Sector developments in 2015
As the chart below shows, 2015 proved to be a successful year with an around 45% increase in number of deals recorded by the Dutch Private Equity and Venture Capital Association (NVP) (2014: 94 deals and 2015: 136 deals). In 2015 around 17% of publicly known private equity deals focused on computer and consumer electronics, of which 39% were related to business software, 26% in other software and 13% in electronic components.
This graph, created by Osborne Clarke, is based on the market data overview prepared by the Dutch Private Equity and Venture Capital Association (NVP) which includes publicly available deal information for the period up to January 2016.
Worth mentioning is the increase in the consumer services sector. Examples are online consumer services, car rental, online betting, legal services or subscription based delivery of goods. An increase of activity in consumer goods and retail was also noticeable. The activity in that sector mainly focused on consumer products manufacturing and specialty retailers (such as Bever Zwerfsport, Chocolate Company, Home Fashion Group (Kwantum) and Suit Supply).
Outlook for 2016
More rules and codes of conduct
After some well-known PE-owned Dutch companies such as HEMA, NRC Media, Van Gansewinkel, Atteró, Estro and V&D got into financial difficulties in 2014 and 2015, PE firms became part of the Dutch political agenda.
Mr. Henk Nijboer, a member of the Dutch Parliament representing the left-wing Dutch Labour Party (Partij van de Arbeid), and others handed a report to the Dutch government in August 2015, which included several proposals for measures aimed at preventing “excesses” of PE firms. The authors argued that the difficulties the companies mentioned above are facing result from the way PE firms customarily operate. The authors propose a wide range of measures that are mostly aimed at limiting tax deductibility, financial rewards for managers, financial indebtedness, asset stripping and the granting of security by target companies, while increasing at the same time the information rights of works councils. More generally, the authors call for more transparency with respect to the cost structure of PE firms.
In a letter dated 21 December 2015, the Minister of Finance, Mr. Dijsselbloem, responded to the report and announced that the Dutch government will investigate the private equity sector and consider some of the proposed measures. In response, the NVP announced three measures:
(i) the NVP and its members will provide more information on private equity activity in the Netherlands;
(ii) the NVP will help to inform works councils that get involved with PE parties by preparing an information document; and
(iii) NVP will update its code of conduct to introduce standard reporting standards on income and costs that are better aligned with international standards and recent legislation.
For 2016, rules and regulations, as well as self-imposed codes of conduct, will be high on the agenda and may be expected to be implemented by the Dutch government or to become part of “market practice” for private equity firms with activities in the Dutch market.
Expected deal activity
On the basis of third party analyst reports as well as current mandates OC Amsterdam are working on, it is expected that PE / VC activities remain focused on digital business, life sciences & healthcare sector and retail sector.
OC Amsterdam deals and team
In 2015 the OC Amsterdam team has been regularly involved in high profile VC/PE transactions, both in the Dutch market and cross-border. The team advised the PE / VC investment side, as well as target companies and their selling (founding) shareholders. Activity has mainly been in the digital business, healthcare and life science and retail sectors. With OC’s Silicon Valley and San Francisco offices, the Amsterdam M&A team headed by Cristine Brinkman has been able to add an impressive number of well-known investors, “start-ups” and “grow ups” to its existing client data base in a limited period of time since the start of their office.
In addition, the team led by Bas Beenen is also very experienced in PE-backed real estate investments (both national and international) and, with the recent hire of the Dutch civil law notary Cars-Jan van Gool, who joined with his full notarial team, OC Amsterdam’s team is now able to fully service clients in all aspects of deals.
Clients and colleagues have complimented OC Amsterdam for its important hire in the Dutch corporate market with the recruitment of Herke van Hulst, who is joining from Clifford Chance. With the arrival of this additional Corporate Partner, OC Amsterdam further strengthens its Corporate team with extensive experience in VC and PE transactions, in particular in the life science and digital business sectors.