BC Partners changes course to steer its investment plan

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LONDON (Reuters) – Private equity buyout specialist BC Partners believes it can match its 2007 investment level, but with a focus on heavy and distressed trades rather than traditional LBOs, said Tuesday a senior manager.

Managing partner Andrew Newington told the Reuters Hedge Funds and Private Equity Summit that BC Partners, whose 2007 transactions include London-based real estate agency Foxtons, did not commit a large amount of capital in transactions ago. two years.

“We could easily see ourselves matching those kinds of volumes this year in terms of our own equity commitments,” Newington said, adding that he didn’t expect industry volumes to stay the same.

Traditional debt buyouts have all but come to a halt as debt to fund transactions dried up in the wake of the credit crunch, prompting buyout companies to look for other ways to transact.

Newington said the company’s focus had shifted in favor of capital-intensive transactions that do not require bank financing, an approach used to acquire German electricity supplier SGB at the end of the year. last.

“A leveraged buyout, at the moment, is not really feasible, but a capital intensive buyout, which involves the provider providing some form of financing, has already taken place,” Newington said, adding that ‘he saw these types of agreements becoming more and more a feature of the market.

“If you find a situation where the price is reasonable and the growth prospects for this business are adequate, you can get a perfectly good return and on a risk-adjusted basis, maybe a very attractive return by making a buyout. actions, “he added.

DEBT FOR EQUITY

BC Partners is considering several hundred million euros of distressed debt investments, but generally only with a view to acquiring stakes in companies through debt-for-equity swaps.

“What we’re doing is buying stocks, but it’s clear that buying distressed debt is a way to buy stocks,” Newington said.

There are “significant opportunities” in distressed debt, he said, due to the number of companies with weak balance sheets but strong operational performance.

“I think for us to emerge as long-term owners of a business that has been through a time of distress is a very attractive proposition,” Newington said. “These are tough times and in tough times you have to find attractive ways to deploy capital. “

He did not rule out working alongside distressed debt investors as there was a clear overlap between private equity and distressed debt investing.

And while buying distressed debt before restructuring means there is uncertainty about the end result, other risks have been reduced.

“Buying a senior credit instrument means you get to a higher level in the capital structure than you would if you were buying stocks,” Newington said.


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