ESO Capital

Turbine Efficiency Group is delighted to announce the acquisition of Gas Turbine Applications Inc (“GTA”). Turbine Efficiency, backed by Core Capital Partners LLP which was acquired by ESO Capital in May 2018, is a leading independent service provider for industrial gas turbines.

GTA is a highly-respected after-market services provider for Solar® Turbines products, specialising in the Saturn and Centaur engines. The business serves a longstanding customer base operating from facilities strategically located in Oklahoma, USA.

The enlarged group will leverage its combined capabilities to service new and existing customers from overhaul facilities in the UK and US, and regional offices in Aberdeen and Dubai.

Chris Turner, CEO of Turbine Efficiency, commented: “The acquisition of GTA represents a key strategic development in the ambitious expansion plans for Turbine Efficiency, bringing with it the extension of our global footprint and the Turbine Efficiency brand into the vast Americas market. We welcome our new colleagues at GTA into the Turbine Efficiency family and look forward to working with them as we take both companies forward together”

Matthew Hewlett, ESO Capital, added “Since our investment in 2016, Turbine Efficiency has more than doubled revenue organically and expanded into new strategic territories. This acquisition further enhances the geographical reach and broadens service capabilities, which will enable the Group to accelerate growth and serve our customers even better.”

 

- Ends -

 

For further information, please contact:
ESO Capital Partners

All media enquires:
Tingting Peng
tp@esocapital.com
D: +44 203 642 2600

For more information on TEG:
Matthew Hewlett
mh@esocapital.com
M: +44 (0)770 9197 397

ESO are actively seeking new investment opportunities. If you would like a meeting to discuss our approach or a specific opportunity:
James Smallridge
jms@esocapital.com
M: +44 (0)7971 475 582

 

Notes for Editors
About Turbine Efficiency
Founded in 2001 as an Independent Service Provider on the full range of Siemens industrial gas turbines from 1 – 15MW. Turbine Efficiency provides a world-class service for all maintenance, repair, overhaul and testing of your gas turbine and package. The group operates from a state-of-the-art overhaul facility in Lincoln, UK with offices in Aberdeen, Dubai & Houston, and resident Field Service Engineers in several key European locations. In 2016 TEL was acquired by Core Capital Partners, a mid-market private equity investor supporting high-growth UK companies.

About Gas Turbine Applications (“GTA”)
Founded in 1984, GTA is an independent service provider specialising in the Saturn and Centaur industrial gas turbines (Solar® Turbines products). GTA provides overhaul, repair and testing services for a longstanding customer base, primarily operating within the upstream and midstream sector, from its facility in Calera, OK.


About ESO Capital
ESO Capital is a London-based investment firm providing hybrid private-capital solutions to European small and medium-sized enterprises (SMEs). ESO’s acquisition of Core Capital is subject to regulatory approval and will combine its debt capabilities with Core Capital’s equity expertise.
www.esocapital.com

ESO Capital

Has the European private debt market had it too good for too long? There are no signs of panic, but nerves are jangling a little as loose structuring, leverage, competition and political volatility compete to be the asset class’s chief bogeyman. Andy Thomson reports.

Read more ...

 

ESO Capital

Private debt managers need to accelerate their take-up of new technologies to avoid becoming yesterday’s news.

Behind the curve is not a place you want to be. And yet Matthias Kirchgaessner of Plexus Investments – an adviser to family offices – is convinced that’s where most private debt managers sit when it comes to use of the latest technology.

At our Germany Forum in Munich earlier this year, he asked representatives of general partners in the audience how many were using data scientists to assist their underwriting processes. Only one delegate put up their hand, and he came from an online lending platform where – because of the sheer volume of loans being processed – technology is essential to keep the wheels turning.

For mainstream private debt managers, the suspicion is that cutting-edge technology is rather less of a priority. In a new PDI podcast, Kirchgaessner said he thought managers should be making better use of Big Data to help them assess not just the current shape of companies, but the kind of shape they are likely to be in three to five years down the line, when the loan matures. He thinks sector-focused analysis – developing a granular picture of what is, and is likely to, affect given industries – could be improved significantly by a more open-minded approach that embraces the latest technological innovations.

And yet, rather like those tales from the folklore of alternative assets when GPs would issue their quarterly reporting to limited partners in the form of Excel spreadsheets only, old habits die hard. Of course, in a digital age where humans may feel increasingly marginalised by the advance of robots and artificial intelligence, there’s something reassuring about people retaining control. But when it comes to analysing reams of data, they can miss things – especially if they are relatively inexperienced. The importance of the broader industry context – the ecosystem within which a given company operates – may also be overlooked by a human more easily than by a machine.

Alex Schmid of fund manager ESO Capital participated in the podcast alongside Kirchgaessner and it was clear that his own firm took the issue seriously, with an emphasis on how technology can be used to trawl data to free up team members to focus on other areas. By deploying a proprietary algorithm which sucks in company information from public sources, Schmid said his firm is able to target firms that may be interested in working with ESO with far greater precision – producing a 20 times better response rate than the firm would get by cold calling, he claimed.

Schmid referred to a theme which crops up in so many conversations these days, and not just in a private debt context – the increasing sophistication and demands of LPs. When it comes to use of technology to assist in many operational aspects – as well as in the reports they receive – the bar is set very high. “Even if you are a small manager, they don’t draw a distinction between you and Blackstone,” Schmid noted. Better get moving up that curve.

ESO Capital

ESO Capital Partners UK LLP (“ESO”), the provider of flexible capital solutions to small and medium-sized companies, announces today that it has supported the financing of a management buyout of north-west England headquartered Pyroguard.

Over the last four years, Pyroguard, a market leading manufacturer of fire-resistant architectural glass, has experienced significant organic growth, which is expected to continue. This new investment will allow the management team of Pyroguard to accelerate their expansion plans in the UK and Europe.

The existing Pyroguard management team will become majority equity shareholders, led by CEO Neil Tilsley with Nick Brayshaw continuing in his role as Chairman. David Steel, Director at ESO, joins the Pyroguard Board.


This is the first transaction completed by ESO since acquiring Core Capital in May 2018, and is structured as a senior-secured loan note with additional equity participation. The deal structure is typical of the highly flexible deals that ESO focuses on. By combining ESO’s credit expertise with Core Capital’s extensive sourcing capabilities, the enlarged ESO team offers bespoke capital structure solutions for European SMEs, with enhanced portfolio company support, solving a financing gap in the market.


Pyroguard’s prior backers were Dunedin and NVM.


Neil Tilsley, CEO of Pyroguard, commented: “I am delighted that a forward thinking and proactive investor such as ESO has seen the potential of investing in the future success of Pyroguard. Dunedin and NVM have been highly supportive investors for several years and have played a significant role in making Pyroguard the successful high growth business it is today. Bringing in a new external institutional investor like ESO, who has supported rapid growth across a range of businesses before, will bring not only a fresh perspective but also help us to accelerate our ambitious growth plans. Pyroguard has an exciting future ahead as a result of this new partnership.”


David Steel, Director, ESO: “Pyroguard is already a very successful business, with an experienced management team, a strong presence in a highly technical sector with significant barriers to entry. Given our experience in working with high-growth companies, we see considerable opportunity for ESO Capital to support the management team of Pyroguard as it looks to build its market share in this very interesting sector.”


Walid Fakhry, Founding Partner, ESO: “We are pleased to be announcing our first deal since ESO acquired Core Capital earlier this year. Our investment in Pyroguard, which sits senior in the capital structure, perfectly demonstrates our strong, flexible financing capabilities and support for ambitious growth companies.”


ESO was advised by K&L Gates. Pyroguard and its shareholders were advised by Clearwater International. Financial due diligence was conducted by PwC and Sentio Insight with tax advice provided by BDO, and commercial due diligence completed by PMSI.


- Ends -

For further information


ESO Capital Partners
Tingting Peng
+44 203 642 2600


Notes to Editors

About Pyroguard:
Based in the UK, with locations in France, Netherlands and Spain, Pyroguard is one of the world’s leading independent producers of fire safety glass.

Supporting architects, specifiers and contractors to meet all of their fire safety glazing requirements from a single source, the company offers one of the widest product ranges available. With high-performance products tailored to customers’ precise specifications, beautiful spaces for work and leisure can be created, combining safety and aesthetics without the need for compromise.
To discover more, visit www.pyroguard.eu

 

About ESO Capital:
ESO Capital is a London-based investment firm providing hybrid private-capital solutions to European small and medium-sized enterprises (SMEs). ESO’s acquisition of Core Capital is subject to regulatory approval and will combine its debt capabilities with Core Capital’s equity expertise.

With over 75 deals completed and more than €1.1 billion of funds raised to date, the enlarged ESO team has the expertise and flexibility to invest up to €40 million in any given transaction, across the capital structure, from senior debt to equity. The team works closely with business owners and management teams to structure innovative, bespoke financing solutions and offer enhanced portfolio company support.
www.esocapital.com

ESO Capital

As the European private equity landscape matures, a shifting of the sands in GP shareholding structures is emerging, with a growing number of M&A transactions and minority stake sales. Nicole Tovstiga reports

Until recently, merger activity between private equity firms still bore undertones of the financial crisis, when the market saw a flurry of mergers between troubled private equity firms.

However, private equity is maturing as an asset class and thus the shareholding structures of private equity firms are being reshaped. Not all change is driven by firm-specific events such as generational transition; GPs are also beginning to see strategic advantages both in merging with counterparts and selling minority stakes to other investors.

Indeed, a recent report by Triago highlights the growing trend of mergers among GPs. According to a white paper published by the private equity service provider, more than 150 M&A transactions involving private equity firms have taken place since 2005, with 65% inked across the past five years. Breaking this figure down, Triago data indicates that 15 deals have been completed annually since 2010, with an all-time high of 25 deals recorded last year.


Show of strength

The figures quite clearly indicate a change in industry perception towards GP mergers. Following the financial crisis of 2007-2008, mergers were not so much a strategic option, but a defensive response, and GP consolidation was usually undertaken from a position of weakness rather than strength. But as the industry evolves, private equity firms appear to be drawing inspiration from the strategies of portfolio companies and are altering their behaviour.

"GPs are a very proud, idiosyncratic lot that have historically based their identity on their unique ability to identify and invest on insider information," says Virginie Bourel, partner at Triago. "They've seen these abilities as a barrier to merging and have instead seen it a sign of weakness to sell out."

But having weathered the financial crisis and finding themselves positioned in more favourable investing climes – with markets across sectors largely having rebounded – a handful of GPs have completed landmark deals that have contributed to shifting acceptance and interest in M&A activity. It also means GPs have been able to increase resilience and diversification, merging with counterparts to improve strategic opportunity and develop products in new asset classes or geographies.

 

"GPs are a very proud, idiosyncratic lot that have historically based their identity on their unique ability to identify and invest on insider information" - Virginie Bourel, Triago

 

"When LVMH's private equity arm merged with consumer-focused private equity firm Catterton in January 2016, the firms did this from positions of strength for strategic advantage in geographies," says Bourel. "Deals like this have removed the stigma surrounding mergers."

US-headquartered GP Catterton, LVMH and Groupe Arnault Holding merged their private equity and real estate operations into a new global consumer investor, L Catterton. The new private equity house incorporated Catterton's $5.5bn in managed assets and the respective €1bn and $500m managed by LVMH's private equity and real estate arms, L Capital and L Real Estate. With LVMH especially strong in Europe, the GP said it was seeking to strengthen its buyout and growth position within the consumer space across Europe, North America, Asia and Latin America.

Meanwhile, the €310m merger of Eurazeo and Idinvest Partners in February this year created a new force in the GP world with €15bn in assets under management and showcases some positive outcomes from manager pair-ups. The deal was completed on the premise that a strong capital base and diversified LP base are key for growth, and with internationalisation as an over-arching theme associated with the merger. Historically, Idinvest's LP base has been predominantly French, with some European and a few international investors.
With the backing of Eurazeo, Idinvest strategically hoped to gain credibility through getting a more diversified LP base on board.


Gaining traction

The slew of activity among GPs in recent months gained traction late last year. In November 2017, investment firm Green Arrow Capital wholly acquired Italian GP Quadrivio Capital. The investment formed part of Green Arrow Capital's plan to diversify its portfolio of alternative assets across Europe.

Most recently, French asset manager Natixis Investment Managers acquired European private credit specialist MV Credit Partners in June. A month earlier, in a deal with similar strategic rationale, hybrid equity and debt fund manager ESO Capital bought lower-mid-market growth capital investor Core Capital. The consolidated group, which had previously worked on deals together, intended to offer a broader range of hybrid capital products ranging from senior debt to equity.

"The merger was driven by a motivation to achieve scale by investing across the capital structure, ranging from senior debt to senior equity," says ESO founding partner Stephen Edwards.

"LPs are looking for fund management businesses that can scale in an increasingly sophisticated market. Those who can play the risk scale want to see proof of ability to deliver across strategies and, through the natural evolution of the private equity industry beginning in the early 1990s, there is now enough data to separate the profitable players from the pack," says ESO founding partner Alex Schmid.

Satellite strategies such as ESO's do not shy away from offering a range of products and services including distressed deal packages. An underlying demand for capital continues to fuel the private equity industry, and there is appetite for flexible approaches that can offer both equity and debt funding.

While merger activity among GPs has spiked, data by Triago also indicates a hike in GPs selling minority stakes. One third of all deals since 2005 have been minority transactions, and more than 90% of these have been motivated by strategic and business development goals, according to Triago's white paper. A first wave of minority stake transactions arose in 2007-2008 and was spearheaded by Asian and Middle Eastern sovereign wealth funds, such as CIC and ADIA, but also large family offices. These buyers acquired strategic minority interests from flagship managers such as Carlyle, Blackstone and Apollo.

 

"LPs are looking for fund management businesses that can scale in an increasingly sophisticated market" - Alex Schmid, ESO Capital

 

More recently, other institutions have also sought to invest, which has prompted major players, including Goldman Sachs, Blackstone, Neuberger Berman and AlpInvest, to raise minority stake funds to tap a new market. These specialised GP stake vehicles have been actively seeking to invest in a maturing market – and offer innovative investment opportunities for LPs. Originally conceived in the hedge fund world, the minority stake funds have trickled into the private equity sphere and, by Triago's account, GP stake funds have contributed around 70% of all minority transactions since 2015.

Says Bourel: "While GP majority stake transactions are led for business and strategic reasons, minority transactions more often than not stem from the needs of founders to transition." Founding partners can be reluctant to relinquish control of their firms, but often are open to third-party shareholders. By retiring or cashing out, they have found a way to bring capital into the business, and to keep talent in house.

"With a high level of assets under management, the fees will be high, and third- party capital can be used to pay out younger partners and keep talent within the GP management team," says Goodwin Procter partner Ajay Pathak. More established GPs are looking to add capital into the fund as high-profile founders that led the business will command an equally notable capital allocation for their stake. It also demonstrates a maturing asset class.

"Institutional funds management is now an asset class in and of itself. Minority stake investments signal that it is much more the norm to be able to put a value on this asset class," says ESO's Schmid.

"GPs are faced with the question of whether their business has value beyond one or two leaders'" says Edwards. "They need to transition and create permanent value."

There are also other reasons driving GPs to sell stakes. Private equity can potentially attract more capital than some other asset classes, but private equity houses also need to ensure what is operationally required to attract big tickets.

For example, newly established French GP Ring Capital held a first close on €140m, with Tikehau Capital investing for a 25% minority stake in the firm in January 2018. The move was operationally positive for both investors. Ring Capital won credibility among other LPs and benefited from Tikehau's experience, as well as its established network and existing investors. Tikehau said it would also tap Ring Capital's research and development capabilities in the technology sector, the only market it invests in, when acquiring companies and managing its growth capital. Additionally, Tikehau offered an exit route for portfolio companies of Ring Capital. Indeed, according to Ring Capital, Tikehau was initially considered an LP before the decision was made to bring the investor on board as a 25% owner.

 

LPs on board

Indeed, LPs are a driving force in the changing private equity landscape.

According to Coller Capital's recentGlobalPrivateEquityBarometer, 40% of LPs have invested or have considered investing in funds that take stakes in GPs. The trend is still more pronounced in the US, although there has been some recent discussion about it in Europe, with LPs attracted to returns and features offered by these funds.

The specialised GP stake vehicles raised by Goldman Sachs, Blackstone, Neuberger Berman and AlpInvest have been designed in a way to provide significant external capital to management companies. More specifically, GP stake funds have access to management company dividends and can collect potential revenue from carried interest, as well as further AUM growth. GP stake funds generally preserve the independence of the management team and its investment process, as they usually adopt a passive role through non-voting rights.

 

"GPs are faced with the question of whether their business has value beyond one or two leaders. They to transition and create permanent value" - Alex Schmid, ESO Capital

 

At the same time, GP stake funds also offer a range of services to support managers. For example, they offer access to their own LP base to help their managers fundraise. This could be a potentially valuable service for first-time strategies or emerging managers. Theoretically, GP stake funds can also support product development and planning – such as operational assistance, talent management and training, or sharing support functions; for example, risk, compliance and accounting.

In reality, the effectiveness of these potential services has yet to be tested. But the popularity of the fundraising is significant. Part of Neuberger Berman, the Dyal Capital team closed its Dyal Capital Partners III on $5.3bn in February 2017, almost triple the size of its initial fund. Triago estimates that given their size, these vehicles could enable tickets between $100-600m to medium and large-cap managers.

It remains to be seen whether the minority stake fund vehicles, which have built their structures in a similar vein to traditional private equity closed-ended funds – with four- to five-year investment periods – will complement the asset class. Minority stake funds are yet to deliver exits. Additionally, a long-term and traditionally illiquid private equity market poses many questions when it comes to exit scenarios for GP stakes. Market observers say some GPs may buy back stakes, or the stakes could be sold on the public market – although for now, the US is more likely to see sales on the stock exchange than Europe.

ESO Capital

London and Frankfurt: ESO Capital Partners UK LLP, (“ESO Capital” or “ESO”), the provider of hybrid capital solutions to small and medium-sized companies (SMEs), announces today the opening of a Frankfurt office, signalling its commitment to German-speaking Europe.

ESO will be able to better serve SMEs across continental Europe from its new base, with a particular focus on Germany, Austria and Switzerland. The office will be led by Christian Fritsch, partner at ESO Capital, and will initially comprise a team of four investment professionals.

The expansion into Germany follows the recent acquisition by ESO of Core Capital, the UK lower mid-market private equity fund. The enlarged firm invests up to €40mn at a time in complex transactions. It deploys funds across the capital structure, providing hybrid capital solutions ranging from senior debt to equity. The team works closely with business owners and management teams to structure innovative, bespoke financing solutions and offer enhanced portfolio company support.

There are estimated to be more than 3.7 million SME businesses (defined as those with annual turnover below €500m) in Germany, representing the vast majority of all enterprises in the country, and underpinning the region’s strong economic performance. Demand among German SMEs for debt has grown every year since 2011 and is expected to continue.

ESO has extensive experience of investing in Germany. Its current investments include 21Sportsgroup, a sport-related e-commerce business, and Loancos, the largest independent loan servicer for performing and non-performing loans in Germany.

Christian Fritsch, Partner at ESO Capital and head of the Frankfurt office, said:
“I am delighted to announce the opening of ESO’s first office outside the UK in Frankfurt. Germany has a rich heritage of privately-owned small and medium-sized companies; by building a base in Frankfurt we will be well placed to support them and meet their growing appetite for credit, particularly given the changing shape of the local traditional lending market.”

Alex Schmid, CEO of ESO Capital, said:
“The opening of our new office is another significant milestone for the firm, following the acquisition of Core Capital this month. I am confident that our innovative approach to delivering financing solutions for European SMEs will prove equally attractive in Germany and German-speaking Europe and we look forward to continuing to serve this market through our new presence on the ground.”


- Ends -


For further information:


Greenbrook Communications
Matthieu Roussellier, Matthew Goodman, Clare Glynn
P: +44 207 952 2000
E: eso@greenbrookpr.com


About ESO Capital
ESO Capital is a London-based investment firm providing hybrid private-capital solutions to European small and medium-sized enterprises (SMEs). ESO Capital’s acquisition of Core Capital is subject to regulatory approval and will combine its debt capabilities with Core Capital’s equity expertise. With over 75 deals completed and more than €1.1 billion of funds raised to date, the enlarged ESO Capital team will have the expertise and flexibility to invest up to €40 million in any given transaction, across the capital structure, from senior debt to equity. The team works closely with business owners and management teams to structure innovative, bespoke financing solutions and offer enhanced portfolio company support.

15 May 2018: Core Capital Partners LLP (“Core”), the UK lower mid-market private equity fund, announces today that it has become the first institutional investor in Alpine Fire Engineers (“Alpine”). Alpine is a market leading designer, project manager, service and maintenance provider of active fire suppression systems. This new investment will allow Alpine to accelerate its expansion plans.

Alpine has experienced significant growth over the last five years, which is expected to continue both organically, as well as through select bolt-on acquisitions. The investment from Core will support the development of Alpine’s service and maintenance offering in addition to investment in IT systems.

The existing Alpine management team will remain significant shareholders, along with new CEO Steven Nanda, who joins after seven years as Managing Director of Industrial Services at SPIE UK where he held responsibility for their UK M&A strategy.  David Steel, Partner at Core, also joins the Alpine Board.

Last week, ESO Capital, the specialist investment firm that provides hybrid capital solutions to European SME’s, announced its acquisition of Core Capital. By combining ESO Capital’s deep debt capabilities with Core Capital’s extensive equity expertise, the enlarged business will offer even more flexible capital structure solutions for lower and middle market European companies, with enhanced portfolio support.

Steven Nanda, CEO of Alpine Fire, commented: “I am delighted to have joined Alpine as CEO. The employees, customers and sector expertise have built a fantastic platform for the business to continue to succeed. Bringing in an external institutional investor who has supported rapid growth across a range of businesses will bring a new perspective and help to accelerate our development.”

David Steel, Partner, Core Capital: Alpine is already a very successful business, with a high-quality management team and a strong presence with its loyal customer base. Given our experience in supporting high-growth companies, we see considerable opportunity for Core Capital to work with Alpine as it looks to build its market share in this very interesting sector. Our investment in Alpine, which is at the top of the capital structure, is typical of the type of investment that the enlarged ESO Capital group will be pursuing in the future.”

Core’s legal advisor was Andrew Masraf at Pinsent Masons, with Management advised by JMW and Paul Hastings.  Hurst Corporate Finance advised Alpine on the transaction. Financial due diligence was conducted by Grant Thornton and commercial due diligence was completed by Teneo (previously Credo Consulting). 

 

- Ends -

 

For investment enquires

David Steel (Core Capital)

+44 203 7949 750

 

For further information

Greenbrook Communications

+44 207 952 2000

Matthieu Roussellier, Matthew Goodman, Clare Glynn

 

Notes to Editors

 

About Alpine Fire Engineers:

Alpine Fire Engineers Ltd were established in 1992 and are a 1048 – 1 Level 4 Loss Prevention Standard approved contractor, the highest level attainable from the Loss Prevention Certification Board. Alpine operate nationally and specialise in the mitigation of client risk through the design, project management and maintenance of fire suppression systems.

 

About ESO Capital:

ESO Capital is a London-based investment firm providing hybrid private-capital solutions to European small and medium-sized enterprises (SMEs). ESO Capital’s acquisition of Core Capital is subject to regulatory approval and will combine its debt capabilities with Core Capital’s equity expertise. With over 75 deals completed and more than €1.1 billion of funds raised to date, the enlarged ESO Capital team will have the expertise and flexibility to invest up to €40 million in any given transaction, across the capital structure, from senior debt to equity. The team works closely with business owners and management teams to structure innovative, bespoke financing solutions and offer enhanced portfolio company support.

Enlarged firm to invest across capital structure, providing hybrid capital solutions, ranging from senior debt to equity

9 May 2018: ESO Capital Partners UK LLP (“ESO Capital”), the provider of hybrid capital solutions to small and medium-sized companies, announces today that it is acquiring Core Capital Partners LLP (“Core Capital”), the UK lower mid-market private equity fund, for an undisclosed amount.

The combined business will continue its focus on supporting SMEs across northern Europe, investing up to €40 million in complex transactions. The firm will invest across the capital structure, providing hybrid capital solutions, ranging from senior debt to equity.

Following the acquisition, Core Capital’s founders, Walid Fakhry and Stephen Edwards, will join the ESO Capital management board, alongside ESO Capital founder Alex Schmid and partners Richard Butler and Christian Fritsch. Alex Schmid will remain as CEO of the enlarged firm.

The acquisition of Core Capital by ESO Capital is a natural extension of the firms’ long-standing relationship. The firms have a proven track record of working together over recent years, most notably through their joint backing of Brasserie Bar Co, the restaurant operator. Between them, ESO Capital and Core Capital have completed more than 75 deals to date and raised funds of more than €1.1 billion.

Alex Schmid, CEO of ESO Capital, commented:

“We are delighted to be acquiring Core Capital, having developed a strong working relationship through our mutual backing of businesses. Core Capital’s expertise in the lower mid-market private equity arena will prove invaluable as we continue to grow and provide bespoke capital solutions to the SME market, which is highly fragmented and underserved. We very much welcome Walid, Stephen and their team.”

Walid Fakhry, Managing Partner of ESO Capital, added:

ESO Capital is a very successful business with a great reputation. Having got to know Alex and the team well over a number of years, we are excited to formalise our partnership and become part of the ESO team. Together, we will be able to better support small and medium-sized businesses across German-speaking Europe, the Benelux region and the Nordics, as well as the UK.”

For further information

Matthieu Roussellier, Matthew Goodman, Clare Glynn
Greenbrook Communications
+44 207 952 2000

About ESO Capital

ESO Capital is a London-based investment firm providing hybrid private-capital solutions to European small and medium-sized enterprises (SMEs). ESO Capital’s acquisition of Core Capital is subject to regulatory approval and will combine its debt capabilities with Core Capital’s equity expertise. With over 75 deals completed and more than €1.1 billion of funds raised to date, the enlarged ESO Capital team will have the expertise and flexibility to invest up to €40 million in any given transaction, across the capital structure, from senior debt to equity. The team works closely with business owners and management teams to structure innovative, bespoke financing solutions and offer enhanced portfolio company support.

ESO Capital

The SME lender sees a pick-up in its special situations deal pipeline amid mounting dry powder in the European private debt market.

European Special Opportunities (ESO) Capital, a London-headquartered European special situations investment firm, is to fully deploy its latest special situations fund by the year end, Tingting Peng, head of investor relations and fundraising at ESO Capital told Private Debt Investor.

The manager’s latest flagship fund, the 2015 vintage European Special Opportunities Fund VI has deployed 80 percent of its $250 million capital, 35 percent of which has gone into real estate debt opportunities. 

The firm is looking to deploy the rest of its capital into special situations lending to European corporates.

ESO Capital raised its capital from at least 17 investors based in the US, according to an SEC filing disclosed in February 2017.

PDI understands that Fund VI has an anchor investor based in the UK, while the remaining commitments come from state-backed pensions and corporate pension funds in the US.

The firm typically invests €10 million to €30 million apiece in lower midmarket SMEs with a focus on the UK, Northern Europe, and Germanspeaking European countries, according to Peng.

The 2013-vintage predecessor vehicle, European Special Opportunities Master Fund V, targeted $230 million, according to PDI data.

ESO Capital also has exposure to European non-performing loans via one of its German portfolio companies in fund VI, LOANCOS Group, as per PDI reporting.

The firm’s investment strategy mainly focuses on a combination of cash and payment-in-kind (PIK) – for which the firm realises its return at the maturity of debt instruments, rather than on a quarterly basis – depending on the type of business and deal.

Asked if the capital will be fully deployed within the target timeline, this year, Peng said: “Market observers say there is $80 billion dry powder in the European private debt market, but as a flexible capital solutions provider, we continue to see interesting deals in our pipeline.”

ESO Capital is not the only SME lender to point out the growing dry powder mountain in the European private debt market.

“People will have to work hard, and there will be some players out there, the weaker funds, who will struggle to deploy capital on returns acceptable to the LPs,” Jon Herbert, a managing director of the UK SME fund at Beechbrook Capital told PDI during an interview recorded last week.

PDI understands that the ESO fund has a six-year life with a target gross internal rate of return of 16 to 18 percent per annum across both debt and equity on an unlevered basis. For debt instruments, the firm targets an internal rate of return ranging from 12 to 14 percent per annum.

The firm has €550 million in capital under management and invests across the full capital structure, providing bespoke solutions, according to a member list provided by the Swiss Private Equity and Corporate Finance Association.

ESO Capital

European private debt is growing and evolving with more capital being raised for mid-market strategies in the region. Christian Fritsch, of ESO Capital, offers insight into the segment that is the backbone of all European economies: the SME market.

 

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ESO Capital

In a world changed by the UK’s EU referendum and US election, PDI gathered seven leading asset class professionals in London to consider the way forward.

 

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ESO Capital

David Christie of ESO Capital explains how private debt can offer close alignment between management and capital in selected areas of real estate.

 

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ESO Capital

Private debt in Europe represents a strong investment opportunity. But with loosening structures and increasing leverage, investors must seek disciplined managers, writes ESO Captial's Olya Klueppel

 

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ESO Capital

Three fund managers, a banker and a lawyer: our UK roundtable discussion couldn’t help but be engaging. Rachel McGovern sat down with five experts to discuss opportunities and pitfalls in the private debt market – in Britain and also continental Europe.

 

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