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Rothschild & Co | Annual Report 2017
Rothschild Merchant Banking
Private equity
In private equity, we manage €3.0 billion with a team of 54 investment
professionals. We have developed two different business lines:
• Corporate private equity;
• Secondaries, multi-manager funds and co-investments.
Corporate private equity
Five Arrows Principal Investments (FAPI)
Launched in 2010, Five Arrows Principal Investments
(FAPI) is our flagship initiative built on Rothschild & Co’s
successful European mid-market investing strategy over
the past two decades.
FAPI concentrates on expansion and buyout deals in the
mid-market segment across Europe. It currently manages
two funds: FAPI I, which raised €583 million in 2010 and
FAPI II, which raised €781 million in 2015. The investment
teams are based in Paris and London.
FAPI I is invested in 15 mid-cap companies in seven
different European countries. Thanks to its affiliation
to Rothschild & Co, the fund has developed a rare pan-
European reach and distinctive sector plays in selected
segments of the economy which it believes enjoy positive
momentum: healthcare, business services, data, as well
as software and technology-enabled services.
In 2017, FAPI I completed four successful exits: full exit of
Autodata for a gross MOIC
(1)
of 2.6x, full exit of Grand Frais
for a gross MOIC of 3.3x, full exit of Munters for a gross MOIC
of 2.5x and full exit of Kisimul for a gross MOIC of 3.2x.
Its successor fund, FAPI II, builds on the same strategy and is
managed by the same team. During 2017, FAPI II completed
four investments: Opus 2, a UK leading cloud-based litigation
and legal transcript management software and services
business, Voogd & Voogd, a Dutch technology-enabled
insurance distribution platform, Menix Group, a French
fast-growing manufacturer and distributor of orthopaedic
and dental implants, as well as related instruments, and
A2Mac1, a fast-growing benchmarking and technical data
provider to the automotive sector. In total, FAPI II has eight
companies in its portfolio.
As at 31 December 2017, the net asset value of the Group’s
investment in FAPI I and II represented €219 million.
In 2017 Kisimul was sold to a leading infrastructure
private equity firm focused on assets with high
revenue visibility. Kisimul is a leading UK-based
provider of specialised education and care services
for individuals with severe learning disabilities. In
late 2009, FAPI identified Kisimul as one of the UK
healthcare sector’s most attractive assets due to its
combination of earnings visibility, niche nature and
politically protected status. During FAPI’s ownership,
the business performed well, with revenue growing
from £31 to £55 million at the time of exit. The
company also generated significant cashflow, which
in 2016 enabled a dividend recapitalisation. The
investment in Kisimul generated a 3.2x MOIC.
In December 2017, FAPI II acquired A2Mac1,
a leading technical benchmarking data provider
to the automotive sector. A2Mac1 specialises in
operating and maintaining a database of over 600
fully disassembled vehicles and their individual
components. Thanks to its unparalleled value
proposition, the company has shown a remarkable
track record of organic growth with more than 20%
revenue compound annual growth rate over the last
five years. FAPI had identified A2Mac1 as a very high
quality asset with a diversified blue-chip customer
base, very low churn and a global footprint. The
company epitomises the classic FAPI investment
thesis combining mission critical product offering
with high barriers to entry, and a compelling story
with multiple avenues of growth.
(1) MOIC stands for Multiple On Invested Capital.