In April 2014, BNP Paribas Fortis Private Equity took a minority stake in filled rolls and pastry chain Point Chaud. Let us take a look behind the scenes of this transaction.
Point Chaud was established by CEO and reference shareholder Didier Depreay in 1993. Since then, the company has expanded to become the biggest filled rolls and pastry business in Wallonia, with about 400 employees and a turnover of €40 million. Point Chaud has about 40 branches in Wallonia and France, most of which are concentrated along the Namur-Liège axis.
In April 2014, BNP Paribas Fortis Private Equity (FPE) took a minority stake in the company. This transaction was the jewel in the crown of almost two years of preparatory work. Luc Weverbergh, Managing Director BNP Paribas Fortis Private Equity, explains:
“Our entry is the result of a shift in Point Chaud's ownership of shares. CEO Didier Depreay wanted to buy out some minority shareholders, but neither he nor the company had the resources to do so. When he presented this problem to his relationship manager at our bank, which has had Point Chaud as a customer for years, he was put in contact with our team immediately.”
It still took quite some time to close a final deal. This is absolutely normal, Luc Weverbergh adds:
“Our entry is always preceded by a preparatory process, in which we evaluate the strategic plan and the figures thoroughly. We also need to come to a joint vision for the future for the company. As part of this, we proposed to simplify the Point Chaud group's structure and give it a Belgian focus. This takes time. The minority stakeholders also had to be bought out in the best possible circumstances. It was a clear advantage that we could set up the transaction ourselves without any external pressure from a corporate financial advisory, for example. This allowed us to take our time in order to build mutual trust and get to know the company.”
Supporting future growth
This participation makes FPE an important minority shareholder of Point Chaud and allowed CEO Didier Depreay to become a majority shareholder. Finance group Meusinvest keeps a small interest in the company. Didier Depreay:
"When BNP Paribas Fortis Private Equity joins the capital, it will provide powerful leverage for expanding our activities in Belgium and beyond. I am pleased about this financial partnership, as it gives us the opportunity to accelerate our development and consolidate our structure and position on the Belgian market. It should also enable Point Chaud to conquer a bigger market share faster in regions where the brand does not have a presence yet in order to become market leader in the Belgian retail segment for filled rolls and pastries. We have concrete plans for a number of new branches in Wallonia and Brussels."
Why Point Chaud?
According to Luc Weverbergh, Point Chaud has exactly the company profile FPE is looking for:
"Our investment strategy focuses on high-performance, medium-sized companies in the Benelux region with a strong market position and major growth potential. Point Chaud fits this profile perfectly. It was also clear right from the first contact we had that our vision is fully in line with the CEO's, both in terms of the choice of new markets and the company's structure, growth strategy and even a possible joint exit. This meant that all the ingredients for successful cooperation were there."
Private equity: a versatile form of financing
Private equity can also be a convenient way for SMEs to strengthen their equity and finance their further growth. But how do you attract private equity investors? And how do they operate?
Private equity can refer to many things. Which investment techniques are involved in private equity and in which cases are they used?
Private equity is an instrument used by FPE to acquire an equity interest in a company, either alone or together with other investors. This does not involve a passive investment, but active share ownership: the aim is to engage in a partnership in the medium or long term. In concrete terms, this means that FPE is represented on the Board of Directors as a minority shareholder and in that capacity provides strategic and financial guidance and/or further professionalization of the company.
After a few years, FPE will withdraw from the company again. How this happens exactly is decided in consultation with the co-shareholder(s). They can buy the interest from FPE, but FPE may also sell it to another private equity investor or industrial player.
A company may decide to attract capital for various reasons. A common reason is that the company seeks to finance growth by increasing its activities, internationalising or acquiring other companies. The advantage is that no new private funds or excessive leverage are necessary. Other options are a business transfer or a (partial) buyout of family or less active shareholders.
Venture capital, also referred to as start-up capital, is a form of private equity used to finance early-stage, high-tech companies. These are mainly innovative start-up companies with promising growth prospects. FPE mainly provides venture capital through investments in university venture capital funds.
Mezzanine financing is a long-term subordinated loan for which the company is not required to provide any interim repayments, but makes one lump-sum repayment at the end ('bullet'). These factors mean that the risks of mezzanine financing are higher, which makes it more expensive than a conventional loan with a shorter term, a repayment schedule and securities.
The company does have to generate sufficient returns and liquidity in order to bear the interest charges. The total payment usually consists of a combination of the following elements:
- Cash interest: Interest that is paid at regular intervals during the term.
- 'Payment in kind' (PIK) interest: Capitalised interest that is not paid in cash during the term, but is added to the payable capital and repaid along with the principal.
- Warrant: An instrument that entitles the provider of mezzanine financing to acquire a small percentage of the share capital later. This allows the provider to enjoy a variable payment too.
The exact relationship between these elements depends on the type of company, its future plans and the arrangements it has made with the financier. A company generating a lot of liquidity will be able to cope with a higher cash interest, while a company with a great need for working capital will tend to go for a higher PIK interest or more warrants.
Mezzanine financing is often used for companies facing a financing gap: an investment need that cannot be fully covered with capital or conventional leverage. A company can also opt for this form of financing if does not need external capital injection because there is sufficient equity present or because the company prefers not to open up the capital to new shareholders, for example.
Sylphar, Lansweeper and Qover win Private Equity Awards in 2022
On 12 October, our bank and the Belgian Venture Capital & Private Equity Association put the winning companies in the spotlight. With the support of Private Equity, all three completed a remarkable growth track.
The winners of the 2022 Private Equity Awards have been announced. It was the fifth time that BNP Paribas Fortis organised this event together with the Belgian Venture Capital & Private Equity Association (BVA). In addition to rewarding Belgian growth companies, this is also a good opportunity to highlight the added value of venture capital for start-up, fast-growing and mature companies.
And the winners are...
The three winners were selected from nine nominees in three categories: Venture capital, Growth, and Buy-out company of the year.
Qover was voted 'Venture Company of the Year'. This award was created for young companies that develop and market an innovative product or service with the support of a venture capital investor.
Qover enables any digital company to embed insurance in its value proposition. The company has built a tech platform that can launch any insurance product in any market, language and currency in a matter of days. The company is ready to scale up internationally and was praised for its innovative and disruptive business model.
Lansweeper was named 'Growth Company of the Year'. This category is for companies that have significantly expanded their activities through organic growth or acquisitions. They bring a financial partner on board who does not want control.
Lansweeper is an IT Asset Management platform provider that helps companies better understand, protect, and centrally manage their IT devices and network. The company has developed a software platform that can be used to create an inventory of all types of technology assets, installed software, and users. Besides setting an excellent financial track record, the company succeeded in gaining a solid foothold internationally.
Sylphar was the winner in the 'Buy-out Company of the Year' category. These are companies that achieve growth through involved management with the backing of a private equity investor with a controlling interest.
Sylphar develops and packages innovative and consumer-friendly OTC products worldwide. OTC products are medicines that are sold directly to the consumer without requirinng a doctor's prescription. Examples include tooth whitening products and skin, hair and body care products. Their spectacular digital transformation of the sales process, strong international expansion, and rapid product development were decisive factors.
"As a financial instrument, private equity is perfectly suited for boosting innovation and sustainable growth. The three winners have all proven this", says Raf Moons, Head of BNP Paribas Fortis Private Equity.
Find out more about Private Equity at BNP Paribas Fortis.
Source: press release
Who will win a Private Equity Award this year?
The Private Equity Awards will be presented on 12 October 2022. We are organising this event for the fifth time, together with the Belgian Venture Capital & Private Equity Association (BVA). Check out this year’s nine nominees.
The Private Equity Awards reward Belgian companies that have received support from a private equity or venture capital investor for their growth and development. This is the fifth time that the Belgian Venture Capital & Private Equity Association (BVA) and BNP Paribas Fortis are organising this prestigious award ceremony.
The nine finalists were nominated based on criteria such as sustainable growth, authentic leadership, and active ownership. They are divided into three award categories: Venture capital, Growth, and Buy-out company of the year.
Venture company of the year:
Aerospacelab is an innovative scale-up specialising in satellite platforms and information obtained from geospatial technology. The company designs, manufactures and operates a constellation of satellites for remote sensing, collecting useful information.
Precirix is a biopharmaceutical company and a spin-off of the VUB. It is dedicated to extending and improving the lives of cancer patients by designing and developing precision radiopharmaceuticals.
Qover enables any digital company to embed insurance in its value proposition. The company has built a tech platform that can launch any insurance product in any market, language and currency in days.
Growth company of the year:
Efficy has developed a complete and highly customisable SaaS (Software as a Service) CRM (Customer Relationship Management) solution. The company wants to become five times bigger, increasing its market share to 5% of the independent CRM market in Europe, within five years.
- Fedrus International
Fedrus International is an international building materials group that manufactures and distributes roof and façade materials and services with a focus on EPDM rubber and zinc. The company wants to become the preferred partner of building professionals, with high quality standards and a great sense of innovation.
Lansweeper is an IT Asset Management platform provider that helps companies better understand, protect, and centrally manage their IT devices and network. The company has developed a software platform that can be used to create an inventory of all types of technology assets, installed software and users.
Buy-out company of the year:
- Baobab Collection
Baobab Collection sells diffusers and candles made from hand-blown glass or metal clad with precious leather. The Belgian brand remains true to its values of craftsmanship and excellence by supporting European expertise and craftsmen.
Sylphar develops and markets innovative and consumer-friendly OTC products worldwide. OTC products are medicines that are sold directly to the consumer without requiring a doctor's prescription. Examples include tooth whitening products and skin, hair and body care products.
- House of HR
House of HR is a leading European HR service provider focusing on Specialised Talent Solutions and Engineering & Consulting. Their goal is to connect people’s talents and dreams with successful companies.
Drive innovation and sustainable growth
"Private equity is a financial instrument that is perfectly suited to boost innovation and sustainable growth. The result is strong growth. But private equity involves after all so much more than just raising capital. Venture capital investors also share their knowledge and network, opening many doors. All the nominees have a solid track record and are all in with a chance to win. I am very curious to see which companies will take home an award", says Raf Moons, Head of BNP Paribas Fortis Private Equity.
Find out more about Private Equity at BNP Paribas Fortis.
Source: Press release BVA
Belgian gaming industry gets a big push
BNP Paribas Fortis Private Equity, together with Howest and Cronos, recently founded ForsVC, the first venture capital fund to focus exclusively on the Belgian gaming industry.
The gaming industry is booming all over the world. A lot of Belgian talent works on the development of computer and video games. In recent years, there has been a true explosion of creative video game start-ups in Belgium. But still, a lot of highly skilled creative people too often go abroad.
From brain drain to brain gain
As a venture capital fund for the Belgian video game industry, ForsVC wants to combat this brain drain. In the coming years, it will invest 10 to 15 million euros in gaming. Each of the three parties is bringing its specific experience and expertise. The Kortrijk college Howest as a reputable training institute. The Cronos group as a seasoned entrepreneur and investor in technology companies, including gaming studios. And the bank as a financial expert in Private Equity.
By making capital and expertise available to promising game companies, the existing ecosystem is enriched and made a lot more attractive. Belgian companies can professionalise themselves, develop high-quality games and pay competitive salaries.
Mireille Kielemoes, managing director fund investments Private Equity at BNP Paribas Fortis: “ForsVC is what we call a “university-linked” fund. This is a specific envelope within our Private Equity portfolio which, among other things, invests in university spin-offs or innovative companies whose IP (intellectual property) has a link to universities or knowledge institutions. Through these funds, we support innovation, creativity, job creation and entrepreneurship in Belgium in promising areas. For ForsVC, we’ll also be working via a participation in the game companies, but individual games are also eligible for project funding through revenue-based lending.”Press coverage dated 14/10