The opening months of 1998 have seen PPM Ventures pressing strongly ahead with its international expansion plans. Shortly after its acquisition of the Australian buyout house Catalyst (story, page 18), the group announced the recruitment of investment director Marc Demicheli to help spearhead its European operation.
Marc Demicheli has some nine years experience in the French private equity market, initially with LBO France and, since 1995, with Charterhouse SA. He previously spent seven years in M&A with JP Morgan.
For the time being, Marc Demicheli is based at PPM Ventures’ London headquarters where he will work alongside Jean-Lou Rihon to develop a French transaction team. A French office, PPM Venture’s first direct presence in Continental Europe, will open later this year. Ultimately, PPM Ventures will build a team of four to five investment executives in Paris as it seeks to extend its European business, focusing particularly on the major markets of France and Germany.
Marc Demicheli pointed to strong growth in the French buyout market during 1997 as a promising sign, adding that he expected this favourable trend to continue during the current year and beyond. He added that a local presence is invaluable for sourcing mid-market deals in France and elsewhere on the Continent: “While the major transactions are mostly addressed through the investment banks – which tend simply to pick up the phone and call London – for the GBP50 million deals, you need to be close to specific sources in the business community”. In Germany, local M&A boutiques are key movers in this market sector, while in France, contacts among auditors and lawyers tend to be a fruitful source of opportunities. Another tactic which, in Marc Demicheli’s experience, has proved particularly useful in the French market, is asking the CEO of an existing investee to identify further potential acquisition targets within his particular industry.
Managing director Jonathan Morgan emphasised that, although establishing a presence on the Continent represents an important element of PPM Ventures’ international development, PPM Ventures would continue to operate as a single team, irrespective of individual executives’ geographic location: “Our philosophy is ‘Have Airport, Will Travel’, with people moving to wherever they are needed for particular deals”.
While Demicheli’s team will therefore have a brief extending well beyond France, with Germany figuring as an area of particular interest, PPM Ventures expects to source a number of interesting French opportunities as the economy continues its slow and painful climb out of recession. However, the group is well aware that there are unlikely to be easy pickings. “Prices are not cheap, although they are not as bad as in the UK”, said Jonathan Morgan.
The GBP170 million (ecu 260 million) invested by PPM Ventures in 1997 – significantly boosted by the large Gala investment – represented a record annual spend, although the year was not the group’s most active in terms of the number of deals completed.