About the company
Founded in 2003, Altor Equity Partners (“Altor”) is a mid-market private equity firm based in Europe that seeks to scale and optimise companies with world-class potential through fundamental business improvements and earnings growth.
The consideration of sustainability is one of many factors that form part of Altor’s investment approach. Beyond mitigating sustainability risks as part of its investment process, Altor has implemented a framework of comprehensive sustainability performance monitoring of its portfolio companies.
It is a signatory to the Science Based Targets initiative (“SBTi”) and it is supporting its portfolio companies to develop science-based targets and implement decarbonisation pathways. Altor’s ambition is to make every Altor-backed company a sustainability leader in its respective industry.
PIP has backed Altor since 2003 and, in March 2024, made a commitment to Altor’s ACT I, which is a fund focused on investment opportunities that have a specific green transition or industrial decarbonisation theme. In Europe, there is a significant and growing push to decarbonise supply chains in order to meet the European Union’s target to reduce net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels.
As a result, Altor believes that many businesses are seeking to secure compliant, more sustainable supply chains to achieve their own targets, and this push is leading to an increase in businesses that can help to deliver sustainable supply chains at significant scale within the next five to 10 years.
Altor’s ACT I aims to primarily invest in companies across a range of sectors where the green transition is central to their business models, and will include businesses that either have existing green transition value chains or businesses that are developing newer but proven industrial processes to directly deliver green end-solutions.
Altor has already identified a long list of attractive targets within a range of investment themes.
About the company
Yellow Hive is a leading Dutch insurance distribution platform with active broker and managing general agent (“MGA”) capabilities. The company, which serves both small and medium-sized enterprises and consumers, is a financial services intermediary for property and casualty insurances, employee benefits, risk assessment and mortgages.
The business is headquartered in the Netherlands and has more than 500 employees.
Investment rationale
- Yellow Hive had a high-quality platform displaying robust historical organic growth supplemented by proven buy-and-build capabilities.
- Resilient business model with expansion into higher margin MGA/niche sectors, which will drive cross-selling opportunities with the potential for significant synergies and economies of scale.
- Fragmented and growing underlying market provides an attractive buy-and-build opportunity.
- A strong alignment with a core, high-quality private equity manager.
Our relationship
Pantheon is an existing primary investor in IK Partners’ (“IK”) Small Cap Fund II and has been an active investor with the private equity manager since 2000, having invested in several of their mid-cap funds on a primary basis and completed eight co-investments.
Active management and value creation
- IK acquired Yellow Hive in 2020 and has since grown revenue and EBITDA by 5.5 and 6.0 times respectively.
- Mergers & Acquisitions are in the DNA of the company. All the business segments are supported by a shared services centre, which enables the business to seamlessly integrate new businesses to the platform, driving efficiency and generating synergies. Furthermore, the company has a good track record of transferring its portfolio of policies into its own MGA channel, and therefore further synergies are anticipated.
- Yellow Hive has the long-term goal of replicating the platform that it has today on a pan-European scale. The company, assisted by IK, has built a pipeline of targets into its plan and aims to execute on this to grow business earnings.
About the company
Syneos Health is a leading provider of outsourced clinical research and commercialisation services to pharmaceutical and biotech customers. The company serves the 25 largest pharmaceutical companies and many of the most innovative biotech companies in the world.
Investment rationale
- Large player in a fragmented space: Syneos is currently the fourth largest Contract Research Organisation (CRO) and second largest Clinical Commercialisation Organisation (CCO) in a market worth more than US$40bn, giving the company preferred access to large complex biopharma projects across blue-chip healthcare customers.
- Strong value proposition: Given the significant costs and time associated with producing a new drug and bringing it to market, the cost of failure (or delays) is very high for customers, leading to high switching costs, low price sensitivity, and high barriers to entry.
- Exposure to high-growth therapeutic segments: Strong organic revenue growth profile and backlog coverage due to focus on high-growth subsegments such as Cardiovascular, Cell & Gene Therapy, Neuroscience, Oncology, etc., which are projected to grow at > 10% cumulative annual growth rate over the next five years.
- Syneos Health was formed via the merger of two high-growth pharmaceutical services businesses (INC Research & inVentiv Health). Upon consolidation, Syneos focused primarily on revenue growth, which resulted in strong bookings year-on-year. However, the company lacked effective cost and inventory control measures to deliver its contracted backlog in a timely manner, leaving significant integration and margin improvement opportunity for a new investor.
Our relationship
Founded in New York in 1992, Veritas Capital (“Veritas”) invests in companies providing primarliy critical technology-enabled products and services to government and commercial customers worldwide.
Pantheon has a long-standing relationship with Veritas, and PIP has invested in two of the manager’s funds on a primary basis. PIP is also co-invested alongside Veritas in Perspecta, a provider of services and solutions to US government agencies.
Active management and value creation
The manager sees a number of routes to create value for the business through bolstering the management team, expanding into adjacent markets and deepening the penetration of high-margin services. Veritas also intends to invest in Syneos’ leadership functions (Chief Operating Officer) to help drive effective operational improvements and complement the recent growth experienced by the company.
About the company
Qualtrics, the leader and creator of “experience management” software, is a cloud-native software provider that helps organisations quickly identify and resolve points of friction across all digital and human touchpoints in their business. These insights allow businesses to retain their best customers and employees, protect their revenue, and drive profitability. More than 19,000 organisations around the world use Qualtrics’ advanced Artificial Intelligence (“AI”) platform to improve business performance. Qualtrics houses one of the largest databases of human survey responses in the world. Qualtrics is co-headquartered in Provo, Utah and Seattle and operates out of 28 offices globally.
Investment rationale
- Qualtrics’ technology is central to how businesses make mission-critical customer and employee decisions which increase revenue and operational efficiency. With an AI-powered platform and built-in automation, companies can deliver exceptional experiences to their customers and employees, at scale.
- The business is led by a strong and experienced management team.
- Qualtrics is recognised as a leader in experience management which is a rapidly growing market.
- Qualtrics has a strong customer base, including well-known brands like Uber, Coca-Cola and Pfizer.
Our relationship
Founded in 1983, Accel is a venture capital firm, based in Palo Alto in the USA, which is dedicated to helping entrepreneurs build world-class technology-focused companies. Given its global investment mandate, Accel also has offices in other technology hubs such as Bangalore and London. Pantheon has a long-standing relationship with Accel, including active participation as an advisory board member. PIP is currently invested in three Accel funds on a primary basis.
Active management and value creation
Accel led the Series A financing round for Qualtrics in 2012. Subsequently, Accel invested substantial follow-on capital across its platform and has advised the company on initiatives such as product development, new customer acquisition, network introductions, and talent management. Accel’s partnership as an active board member and investor helped enable a sale to SAP and ultimately an initial public offering in January 2021, at a valuation of US$15.1bn.
In 2023, Accel identified Qualtrics as a compelling investment opportunity due to a dislocation in the public stock price. Accel partnered with Silver Lake and Canada Pension Plan Investment Board (“CPPIB”) to purchase the business for approximately US$12.5bn. Accel’s intimate knowledge of the business and ongoing close relationship with the management team makes it a preferred partner to help Qualtrics maintain its market-leading position and continue product innovation.
About the company
Apex Service Partners (“Apex”) is a provider of HVAC (Heating, Ventilation, Air Conditioning), plumbing and electrical services. Founded in 2019, the business operates across the USA and has over 8,000 employees.
Investment rationale
- Apex operates in a sector that has proven to be resilient through economic cycles as it provides mission-critical services that often cannot be delayed.
- The HVAC market is growing strongly and is benefitting from an increasing number of households, ageing housing stock, increasing energy efficiency requirements and more extreme weather patterns.
- Apex operates in a highly fragmented market that the manager believes is ripe for consolidation. The vast majority of competitors are smaller, independent providers that lack the scale required to grow in this market.
Our relationship
Alpine Investors (“Alpine”) is a top-performing, US-based private equity manager that focuses on the mid-market. PIP has previously invested alongside Alpine in TEAM Services Group, which was a manager-led secondary transaction.
Active management and value creation
Alpine first invested in Apex in 2019 and has grown the company significantly through M&A during the first phase of its ownership. Apex’s internal M&A team has developed a successful M&A playbook that provides acquired businesses with a significant uplift to EBITDA one year after acquisition. The M&A strategy is likely to result in accretive acquisitions, which is expected to drive value over the course of Alpine’s next phase of ownership.
About the company
Medica is a provider of teleradiology services with operations in the UK, Ireland and the USA. The company provides outsourced reporting of Magnetic Resonance Imaging (MRI), Computed Tomography (CT), ultrasound and X-ray images to customers including NHS trusts, the Irish Health Service Executive, private hospitals and insurance groups.
Founded in 2004, Medica has grown substantially to become a high-quality business with a reputation for reliable services and excellent teleradiology reporting, which has resulted in strong customer advocacy.
Investment rationale
- There are significant structural tailwinds in the teleradiology industry. Strong demand for teleradiology services has created a backlog, while the industry is suffering from a shortage of radiologists.
- Medica benefits from high barriers to entry as it is difficult for new entrants into the market to recreate Medica’s extensive network of radiology specialists and doctors. As a result, Medica has a “sticky” customer base.
- The business has an attractive financial profile with healthy margins and strong cash flow generation.
- The recent acquisitions in Ireland and the USA have expanded Medica’s geographic footprint and diversified its services.
Our relationship
Pantheon has a long-standing relationship with IK Investment Partners (“IK”) dating back to 2000, and holds six advisory board seats with the manager. PIP is currently invested in three IK funds on a primary basis. PIP is also a co-investor alongside IK in Salad Signature, a manufacturer of salad spreads.
Active management and value creation
IK has a track record of creating value in the healthcare sector having invested in 23 healthcare companies across Europe since inception, deploying a total of €2.1bn.
The manager views M&A as a key tool to continue Medica’s growth trajectory with further investment expected to increase the size and speed of its buy-and-build strategy. Organically, the manager sees value creation opportunities through the delivery of scale and deeper penetration of both new and existing telemedicine services, in new and existing geographies.
Additionally, the manager plans to leverage artificial intelligence to improve Medica’s workflow, minimise their customers’ backlog and ultimately enhance patients’ medical journey and outcome.
About the company
Commify is a provider of business messaging solutions to small and medium-sized businesses (SMEs). Its products allow companies to communicate with their customers via text and email for mission-critical uses such as appointment confirmations and customer support. Commify employs nearly 300 people across Europe, the USA and Australia.
Investment rationale
- Commify is one of the leading players in a market where growth is being driven by trends such as digitalisation, the increasing use of messaging services and privacy regulations which favour larger operators such as Commify.
- Commify, with its diverse product offering, is well-positioned to serve small and medium-sized businesses (SMEs). Commify’s value propositions ensure a high level of customer service and compliance tailored to customers’ needs.
- ECI Partners (“ECI”) has extensive experience and a track record of creating value within businesses operating in the digital platforms, SME services and Cloud and digital services sectors.
Our relationship
PIP is a primary investor in three ECI funds, and Pantheon currently holds three advisory board seats with the manager. PIP is also a co-investor alongside ECI in Ciphr, a provider of human capital management and payroll solutions to mid-market businesses.
Active management and value creation
Commify has a long track record of M&A over the past decade. The company has a strong M&A pipeline and sees this as an important route to expand the business across existing and new geographies. The business messaging market is highly fragmented with sellers motivated by regulatory complexity and the burdens of technological development.
Investment by Commify in a new cloud platform is expected to provide access to a broader range of customers, enable cross-selling opportunities and improve M&A integration. ECI will also seek to invest in product development to offer new products and services to customers.
About the manager
Ambienta is a European private equity manager focused on investing in sustainability-driven businesses. The manager was founded in 2007 and has offices in Milan, London, Paris and Munich. Pantheon has a long-standing relationship with Ambienta and holds three advisory board seats with the manager. PIP has previously co-invested alongside Ambienta in SF Filter, a distributor of mobile and industrial filters for after-market applications.
ESG credentials
In 2020, Ambienta obtained Carbon Neutral certification for its commitment to Net Zero.
Ambienta IV is classified as Article 9 under SFDR1, meaning the fund has sustainable investment as its objective.
The United Nations Principles for Responsible Investment has awarded Ambienta their top rating every year since 2017.
Ambienta is committed to diversity and inclusion with 52% of hires in 2021 being female.
Ambienta’s “ESG in Action” programme monitors portfolio company progress against a range of ESG key performance indicators.
The manager is an active member of Institutional Investors Group on Climate Change, a global investor body which focuses on climate change.
Ambienta is a member of the Invest Europe Responsible Investment Roundtable.
Investment approach
Ambienta believes that sustainability is a mega-trend affecting all sectors in their own different ways. Ambienta IV will continue its investment strategy of targeting small- and medium-sized businesses in Europe whose products aid pollution control and resource efficiency in their respective sectors. The businesses will have scalable and profitable business models, growing international end-markets and differentiated market positions.
The manager typically looks for fast-growing businesses that lack the necessary capital, infrastructure or expertise, to sustain the next phase of growth. Ambienta aims to create value at the portfolio company level by focusing on:
- Strengthening the organisation through the implementation of stronger internal structures and processes;
- Identifying strategic and operational levers to enhance margins and long-term growth;
- Using buy & build strategies to consolidate a fragmented market;
- Growing the company’s geographical footprint; and
- Using ESG as a value creation tool.
The development of a dedicated Sustainability & Strategy function, whose role is to understand the ways in which resource efficiency and pollution control shape industries, enables the manager to screen and select the very best investment opportunities. The function, which comprises eight full-time employees, has provided Ambienta with a large bank of knowledge and expertise, and is an integral part of their investment process.
Ambienta’s unique approach to investing in businesses driven by sustainability has demonstrated that top decile financial returns can be combined with a measurable and favourable environmental impact.
Maiden investment from Ambienta IV
Ambienta recently completed its first investment from Ambienta IV into Previero, a designer and manufacturer of plastic recycling solutions. The business is set to play a key role in the transition towards the recycling of plastic; currently just 15% of plastic waste generated worldwide is recycled, due to a lack of infrastructure, while this is expected to need to double to meet corporate commitments and regulations.
Ambienta will support value creation opportunities in Previero through the provision of financial and managerial resources, as well as increased investment in both fixed and human capital.
About the company
OptConnect is a provider of wireless internet connectivity solutions for unattended equipment such as kiosks, smart vending, digital signage and ATMs. It enables a reliable Internet of Things (“IoT”) connection to provide a cost-effective and dependable platform for customers.
Investment rationale
- OptConnect has a resilient business model with predictable recurring revenues, healthy margins and a strong market position.
- The company’s total addressable market is projected to grow at an annual rate of 15% to 2025.
- The growth of the IoT market is likely to result in an increasing number of devices requiring wireless connections to the internet.
- Graham Partners originally invested in the company in 2017 and has focused on growing the business through new product innovation, expansion into new markets as well as the completion of an add-on acquisition.
- The manager has grown the number of installed products from 80,000 in 2017 to over 480,000, representing an annual growth rate of 43%.
Active management and value creation
Graham Partners is a specialist in the technology sector, with a particular focus on industrial technology. The manager sees a number of routes to further value creation including accretive M&A, increased operating leverage and earnings growth.
About the company
valantic is a consultancy and provider of software solutions for digital transformations. The company has over 800 consultants and developers and is represented in Germany, Austria, Switzerland, Belgium, the Netherlands, Portugal and many other international locations.
Eraneos is an international management and technology consulting group providing digitalisation and transformation services, from strategy development through to implementation. The company has 1,000 consultants in four core markets (Switzerland, Germany, the Netherlands and Spain).
Investment rationale
- Deutsche Private Equity (“DPE”) is a top-tier manager operating in Germany, Austria and Switzerland that has a strong track record of supporting and delivering organic growth for its portfolio companies and specialises in executing buy-and-build growth strategies. The manager has consistently generated strong returns over several funds.
- DPE wanted to move the two businesses to a continuation fund so that additional capital could be provided for further accretive add-on acquisitions.
- The growth of the digital transformation services market is expected to provide a strong tailwind for both companies, with an expected compounded annual growth rate of 9% until 2026 taking the total market size to more than €80bn.
- The business benefits from their sticky customer relationships, substantial scale combined with a customer-centric approach and a full end-to-end consulting service that is able to respond to customers’ needs.
- Eraneos has delivered robust performance with consistent above-market organic growth, maintained strong margins and cash conversion over the recent years. In combination with a well-executed growth strategy and successful buy-and-build strategy Eraneos was able to strengthen its positioning with a footprint in four European markets.
Active management and value creation
- Both businesses have grown substantially under the ownership of DPE, with revenues increasing by over 270% for Eraneos since it was acquired in 2017, and more than 240% for valantic since it was acquired in 2019.
- valantic has a track record of completing and integrating add-on acquisitions, with 15 completed under the ownership of DPE, who originally invested in the business in 2019.
- valantic sees routes to further value creation through the launch of new technologies and service offerings. These will enable customers to benefit from a more comprehensive portfolio of products and services, while the business will also focus on developing new customer markets in Scandinavia and Benelux. The company has continued to deliver strong organic growth and has already completed five add-on acquisitions over the past six months.
- Eraneos has also continued to expand through M&A with two recent acquisitions in Germany. In addition, the group is pursuing organic growth opportunities and recently opened a new office in Austria, while enhanced client support and expanding joint consultancy businesses are also expected to drive growth. Eraneos is targeting double-digit growth for 2023 and beyond.