Annual Review 2010

Transcription

Annual Review 2010

Cinven – helping European companies grow worldwide
London
Frankfurt
Paris
Milan
Annual Review 2010
Hong Kong
Business Services
Consumer
Financial Services
Healthcare
Industrials
TMT
Amadeus Coor Spice
Camaïeu Gondola Maxeda
Avolon
Partnership Assurance
Partnerships in Care Phadia Sebia
Spire Healthcare
Ahlsell
Avio Frans Bonhomme
JOST
Numericable/Completel
Ziggo
Cinven in brief
Cinven in brief 01
Chairman’s letter 02
From the Managing Partner 03
Leading European buyouts
06
2010 case studies
08
Sector expertise 12
Our investors 25
Our investments 27
Financing team 64
Governance and committees 66
Corporate responsibility 67
Contacts
73
Cinven is a leading European buyout firm, founded in 1977,
with offices in London, Paris, Frankfurt, Milan and Hong Kong.
We acquire European-based companies that require an
equity investment by our funds of 5100 million or more.
We focus on six sectors: Business Services, Consumer,
Financial Services, Healthcare, Industrials, and
Technology, Media and Telecommunications (TMT).
Cinven acquires high-quality companies and works with them to help them grow and
develop, using our proven value creation strategies. Typically, Cinven holds its investments
for between four and six years. While Europe remains our focus, Cinven’s Portfolio team
helps our European portfolio companies take advantage of international best practices
and growth in global markets, in particular opportunities in emerging economies, including
those of Asia.
We take a responsible approach towards our portfolio companies, their employees,
suppliers and local communities, the environment and society as a whole. Cinven complies
with the UK’s Guidelines for Disclosure and Transparency in Private Equity published by the
Walker Working Group in 2007, and with comparable codes throughout Europe.
Cinven Limited (‘Cinven’) is manager of, and adviser to, the Cinven funds. Cinven Limited is authorised and regulated by the Financial Services
Authority. Cinven is a registered trademark.
Cinven Annual Review 2010
1
Chairman’s letter
We at Cinven have been encouraged
by the global economy’s gradual
recovery.
The macroeconomic outlook
has improved, and concerns about
sovereign debt appear to have
been fully priced in by the financial
markets. At the micro level,
corporate performance is on an
improving track – a trend that
has been reflected within our
own portfolio. So while we do
not underestimate the risks and
remain fully prepared for continued
volatility, we see convincing evidence
that the economy’s recovery will
be sustained.
Since 1988, Cinven has not deviated
from its focus on European companies.
We have maintained our commitment
for the simple reason that we continue
to see unexploited potential across the
continent. Europe faces well-known
challenges, such as its relatively slow
growth and ageing population; but set
against that, it is the world’s largest
economy,* has a population of 500
million and is home to an impressive
spread of world-class companies.
The performance of our portfolio
companies demonstrates that we can
consistently find European companies
that transcend the local economic
environment.
Robin Hall
Chairman
*According to World Bank statistics
2
With a multi-national investment team,
a local presence in many European
countries and deep sector knowledge
at its disposal, Cinven is fully equipped
to help top class European companies
move to the next stage of their
development. We help national and
regional champions look over the
horizon and extend their customerbase, operations and supply-chain
within Europe, into Asia and globally.
We add value to our companies at
the operational level: our focus is
on revenue growth as well as
operational efficiency.
We also know how important it is
to respect and work within Europe’s
value-system. Cinven’s responsible
investment approach is not just a moral
imperative – it helps us to originate
new transactions. It matters to the
management teams we back, and
also to our investors, many of which
are public institutions with responsible
investment policies of their own.
The Cinven way of doing business
centres around long-term relationships
built on trust. We value our reputation.
We believe in acting with integrity,
keeping our promises and being open
about our aims and activities. Cinven
and its portfolio companies comply
with all applicable European
transparency guidelines, making
information available to our
stakeholders through our annual
review and website. We maintain
an active dialogue with our investors,
keeping them fully informed about
market developments, prospective
transactions and the performance
of our companies.
Cinven is known for continuity,
stability and professionalism as well
as performance. We have evolved a
system of governance that has brought
the business safely through a number
of business cycles, and as a new
generation succeeds Cinven’s founding
partners, we are managing the process
carefully to ensure a smooth transition.
From the Managing Partner
Cinven has emerged from
the recession in robust health.
With business confidence returning
and company balance sheets in good
order, Europe’s CEOs are looking
once again to acquisitions and
disposals to boost earnings. We
are benefiting from this recovery:
the strategic insight and tireless
networking of our sector teams is
generating a strong flow of investment
opportunities. Debt finance for
acquisitions is now easier to obtain –
for the right transactions. Cinven’s
Hugh Langmuir
Managing Partner
Our conservative business strategy
and cautious investment approach
have brought us through the
recession in robust health, and we
now have concrete evidence that
an upturn in the private equity
market is under way. During the
last 12 months, we have acquired
three highly attractive businesses –
Avolon, Sebia and Spice – and
saw one of our most successful
investments come to fruition when
Amadeus floated on the Madrid
Stock Exchange.
3
good standing with its relationship
banks and other lenders has meant
that our acquisition financings –
and refinancings – have been well
supported.
Against an improving global macroeconomic backdrop we have shifted
the emphasis in our current portfolio,
from a largely defensive stance, in
which we were seeking mainly to
protect value, to a more growthoriented posture. We are now
actively searching, together with the
management teams of our portfolio
companies, for opportunities to create
value by promoting organic growth or
by making bolt-on acquisitions, where
there is a clear strategic rationale.
A successful year
The fourth Cinven fund – our current
fund – continued to make good
progress over the last 12 months.
Sales and profits increased at most
of the companies in the portfolio,
many of which have also outperformed
their respective markets. For 2010,
organic sales growth of the portfolio in
the fourth Cinven fund was 9.5% and
growth in profits was 11.1%. Given
the improving but still uncertain
economic environment, this is an
excellent result by any measure.
Ahead of the credit crisis, we made
the decision to invest in ‘defensive
growth’ companies – businesses that
are resilient during recessions and
grow during recovery. This has helped
to shield our investors from the effects
of the economic downturn.
With the acquisition in 2010 of Avolon,
the global aircraft leasing company;
Sebia, the protein diagnostics testing
business; and Spice, the outsourced
utility and energy services company,
we have invested 70% of our investors’
commitments to the fourth Cinven fund.
The third Cinven fund was formed
in 2001 and made 17 investments
(counting Numericable and Completel
as one), 11 of which have been
fully realised. The fund continues to
perform well. The highlight of the last
12 months has been the successful
flotation of the travel distribution
services business Amadeus on
the Madrid Stock Exchange, which
realised D1.44 billion for the company
and left Cinven with a holding of 17%
(now 13%, following the D263 million
sale of part of our stake in October
2010). The fund has maintained its
strong performance due to the
successful realisations that were
made before the credit crisis and the
outstanding outcome of Amadeus’ IPO.
continued
The businesses we have bought over
the last 12 months and Amadeus’ IPO
show Cinven at its best. In each case,
we have not waited for opportunities to
come our way but have ‘made our own
luck’. Cinven’s three latest acquisitions
were the outcome of a lengthy process
of sector tracking, strategic analysis
and relationship-building.
4
Our investment in Avolon was
prompted by a strategic opportunity
in aircraft leasing, which was identified
by our Financial Services team and
drew on industry knowledge we had
acquired through our ownership of
Avio and Amadeus.
The acquisition of Sebia resulted
from our long-standing relationship
with the company and its CEO, close
co-operation between our French and
Healthcare teams, and the experience
we gained as the owners of Phadia,
a comparable business that operates
in the allergy diagnostics testing
sub-sector of the medical equipment
market.
Cinven’s investment in Spice was the
outcome of our Business Services
team’s tracking of companies that
serve the UK’s utility markets. Cinven’s
knowledge of other outsourcing
businesses in which the firm has
invested – such as Coor, Gardner
Merchant and Comax – helped the
team to develop its investment strategy.
In the case of Amadeus, the strategic
insight that first led us to the company
in 2002, our strong working partnership
with its management team and more
than D1 billion invested by the
company since the acquisition have
helped to transform the business.
Amadeus made its debut on the Madrid
Stock Exchange against a backdrop
of stock market volatility and the
cancellation of a number of private
equity-backed IPOs. Despite this, the
flotation – the largest in Europe for two
years – was extremely well received.
You can read more about Amadeus
and Cinven’s latest acquisitions on
pages 8-11 of this annual review.
Generating growth
The robust performance of our
business and our funds since the
credit crunch has reinforced our view
that Cinven’s business model is the
right one to take the firm into the next
decade. This model has five main
components:
— our long-term commitment to the
European buyout market, in which
we have been a leader for more
than 30 years;
— our stable, experienced team,
which has the skills needed to
originate high-quality investments
and help European companies to
take advantage of global growth
opportunities;
— our sector organisation, which
generates deeper industry insights
and helps us get to opportunities
before others on attractive
acquisition targets;
— our active ownership approach:
we work in partnership with our
companies’ management teams to
increase revenues and profits; and
— our ability to grow our portfolio
companies’ revenues outside
Europe.
We remain committed to the European
buyout market because we believe
it has enormous potential. Europe’s
GDP exceeded US GDP in 2010;
there were more European than US
companies in the Global Fortune 500
in 2010, and their revenues and profits
grew faster. Yet Europe’s productivity
is consistently lower than that of
the US, and European businesses
derive a lower share of their revenues
from Asia than do US companies
(see adjacent charts).
continued
These statistics indicate the scale
of the opportunity that lies ahead for
Cinven. We help European companies
grow worldwide: our mission is to
generate top quartile performance
for our clients by identifying and
investing in stable, high-quality
companies with unrealised growth
potential. For example, through our
colleagues in Hong Kong, we help
our companies to benefit from
increased sales, lower-cost sourcing
and joint ventures in China. Cinven
has helped many European businesses
to widen their horizons beyond their
home markets and expand into Asia,
Emerging Europe and North America.
You can read more about how we do
this on pages 6-7 of this annual review.
Total GDP (2010)(1)
USD trillion
European Union
US
Europe
11
US
15
Companies in Global Fortune 500
(2010)(3)
Number of companies
Europe
US
(2)
5
14.6
Asian revenues % of total revenues(2)
European vs US exchanges (2010)
(1)
16.1
178
139
Source: IMF World Economic Outlook
Source: DowJones (3) Source: Fortune
A stable, experienced investment team
Cinven’s aim is to ensure that the firm
remains competitive by maintaining
a balance of experience and younger
talent at all times. For us, generational
change is an opportunity, not a risk:
as longer-serving members of our
investment team move on, we promote
those who have proved themselves
and bring new, ambitious recruits into
the business to replace them.
Cinven is a collegial firm: we like
talented people who are at their best
when they are working collaboratively.
It is an approach that has brought an
enviable level of stability and continuity
to our firm. We expect the private
equity industry to remain highly
competitive in future, and we want
to promote individual talent and
entrepreneurial skills as well as
team-working. We have built a culture
of continuous improvement aimed
at ensuring best performance.
All members of our investment team,
at every level, are fully conscious
of their responsibilities to the firm,
our clients and portfolio companies.
They also have every opportunity
to contribute ideas and insights
to our decision-making processes.
Looking ahead
There is good reason to expect the
improving macro-economic trend to
continue, although we do not assume
that it will do so. Cinven will make
acquisitions only when the price is
right and we can see clearly how
we can create value for our investors.
The firm will maintain the cautious
stance that has brought us through
the credit crunch and the recession
without major shocks and with our
reputation strengthened. We will
continue single-mindedly to pursue
our goal of achieving outstanding
returns for our investors.
Cinven buys strong European
companies and makes them more
valuable by accelerating their growth
and development.
Since Cinven started making control
investments in 1988, we have created
value for our investors mainly by
increasing the revenues and profitmargins of the companies we own;
we do not rely on financial
engineering or increases in stock
market multiples to create value for
our investors.
Looking at all realisations for Cinven’s
funds, increased profits (EBITDA) at
our companies were responsible for two
thirds of realised increases in value within
our portfolio. Higher revenues accounted
for just under two thirds of this profit
growth, with the remainder due to
increases in margins (see adjacent chart).
Ivan Kwok, Immo Rupf and Joseph Wan
Portfolio team
The lessons we learn as owners of
market-leading companies are shared
with every business Cinven acquires.
We continue to have a singular focus
on creating value in Europe. There are
two ways to do this:
— to apply international best practices to
our European portfolio businesses; and
— to access growth in emerging
markets in Europe and Asia.
Best practices and capturing growth in
emerging markets are at the heart of
our value creation strategy.
In 2010, we further strengthened
our operational expertise through new
appointments to our Portfolio team:
Immo Rupf joined as a Partner, based
in London, while Ivan Kwok, Principal,
will be based in Hong Kong, working
alongside Joseph Wan, Partner.
6
How the Portfolio team creates value
Cinven follows a systematic approach
to allocate the Portfolio team’s
resources. The firm’s Portfolio Review
Committee (PRC) considers how
best to deploy the team and monitors
progress against agreed objectives.
The Portfolio team is involved in the
100-day review process following an
acquisition and also works across our
current portfolio, wherever the PRC
determines that there is an opportunity
for the team to add value.
Members of the Portfolio team have
an active support role and work
alongside our deal teams and board
representatives. They work together
with our portfolio companies’
management teams in the following
areas:
— revenue growth initiatives:
increasing revenues by helping our
companies establish themselves
in international markets, including
Asian markets;
— operational optimisation initiatives:
increasing efficiency and reducing
costs, thereby boosting profit
margins;
— sharing best practice: cross-portfolio
sourcing initiatives, the sharing
of knowledge around common
commercial practices and
the identification and use of
consultants; and
Creating value through EBITDA growth
The sustainable model for private equity: Revenue growth
66% from
profit growth
10,000
63% from revenues
8,000
Realised investments Funds
1,2 and 3 at 31/12/10 (Dm)
3,522
6,000
4,000
701
1,075
5,299
2,000
0
3,358
3,358
Cinven
equity
Net debt
reduction
and
refinancing
Multiple
arbitrage
EBITDA
growth
Realised
proceeds
BITDA growth
E
from revenue 63%
EBITDA growth
from margin 37%
Note: Includes realised investments in Funds 1, 2 and 3 which have created value. EBITDA
arising from significant acquisitions by portfolio companies has been excluded from “EBITDA
growth” as have piecemeal divestiture strategies.
— new investment opportunities: using
our emerging markets expertise to
create a strategic road map for new
portfolio companies that we can
act on from the outset, helping to
position Cinven as a partner of
choice, and building operational
optimisation into the investment
strategy from the beginning.
continued
Cinven’s unique approach to the Asian
growth opportunity differentiates us
from competitors whose funds invest
directly in Asia. By using our knowledge
and contacts in the region, we can help
our European companies to reap the
benefits of Asia’s development through
strategies such as low-cost sourcing
and new market entry. This has included:
— the formation of two joint ventures
between Avio and two leading
Chinese state-owned businesses
that will give Avio a foothold in China’s
fast-growing aero engine market;
— s ignificant cost savings achieved
for portfolio companies, including
Gondola and Phadia, through Asian
sourcing; and
— initiatives on behalf of a number of
portfolio companies to introduce their
brands and products to the Chinese
marketplace.
See the adjacent case studies for
further information.
7
Low-cost Asian sourcing
Avio gains access to China’s
growing aviation market
Phadia grows its US sales by
23% p.a. (2007-2010)
Cinven’s Portfolio team in Asia has
been responsible for a number of
Asian low-cost sourcing initiatives
on behalf of our European portfolio
companies. The team works very
closely with portfolio sourcing teams,
developing pilots to ascertain the
business case, introducing local
contacts and suppliers, and helping
to develop or streamline local
sourcing organisations.
Avio is a world leader in the design,
manufacture and servicing of
subsystems and components for
commercial and military jet engines
(see page 54 of this annual review
for a profile of Avio). Until the
business was acquired by Cinven in
2006, Avio focused its sales efforts
on the European and US markets.
The Cinven Portfolio team has
been working closely with Avio’s
management team to open up new
markets for the company in China’s
burgeoning aviation sector, which
has benefited from the Chinese
government’s desire to build an
indigenous aviation industry.
With Cinven’s support, Phadia has
significantly increased its market
share in the US. Phadia is the global
leader in in-vitro allergy testing: it
manufactures and sells specialised
blood testing systems and associated
consumables and services (see page
46 of this annual review for a profile
of Phadia). Before we acquired the
business in 2007, Phadia had
achieved strong growth in Europe,
but its progress in the important US
market had been slow.
The Portfolio team has been able
to achieve landed-cost savings of
over 30%. Companies that are
currently benefitting from the team’s
involvement include Gondola, the
UK casual dining operator, and
Phadia, the Swedish allergy
diagnostics testing business.
The work resulted in the formation
of two joint ventures with AVIC
Dongan, AVICOPTER and Xian Aero
Engines in 2010. These joint ventures
will play a critical role in enabling
Avio to access a fast-growing
market with important aero engine
programmes, such as that for China’s
new C919 narrow-bodied airliner;
in addition, it will further its low-cost
manufacturing and sourcing
ambitions.
One of the main components of the
growth strategy agreed by Cinven
and Phadia’s management team was
to increase the company’s US market
share by taking a fresh look at its
local sales operation. The sales force
was strengthened and its efforts
were directed towards doctors –
who ultimately drive the demand for
allergy testing products – instead
of laboratories, which are Phadia’s
direct customers. This strategy has
proved successful, and along with
product innovation, has been
responsible for a 27% increase in
Phadia’s US revenues in the year
to 31 December 2010.
2010 case studies
Investment-led transformation
at Amadeus.
Launched in April 2010 at a price
of F11 per share, the flotation raised
a total of F1.44 billion, returning
F219 million to Cinven funds, despite
a challenging market environment.
A subsequent share sale by Cinven
at F13.50 per share returned a further
F263 million to Cinven and reduced
our stake in the business to 13%.
Following the 2007 refinancing, the
2010 listing and the share sale,
Amadeus has now returned 3.6 times
Cinven’s original investment. Cinven
continues to retain its 13% stake
(58.2 million shares) in the company.
Amadeus is a leading transaction
processor and provider of advanced
technology solutions for the global
travel and tourism industry (see page
28 of this annual review for a full
profile). It has two businesses:
— Distribution, powered by its global
distribution system (GDS), which
provides an international network
for the distribution of travel products
and services; and
— IT Solutions (Altéa), which offers
travel providers (today, mainly airlines)
an extensive range of technology
solutions that automate vital business
processes, such as reservations and
departure control.
www.amadeus.com
Amadeus’ successful IPO on the
Madrid Stock Exchange reflects
the outstanding results it achieved
following its acquisition in 2005.
8
At acquisition, Amadeus also included
Opodo, the leading European online
travel agent. Following a turnaround
resulting from a change of management
implemented by Cinven, a sale of
Opodo was agreed in February 2011
for D449 million.
Before its acquisition by Cinven,
Amadeus was listed on the Frankfurt,
Madrid and Paris stock exchanges
and had three major European airline
shareholders: Lufthansa, Iberia and
Air France. The acquisition of
Amadeus was a result of Cinven’s
Business Services sector team
identifying the unrealised potential
of the company as early as 2002
and beginning conversations with its
management team. We developed a
proposal to take the company private
and presented this to the majority
airlines. As a result, when the airline
shareholders of Amadeus decided
to sell the company in 2005, Cinven
was well positioned with all the
stakeholders. All three airline
shareholders opted to re-invest when
a Cinven-led consortium acquired
the business.
During the five-year period of Cinven’s
ownership, over D1 billion was invested
in product development. This huge
commitment drove the 48% revenue
growth that Amadeus achieved over
the six years between 2004 and
2010. Increased efficiency also helped
to produce an 84% growth in profits
(EBITDA) during the same period.
Ahead of the IPO, Amadeus had
been transformed. By 2009, its GDS
business had increased its market
share by 8% to 37% and connected
over 103,000 travel agencies, upwards
of 720 airlines and more than 85,000
hotels. Altéa, its innovative IT solutions
business, had grown to be the leader
in the airline IT outsourcing market,
increasing its share of Amadeus’
revenues from under 10% to 28%.
Cinven had identified this strategic
opportunity when we first began
discussions with the company in 2002:
many airlines that were dependent on
inefficient and expensive legacy IT
systems have chosen to outsource this
non-core element of their service to Altéa.
Amadeus generates strong cash
flows and has continued to reduce
its debt-to-equity ratio throughout the
economic cycle. When the business
was refinanced in 2007, Cinven rejected
exotic financing techniques in favour of
straightforward senior debt, and did not
exceed the leverage ratio set at the time
of the acquisition. The success of the
IPO was in part due to the company’s
sustainable financing structure.
Amadeus’ strong performance reflects
the transformation that took place
during Cinven’s period of ownership,
with our sector team’s active
involvement. Amadeus has a first class
management team, a strong brand and
exciting prospects.
2010 case studies
continued
Avolon has outperformed during
its first year of operations.
Avolon turns up the heat.
By December 2010, Avolon had
acquired a portfolio of 61 aircraft at
significant discounts to market value,
helping to lock in future returns. These
new-generation aircraft – such as the
Airbus A320-200 and Boeing 737-800
Avolon is a global aircraft leasing
– are the most in demand in the resilient
business, headquartered in Dublin and short-haul and economy markets.
with offices in New York, Hong Kong
Looking ahead, Avolon has a healthy
and Shanghai. Cinven took a controlling pipeline of future buying opportunities.
interest in the company in May 2010,
together with two partners. You will find Avolon has recruited a full complement
of skilled personnel, reinforcing its
a full profile of Avolon on page 40 of
technical, finance, treasury, capital
this annual review.
markets and risk management teams.
Since May 2010, Avolon’s
With Cinven’s help, it has also
management team has moved quickly
developed the systems, processes
to take advantage of increased demand and infrastructure needed to manage
for lease finance from airlines. There
a portfolio of 100-plus aircraft efficiently.
has been a rebound in the global airline
The business has shown that it can
industry following the cyclical lows in
access fresh debt financing in line with
2008 and 2009: passenger numbers
its growth: since its initial US$1.4 billion
and cargo traffic are up, especially in
capital-raising exercise in May 2010,
Asia and the Middle East, driving
Avolon has raised a further US$300
demand for new, narrow-bodied fuelmillion in term loans. Cinven’s Financing
efficient aircraft that offer the airlines
team were instrumental in securing the
flexibility and help to keep their costs
capital, and expect the debt financing
under control.
environment to continue to improve,
Although airlines’ finances are
giving Avolon the opportunity to further
recovering, they remain capitalreduce its cost of funds.
constrained and often prefer leasing
to outright ownership because it
offers a low-cash upfront payment
www.avolon.aero
The aircraft leasing company’s
management team has brought
the business rapidly up to speed,
strengthening the existing team,
building an efficient operational
infrastructure and acquiring a
portfolio of new, fuel-efficient
aircraft on attractive terms.
and improved flexibility. Around 40%
of new commercial aircraft coming
into service are now leased, creating
a market that is expected to be worth
US$450 billion over the next five years.
9
Encouraged by the rapid progress
Avolon has made and the continuing
market opportunity, Cinven and its
partners have committed a further
US$250 million in equity, in addition to
the US$750 million equity investment
made in May 2010.
Cinven’s initial investment was the
result of 18 months of evaluation and
analysis by its Financial Services sector
team, which drew on the knowledge the
firm has built up in the aviation sector
through its investments in Amadeus, the
airline transaction processing business,
and Avio, the aerospace engine
manufacturer. The transaction could not
have taken place without the assistance
of Cinven’s Financing team, which was
responsible for structuring Avolon’s
initial US$1 billion-plus debt package.
The Financial Services team’s
investment strategy stemmed from the
insight that a structural dislocation had
occurred in the aircraft leasing market,
driven by the difficulties facing the
financing markets and the parent
companies of three of the world’s five
largest aircraft lessors. With long-term
market fundamentals remaining intact,
there was an opportunity to create a
leading aircraft lessor, acquire assets
at attractive valuations and benefit from
the increased demand that would result
from an economic recovery. Avolon has
taken full advantage of this strategic
opportunity, validating the investment
thesis and achieving its targets ahead
of plan.
2010 case studies
continued
Sebia’s drive for global growth.
Since it was acquired by Cinven in
June 2010, Sebia has continued to
grow in all its major markets and is
making excellent progress with its
strategy of geographical expansion
and product innovation. For the 12
months to 31 December, Sebia’s
revenues increased by 9% to
J130 million, ahead of expectations.
The acquisition followed years of
preparatory work: Cinven’s Healthcare
and French teams had been monitoring
Sebia closely since 2002 and had
built a strong relationship with its
management team. Cinven submitted a
pre-emptive offer to the sellers following
a period of privileged access to the
company. As the owner of Phadia,
the leading allergy and autoimmunity
diagnostics business, Cinven was able
to draw on its knowledge of the highvalue in-vitro diagnostics industry.
Sebia is the worldwide leader in
clinical electrophoresis equipment and
reagents (see page 48 of this annual
review for a full profile). Its systems
analyse protein markers that signal
the presence of various diseases and
conditions, primarily myeloma, a form
of blood cancer that typically affects
people who are over 50 years old.
www.sebia.com
Sebia sells diagnostic machines and
reagents to testing laboratories and has
an unmatched installed base of around
10,300 instruments worldwide. Only
Sebia’s reagent consumables can be
10
used in these machines, and sales of
reagents account for around 77% of
its sales. Sebia’s installed base and
the underlying growth in the healthcare
marketplace – driven by economic
development and ageing populations –
provide a secure foundation for its
future.
Innovation is an important driver of
Sebia’s growth. Only Sebia supplies
capillary diagnostic technology –
higher-value, automated systems that
reduce the need for intervention by
lab technicians and provide faster test
results. This ‘gold standard’ technology
has allowed the company to gain
significant market share, notably in
countries where Sebia faced significant
competition such as Germany and
the US.
Importantly, Sebia is gaining market
share in markets such as India, China
and South America, where rising
incomes are generating increased
demand for healthcare services.
Sebia’s revenues are currently growing
at over 35% in all of the major emerging
markets it has entered. Sebia is
developing its distribution network in
these countries – one of the keys to
success in emerging markets. In China,
for example, Cinven’s Portfolio team is
working on an initiative to help the
company increase its penetration of
local markets.
Sebia’s superior technology and its
installed base have helped to protect
the company’s revenues during the
economic downturn in regions such
as Europe and the US, where falling
incomes and constraints on state
Sebia has a strong pipeline of new
spending have affected the entire
detection tests for protein ‘markers’.
healthcare industry. In fact, 2010
Among these are tests for the proteins
proved to be a record year for new
Hb and HbA1c, which test for the blood installations: Sebia’s installed base
disease thalassaemia and diabetes
increased by 13%, further securing
respectively. Testing for Hb was
its future revenue stream.
introduced in 2010 and has already
proved a great success, with Sebia
Sebia’s first class management team,
having already taken around 10% of
led by Benoît Adelus, former CEO of
the multinational diagnostics company
the market. Testing for diabetes will
BioMérieux, met its objectives on all
be introduced in 2011 and represents
fronts in 2010. The company’s strong
a major opportunity for Sebia: type 2
market position, emerging market
diabetes, which is associated with
unhealthy lifestyles, is a growing health growth and new product pipeline look
problem worldwide. Entering the HbA1c set to underpin its growth prospects in
market would enable Sebia to increase the years ahead.
its addressable market by over 50%.
2010 case studies
continued
Re-energising the core
business at Spice.
In December 2010, Cinven acquired
Spice plc, a provider of outsourced
infrastructure support services in
the fields of utility and energy that
operates mainly in the UK.
Completed on acceptance of a public
offer for this London Stock Exchange
listed company, it was one of three
transactions originated by Cinven in
2010 that did not involve an auction.
Founded in 1996, Spice grew
organically and through acquisition
into a group of utility and energy-related
businesses with more than £300
million of revenues (see page 32 of
this annual review for a full profile).
The business has four main divisions:
— electricity infrastructure: providing
engineering, design, and consultancy
services to distribution networks and
the private sector;
— water network infrastructure:
providing installation, maintenance
and specialist consultancy services;
— energy efficiency consultancy and
procurement services; and
— billing services, which focuses on
imbalance analysis and recovery
for the utility industry.
www.spiceltd.co.uk
Spice’s leading market positions are
underpinned by strong environmental
and regulatory drivers. The UK’s ageing
energy and water infrastructure requires
considerable investment – as mandated
by the regulators, Ofgem and Ofwat –
11
creating continuing demand for
the company’s services from network
operators. Managing energy efficiency
and costs is another important theme
for the company’s energy procurement
customers.
It was these macro-economic features
that first attracted the attention of
Cinven’s Business Services team.
The team had been monitoring a
number of companies that serve the
utilities markets for some time, when a
profits warning led to a steep decline in
Spice’s share price. Problems at one of
its smaller businesses (which has since
been sold) led to the profits warning
and were followed by the departure of
the company’s Chief Executive. Having
traded as high as 90p ahead of these
developments, within a few months the
shares contracted to roughly a third of
their previous value. The Cinven team
saw in Spice a fundamentally sound
business operating in an attractive
market and seized this opportunity
to make a full offer for the business.
The bid succeeded at 70p per share,
providing a premium for the company’s
public market shareholders and an
opportunity to create value in the
longer-term for Cinven’s investors.
Cinven’s strategy is to re-energise
the business’s four core divisions,
de-layering the reporting structures
and placing more power in the hands
of up-and-coming managers from the
divisions. Spice will also be looking
to make bolt-on acquisitions and to
develop its nascent US billings
business.
One of Cinven’s first moves was to
secure the services of David Owens
to work with Cinven on preparing a
business plan and then to become
CEO. David has significant expertise
across the competitive and regulated
utility and energy sectors; most recently,
he was Chief Executive of Thames
Water. An equally experienced
Chairman, Sir Roy Gardner, joined the
company shortly afterwards. Sir Roy
is Chairman of Compass Group PLC
and was formerly Chief Executive of
Centrica plc.
The Spice investment bears all the
hallmarks of Cinven’s preferred
approach. This proprietary, primary
market opportunity resulted from a
lengthy tracking process initiated by
the Business Services team and drew
on the knowledge the firm has built up
as owners of outsourcing businesses
such as Coor, Comax and Gardner
Merchant. Debt facilities accounted for
less than half the purchase price and
were provided to a significant extent
by Spice’s relationship banks, whose
support the Cinven team had been
careful to win. Most importantly, value
will be created by making operational
improvements to the business, working
in partnership with a strengthened
management team.
Sector expertise
We continually review and analyse
our chosen sectors, building our
understanding of market trends and
new business models, seeking out
investment opportunities and getting
to know successful business leaders.
Business Services
Amadeus Coor Spice
Consumer
28
30
32
12
34
36
38
Financial Services
Healthcare
Avolon
40
Partnership Assurance 42
Spire Healthcare
Industrials
44
46
48
50
Ahlsell
Avio Frans Bonhomme
JOST
TMT
52
54
56
58
Numericable/Completel 60
Ziggo
62
Sector expertise
continued
Business Services
Cinven has a lengthy track record in
the business services sector, reaching
back to the firm’s early days.
Selected investments
Spain (global operations)
Amadeus
Global travel transaction processor
and provider of advanced technology
solutions
UK
Comax
Facilities management
Nordic region
Coor
Integrated facilities management
UK (global operations)
Gardner Merchant
Contract catering
13
UK
NCP
Parking and traffic management
services
UK
Spice
Utility and energy outsourcing
Sector expertise
continued
Business Services
The business services sector is
diverse and includes many different
market segments and business
models. Overall, conditions in the
sector remain challenging. The
fortunes of companies that operate
in the business services sector are
necessarily linked to the industries
they serve, and as a result
performance has varied widely.
Many companies have been sustained
during the recession by the longterm trend towards outsourcing.
Longer-term, Europe’s gradual
recovery from recession has improved
prospects, and economic projections
for the business services sector are
consistently positive, particularly where
services are geared towards the
private rather than the public sector.
Bruno Schick and Nicolas Paulmier
Business Services sector professionals
14
Cinven has owned businesses that
operate in many sub-sectors, including
facilities management, building
products distribution, contract
catering, transportation, plant hire, IT
services, oilfield services, car auctions
and technical management services.
Our current portfolio includes
Amadeus, the global travel distribution
services company; Coor, the Nordic
integrated facilities management
business; and Spice, the UK-based
utility and energy outsourcing
company.
For the Business Services team, one
of the highlights of 2010 was the April
flotation of Amadeus on the Madrid
Stock Exchange (see the case study
of Amadeus on page 8 of this annual
review). The team provided the strategic
insight that first led us to Amadeus in
2002 and has worked closely with the
company’s management to grow and
develop the business. Against a
difficult market backdrop, Amadeus’
IPO was very well received. Following
a subsequent share sale by Cinven,
we retain a 13% stake in the business,
which continues to perform strongly.
Another important 2010 event for
the Business Services team was the
acquisition of Spice plc, a UK-based
provider of outsourced infrastructure
support services in the fields of utility
and energy (see the case study on
page 11 of this annual review). This
transaction was completed through
the acquisition of a London Stock
Exchange listed company. Cinven’s
strategy is to re-energise its four core
divisions and improve the overall
performance of the group. Spice
will also be looking to make bolt-on
acquisitions and to develop its US
billings business.
Cinven helps high-quality, ambitious
businesses to expand outside their
home country markets within Europe
and to tap into Asia’s growth. Working
alongside management teams, we
provide capital, ideas, knowledge
and contacts to help them grow and
develop their businesses. We are
flexible and have shown our
willingness and ability to work
alongside corporate partners.
The Business Services team stays
closely in touch with senior executives
across the region and is confident that
prospects in the sector will continue
to improve. Against the background of
Europe’s gradual economic recovery,
the team is actively pursuing many
promising investment opportunities.
Sector expertise
continued
Consumer
Cinven has been an active investor
across the spectrum of consumer
facing and consumer product markets
for over 25 years.
France, Poland, Italy, Russia
Camaïeu
Clothing retailer
Germany
CBR
Ladies’ fashion wholesaler
UK, Benelux, Germany,
Asia, Australia
Fitness First
Health and fitness clubs
UK
Gondola
Casual dining operator
Benelux region
Maxeda
Non-food retailer
UK
Odeon
Cinemas
15
Sector expertise
continued
Cinven has a long and successful
history of involvement in all of
the main consumer sub-sectors.
In retail, we have invested in the
clothing, department store, DIY,
home furnishing and toy segments.
In leisure, we made acquisitions
in gaming, health and fitness, pubs,
cinemas, travel and restaurants.
In consumer goods, Cinven has
owned food manufacturing and
distribution, household goods,
electrical goods, beverages,
textiles and clothing businesses.
Consumer
Our current portfolio includes the
French women’s clothing retailer
Camaïeu; the UK casual dining
operator Gondola (owners of
PizzaExpress among other brands);
and Maxeda, the Benelux-based nonfood retailer.
Guy Davison, Rebecca Gibson and Xavier Geismar
Consumer sector professionals
16
During 2010 Maxeda carried out a
strategic review of its Fashion Group,
which comprised V&D, La Place,
de Bijenkorf, Hunkemöller and M&S
Mode, all of which made substantial
progress in Cinven’s ownership. The
company decided to position each
business for the future with new
strategic partners, and as a result,
all have been acquired by owners that
can help them take the next step in
their evolution. Maxeda will continue
to support and invest in its DIY Group,
making Brico, Brico Plan-It, Formido
and Praxis more successful and
positioning Maxeda DIY as a modern,
integrated and market-leading Benelux
business.
Cinven’s Consumer team operates
from all four of our European offices
and maintains a wide circle of
relationships with senior executives
and advisors in the sector. The team
is supported by colleagues from
Cinven’s Hong Kong office, who
use their regional network and local
knowledge to help our consumer
companies enter new markets,
reduce costs and improve operations.
Cinven’s most successful consumer
investments tend to share certain
characteristics, which we look for
when we are considering any new
investment opportunity. We are
particularly interested in companies
that outperform in growing markets
and show resilience in recessionary
conditions.
The businesses Cinven backs are
usually differentiated market-leaders
with strong brands, active in markets
that are supported by long-term
consumer trends. We like ‘high
volume, low ticket’ businesses with
multi-site operations and a broad
geographical presence. We are
attracted by companies that combine
‘bricks and mortar’ operations and
online distribution. Every business
we invest in must show potential for
growth – either growth in its current
markets (like-for-like growth and new
store roll-out), or by expanding into
new geographical markets, or through
market consolidation.
Investment prospects are good.
We continue to examine businesses
that do well in recessionary times,
such as online retailers, food retailers,
manufacturers of essential household
and personal care products, and
retailers with a ‘value for money’
offer. As economic growth picks up,
consumer businesses that benefit from
an economic upturn are also beginning
to look attractive. Over the next 12
months, we expect the continuing
economic recovery in Europe to
generate a flow of exciting investment
opportunities.
Sector expertise
continued
Financial Services
The financial services sector has
entered a period of accelerated
change, creating attractive investment
opportunities.
Ireland (global operations)
Avolon
Aircraft leasing
UK
Holmwoods
Insurance broking
UK
Provider of retirement solutions
UK
Sabre
Speciality motor insurance
17
Sector expertise
continued
Financial Services
Caspar Berendsen and Peter Catterall
Financial Services sector professionals
18
In the post-credit crisis era, financial
institutions are re-shaping their
strategies and business models,
sometimes radically. Businesses
are being spun out as major
corporate and financial institutions
reconsider their operations, often
under pressure from regulators, and
opportunities for new businesses
are emerging as established ones
pull back. At Cinven, we expect this
phase to continue. Our Financial
Services team is actively seeking
opportunities to invest in
businesses with growth potential
and attractive market positions.
Cinven invests in both the regulated
and non-regulated segments of the
financial services sector. We apply
Cinven’s traditional investment
approach of identifying market-leaders
in attractive growth markets. Often,
we work with corporate institutions,
industry advisers and former
executives who help us to develop
and execute investment strategies.
We invest in market-leaders operating
in attractive markets, with cashgenerative business models and
strong management teams. We focus
on growth businesses as well as ‘yield
plays’, and are open to acquisitions
that involve low debt-to-equity ratios.
Our current portfolio includes
Partnership Assurance, the UK’s
leading provider of specialised annuity
products for people with medical
conditions; and Avolon, the global
aircraft leasing business. Partnership
Assurance has continued to perform
strongly and has gained momentum
since Cinven acquired the business in
2008. Our 2010 investment in Avolon
was another landmark investment for
the Financial Services team, which
developed the strategic insight that
led to the origination of the transaction
(see the case study of Avolon on page
9 of this annual review).
Cinven believes that there will be
continued opportunity for private
equity investment in the coming years
of transition in the financial services
industry, which has witnessed:
— the sale of non-core assets by
financial institutions that need
to bolster their balance sheets;
— de-mergers enforced by regulators
as a condition of their continuing
support;
— mergers as businesses seek the
‘critical mass’ they need in order
to attract capital;
— changes in behaviour by consumers,
as they react to low rates of return,
repay loans instead of saving, and
become more risk-averse;
— disposals spurred by financial
services companies’ more selective
approach to globalisation; and
— the prospect of an end to government
support for the banking industry,
at some point in the future, as yet
unknown.
These trends are still playing out and
our Financial Services team expects
the industry to remain in flux for some
years. We are tracking a number of
sub-sectors closely and confidently
expect investment opportunities to
emerge in the short- and medium-term.
Sector expertise
continued
Healthcare
Cinven is one of the most prominent
private equity firms in healthcare,
having completed nine investments
in six different countries totalling
57.4 billion.
UK
General Healthcare
Hospital operator
France
Générale de Santé
Hospital operator
UK
Partnerships in Care
Psychiatric care homes
Sweden (global operations)
Phadia
In-vitro diagnostics – Allergy testing
France (global operations)
Sebia
In-vitro diagnostics – Protein testing
UK
Spire Healthcare
Hospital operator
19
Sector expertise
continued
Cinven’s Healthcare team has
expertise across the entire
sector, encompassing healthcare
services, medical technology and
pharmaceuticals, and has been a
driving force within the industry in
areas such as the consolidation
of the UK private hospital market
and the development of the niche
in-vitro diagnostic market.
Healthcare
Cinven’s current healthcare portfolio
includes Sebia, a protein diagnostics
testing business; Spire Healthcare,
a leading UK-based hospital group;
Partnerships in Care, a UK psychiatric
care home operator; and Phadia,
the market-leader in allergy and
autoimmunity diagnostics. In addition,
we have previously invested in medical
services, medical technology and
pharmaceuticals, in many European
jurisdictions.
Stuart McAlpine, Pascal Heberling and Simon Rowlands
Healthcare sector professionals
20
Cinven acquired Sebia in June 2010.
The business has made considerable
progress, continuing to grow in all its
major markets since the acquisition as
it pursues its strategy of geographical
expansion and product innovation
(see case study on page 10 of this
annual review).
An underlying theme across our
healthcare portfolio is revenue growth
driven by Cinven’s investment in the
businesses, including investment in
the salesforce, R&D, expansion capital
expenditure and in acquisitions.
Healthcare benefits from strong
demographic drivers: ageing
populations increase the demand
for healthcare. In addition, medical
science is advancing, leading to new
technologies and treatments which
drive up the cost of healthcare. In a
period when government budgets are
under pressure, identifying the right
areas to invest in is critical to success
in this sector.
Cinven targets businesses which
benefit from demographic change,
both in developed and emerging
markets, and which operate in areas
that have favourable reimbursement
dynamics that insulate them against
the general pressure on healthcare
costs. Areas where we see particular
opportunity today include:
— medical technology businesses
active in niche markets that have
potential to grow through global
expansion and are insulated from
general reimbursement pressures;
— companies with resilient payors
(e.g. medical insurers and those
governments with stronger balance
sheets), making them less vulnerable
to consumer downturns;
— companies that can help reduce the
cost of public healthcare provision,
either through early identification of
disease (e.g. diagnostics) or through
improving the cost-effectiveness of
provision (e.g. outsourcing); and
— businesses that can benefit from
the significant shifts occurring in the
large pharmaceutical sector, which is
undergoing significant consolidation.
Through the experience we have
from our long investment history and
the strong network of relationships
developed over that time, we are often
able to identify proprietary angles on
investment opportunities. In addition,
our Asian office has a proven record
in helping European healthcare
companies within the Cinven portfolio
to tackle the challenge of emerging
market growth. This capability makes
us a value-adding shareholder, which
is especially appealing where
management teams want a partner
who can contribute operational
expertise as well as capital.
Sector expertise
continued
Industrials
Cinven has been active in the
industrials sector for more than
30 years and has undertaken
over 100 transactions.
Nordic region
Ahlsell
Building materials distribution
Italy (global operations)
Avio
Aerospace engine component
manufacturer
UK and international
Foseco
Industrial consumables
France, Spain
Frans Bonhomme
Plastic pipe distributor
Germany
JOST
Truck component manufacturer
21
Sector expertise
continued
Cinven has invested in all of the
main industrials sub-sectors:
— building materials and
construction, from the light to
the heavy end of the building
materials product range;
— energy and natural resources,
including metals and mining, oil
and gas, utilities and renewables,
and chemicals; and
— engineering and manufacturing,
including industrial machinery,
power and infrastructure
equipment, and supply to
the transport, aerospace
and defence end-markets.
Industrials
Roberto Italia and Benoît Valentin
Industrials sector professionals
Our Industrials team has extensive
knowledge and experience in the
sector and its global network of
company executives and industry
participants helps Cinven to originate
proprietary transactions. Cinven’s
current portfolio includes Avio, the
aerospace engine component
manufacturer, and JOST, the
manufacturer of components
for trucks and trailers.
Cinven’s long experience as investors
in industrial businesses enables us
to develop early insights into market
trends and developments, allowing
us to identify businesses that will
do well at different points in the
business cycle.
22
Cinven usually invests in businesses
that display the following characteristics:
— defensive market leadership
with high barriers to entry;
— strong and relevant technology;
— a supply chain that supports longterm, partnership-type relationships;
— customers in dynamic end-markets,
with opportunities to promote
superior organic growth and/or
sector consolidation; and
— profitable, sustainable growth with
an appropriate return on capital.
Although the economic downturn has
eased and prospects are gradually
improving, most of Europe’s industrial
companies still face major challenges
and the picture varies widely by region
and market segment.
With lower cost competition from
Eastern Europe and Asia, European
industrial companies need to address
continuously the competitiveness of
their products and core technologies.
The strong investment cycle in
emerging economies is driving a
significant portion of incremental
demand for industrial goods and local
competition is emerging there, too.
Close interaction with Cinven’s
Portfolio team helps industrial
companies in our portfolio to pursue
sustainable value creation strategies,
through initiatives to reduce costs,
penetrate new markets and improve
operations. For example, our Industrials
and Portfolio teams have been working
with the Avio team over the last two
years to open up new markets for the
company. Two joint ventures have
been established with AVIC Dongan,
AVICOPTER and Xian Aero Engines,
with the aim to gain access to promising
opportunities in the Chinese aerospace
market and to establish a high-quality
manufacturing base in the region.
A number of industrial sub-sectors
are benefiting from a general cyclical
recovery, which is currently led mainly
by restocking effects, together with
growing demand from emerging
economies. Cinven’s Industrials team
is actively investigating opportunities
in sub-sectors which will benefit from
such a recovery and will also offer
structural growth opportunities.
A key area of focus for the team
are technologies that facilitate more
efficient utilisation of natural resources,
systems and components, in line with
advanced European standards, in
areas such as transportation and
security. These technologies offer
an opportunity for superior growth in
developed and emerging economies.
Leading European industrial companies
that have mastered these technologies
and can package solutions and
products effectively are an important
target for Cinven’s Industrials team.
Sector expertise
continued
TMT
With a track record of over 20
years in the sector, Cinven has
been responsible for landmark
TMT transactions.
France
Aprovia
B2B magazines and exhibitions
France, US
MediMedia
Healthcare publisher
France, Belgium, Luxembourg
Cable operator
Netherlands, Germany, US
Springer
Academic publishing
Netherlands
Ziggo
Cable operator
23
Sector expertise
continued
Cinven has invested in consumer
publishing, B2B media, academic
publishing, directories and cable
and satellite businesses. Our
portfolio includes Numericable/
Completel, the only major cable
operator in France, which Cinven
created through a three-way
merger; and Ziggo, the Netherlands’
largest cable operator, which was
also created via a three-way merger
led by Cinven.
TMT
In April and October 2009, Cinven’s
TMT and Financing teams helped
Ziggo to refinance F2 billion of its
senior and mezzanine debt, cutting
its cost of capital and lengthening the
maturity of its debt. The F1.2 billion
tranche launched in April 2009 was
the largest of its kind by a first-time
issuer in Europe since 2007 and was
named European High Yield Bond
of the Year in 2010 by International
Financing Review.
David Barker and Brian Linden
TMT sector professionals
24
Technological progress and the effects
of the economic downturn continue
to drive change in the TMT sector.
Consumer behaviour in the telecoms
and media sub-sectors is shifting as
telephony, television and the internet
converge, with new devices driving
the change. Patterns of demand
are changing and audiences are
fragmenting, posing a major challenge
for businesses whose revenues
depend heavily on advertising.
In addition, the long-term shift from
printed media to online channels
continues to alter many media
business-models. During the
downturn, most telecoms and cable
businesses have done well, but in
the media sub-sector, the downturn
in advertising has affected many
companies.
TMT acquisition activity has slowed
in recent years, but prospects are
improving, led by economic recovery
and the re-opening of debt markets.
Activity is increasing across all areas
of TMT, with interesting opportunities
emerging in sub-sectors of telecoms,
media and technology.
Our TMT sector team closely tracks
the continuously-changing TMT
landscape. We are in regular contact
with senior TMT entrepreneurs
throughout Europe and are constantly
looking at opportunities to acquire
robust, stable, growing, cashgenerative TMT businesses.
Our investors
Pension funds and insurance
companies with a long-term
perspective invest in Cinven’s funds.
Cinven is currently investing its
fourth fund, which totals J6.5 billion.
More than 150 investors based in
23 countries participated in the fund
as limited partners. Around half of
them (by value) are based in Europe;
another 40% are based in North
America. The balance are based
in Asia and the Middle East.
Our investor base is diverse and
consists of long-term investors in the
asset class, such as large corporate
pension funds, public pension funds
and life insurance companies (see case
studies on page 26). We never forget
that the returns on Cinven’s funds help
to finance pensions and insurance
policies when they are paid out. With
this in mind, we strive to achieve the
best long-term risk-adjusted returns
for our investors.
Alex Hess and Andrew Joy
Investor Relations
25
The work of Cinven’s IR team
Cinven’s six-person Investor Relations
(IR) team manages the flow of
information to our investors (known
as limited partners) through detailed
regular reporting, presentations,
conference calls and emails. The team
– which was further strengthened
during 2010 through the recruitment of
a Principal and an Associate – provides
information about Cinven and our
companies, responds to requests for
information and hosts events based
on our companies’ financial reporting
calendars. Limited partners are alerted
whenever Cinven makes an acquisition
or realises an investment, and are
briefed on important developments
across the portfolio.
Cinven’s secure ‘extranet’ provides
limited partners with 24-hour online
access to portfolio company reports,
presentations, recorded conference
calls and other material. It is
continuously updated and
complements in-person meetings
and other forms of communication.
Cinven’s Portfolio Review Committee
and accounts team work with the IR
team to finalise the valuation of our
investments.
We present our portfolio companies’
annual results at an annual meeting
that takes place in London in March.
We visit major investors in their home
countries once a year. An Advisory
Committee of investors, representing
all of our limited partners, meets twice
a year, once in London and once in
another European city. Other regional
meetings occur throughout the year,
bringing groups of investors together.
Investors commend Cinven’s IR team
During 2010, the IR team commissioned
a major research study to solicit
investors’ feedback on Cinven broadly,
and specifically to target areas where
the team could improve its interaction
with investors. Carried out by an
experienced independent research
organisation, the study involved
interviews with a cross-section of
current and potential Cinven investors.
Cinven’s investor relations function was
highly commended. As a result of the
feedback received, the IR team has
further improved Cinven’s reporting
to investors. This new format was
implemented for the year-end reporting
in 2010.
Current investors by geography
(by number)
Current investors by type*
(by amount invested)
4
1
1
5
3
4
2
1 North America 42%
2 Continental Europe 32%
3 Rest of World 14%
4 UK 12%
3
1 Public pension 39%
2 Insurance 16%
3 Corporate pension 15%
4 Bank 13%
5 Endowments and other 17%
* This chart includes investors through fund
of funds vehicles
2
Our investors
continued
SL Capital Partners
SL Capital Partners is the specialist
Private Equity subsidiary undertaking
of Standard Life, offering private
equity investment through fund of
funds limited partnerships, bespoke
arrangements and retail products.
It is a long-standing investor in
Cinven’s funds.
SL Capital Partners’ clients range
from leading institutional investors
in the UK, US, Canada and Europe,
to family offices and high net worth
individuals globally. SL Capital
Partners has raised a total of
approximately F6.2 billion in private
equity assets from clients from 24
different countries. Standard Life has
been investing in the European private
equity market for over 20 years.
26
Standard Life is a leading long-term
savings and investments company
headquartered in Edinburgh and
operating internationally. Established
in 1825, Standard Life provides life
assurance, pensions and investment
management products to over
6.5 million customers worldwide.
The Group has around 10,000
employees across the UK, Canada,
Ireland, Germany, Austria, India,
US, Hong Kong and mainland China.
As at 30 June 2010, it had total assets
under management of F174.7 billion.
Standard Life’s approach to corporate
responsibility includes investing its
customers’ money responsibly. The
Group believes that acting responsibly
and with integrity in all aspects of its
business will help to maintain its
reputation, strengthen its brand, attract
and retain the best people, and meet
wider society’s expectations for good
corporate behaviour.
CPP Investment Board
The CPP Investment Board (CPPIB) is
a professional investment management
organisation based in Toronto, Canada,
with offices in Hong Kong and London.
Its purpose is to invest the assets of
the C$138.6 billion Canada Pension
Plan (CPP), Canada’s national pension
plan. CPPIB operates independently of
the CPP, and at arm’s length from the
federal and provincial governments
that are jointly responsible for the CPP.
In order to build a diversified portfolio
of CPP assets, CPPIB invests in public
equities, private equities, real estate,
inflation-linked bonds, infrastructure
and fixed income instruments.
Private equity funds represent
the core of CPPIB’s private equity
portfolio. Approximately $33 billion
has been committed to private equity
funds since CPPIB entered this market
in 2001. CPPIB is also an active
participant as a buyer in the secondary
market, having invested approximately
$3.6 billion in this market. CPPIB is an
investor in the fourth Cinven fund.
As a long-term investor and owner,
CPPIB believes that responsible
behaviour with respect to environmental,
social and governance factors can
generally have a positive influence
on corporate financial performance.
Our investments
Cinven has well-defined investment criteria
that capitalise on our proven value creation
strategies and the knowledge of our sector
teams. We invest in high-quality companies
that have the benefits of scale, product
and price leadership and where we see
the potential to accelerate growth.
Business Services
Amadeus Coor Spice
Consumer
28
30
32
27
34
36
38
Financial Services
Healthcare
Avolon
40
Partnership Assurance 42
Spire Healthcare
Industrials
44
46
48
50
Ahlsell
Avio Frans Bonhomme
JOST
TMT
52
54
56
58
Numericable/Completel 60
Ziggo
62
Our investments
continued
Business Services
Amadeus
Company description
Cinven origination
www.amadeus.com
Amadeus was established by four
airlines in 1987 and has become
the largest global distribution
system (GDS) in the travel industry,
connecting travel providers (i.e. airlines
and hotels) with travel agents and
customers. Its Altéa unit provides IT
solutions that optimise airline business
processes, including a reservation
and sales platform; e-commerce
capabilities for airline websites;
revenue management technology; and,
since 2009, departure control systems
that ensure efficient, safe and timely
flight departures. At December 2010,
it also owned Opodo, the online
travel agent, for which a sale has been
agreed at a price of D449 million,
subject to competition clearance.
Cinven first identified Amadeus as an
attractive investment opportunity in
2002 following a review of the growing
airline services market by the Business
Services team, which was aware that
airlines may need to divest assets after
the 9/11 attacks. Although the company
was listed, it was controlled by three
of its four original airline founders,
who wished to remain involved but
also wanted to realise value from their
investment. Starting in 2002, Cinven
developed a close relationship with the
Amadeus management team and also
met with the airlines to discuss the sale
of their equity stakes. Cinven made an
offer to the airlines that was being
progressed until Air France and KLM
decided to merge.
Activity
Location Acquired Transaction value
Sales* Employees Cinven representatives Senior management
Global travel transaction processor
and provider of advanced technology solutions
Spain (global operations)
June 2005
D4,391 million
D2,683.3 million
Approximately 8,500
Stuart McAlpine, Benoît Valentin
Chairman José Antonio Tazón
CEO Luis Maroto
CFO Ana de Pro
*to end December 2010 (audited)
28
In mid-2004, the airlines conducted
a limited auction; as management’s
preferred partner, Cinven was invited
to participate. At the point of being
awarded exclusivity in early 2005,
Cinven teamed up with another private
equity company on the transaction.
Cinven’s relationship with management
and the founder airlines, as well as its
demonstrated commitment to the
business, were key factors in its
selection. After the transaction, Cinven
and the other private equity company
together held 53% of the company’s
institutional equity, with the airlines
(who reinvested a significant share of
their proceeds from the sale) holding
the balance.
Our investments
continued
Business Services
Investment rationale and strategy
Amadeus was identified by Cinven not
just as an opportunity to capture longterm growth in the global air travel
industry but also as a beneficiary of
the shift towards higher-value global
bookings. Amadeus was viewed as
having a competitive advantage
compared to its peers, partly through
its proprietary technology, but also
due to its focus on faster-growing,
non-US markets. Finally, there was
an opportunity to further accelerate
Amadeus’ strong performance through
the Altéa IT outsourcing business,
where Cinven saw the potential to
attract more airlines to this long-term
source of growth.
Cinven’s strategy for Amadeus
involved the following:
— working with the management team
to capitalise on attractive industry
fundamentals;
— extending commercial relationships
with the airlines to increase market
share in many areas;
— investing further in the GDS
product to ensure that it remained
competitive in both functionality
and cost;
— promoting growth in Altéa by
investing in the platform and
migrating more customers onto
additional system modules;
29
— benchmarking Amadeus’ cost base
against those of its competitors in
order to identify additional cost
savings; and
— further developing Opodo in order
to prepare the business for the
divestment that was agreed in
February 2011.
Cinven value creation
During the period of Cinven’s
ownership, the focus has been on:
— growing the core GDS business,
which increased its global market
share from 29% to 37% between
2005 and 2010, for example, by
targeting faster-growing regions
outside North America and
Western Europe;
— promoting rapid growth in Altéa by
investing heavily in its development,
with the result that Altéa achieved
almost a five fold increase in the
volume of airline passenger
bookings from 2004 to 2010 and
developed from a ‘start-up’ into a
business generating F601 million
in revenues with a market share of
just over 30%;
— investing more than F1 billion in
research and development, with
an annual investment in product
development increasing by more
than 50% since 2005;
— strengthening the management
team at Opodo (which was lossmaking at the time of acquisition)
and re-focusing on core air travel,
leading to a turnaround in
performance and a sale that
was agreed in February 2011;
— initiating an operational cost
savings programme estimated to
have reduced operating expenses
by more than F175 million between
2005 and 2010; and
— proactively managing Amadeus’
balance sheet, working closely
with the Cinven Financing team.
Amadeus generates strong cash
flows and has continued to reduce
its net debt ratios throughout the
economic cycle.
Our investments
continued
Business Services
Coor
Company description
www.coor.com
Coor is a Nordic facilities management
company with activities in Sweden,
Norway, Denmark and Finland. It is the
Nordic region’s leader in integrated
facilities management (IFM): the
provision of a single package of
support services such as catering,
cleaning, back office, IT, productionrelated and other facilities management
services, for which Coor takes
complete responsibility. Margins and
growth rates in this subsector of the
facilities management market are
generally above average, reflecting the
value to the customer of an integrated
solution. Coor offers efficiency gains
Activity
Integrated facilities management
Nordic region
December 2007
SEK 4,930 million
SEK 6,294 million
Approximately 3,800
Brian Linden, Soren Christensen
Chairman Anders Narvinger
President and Group CEO Mats Jönsson
CFO Olof Staolnacke
*to end December 2010 (unaudited)
30
Cinven origination
and cost reduction by integrating and
managing services within one contract,
which has proved attractive to a
growing number of Nordic private and
public sector organisations that want
to outsource their non-core functions.
Cinven’s business services sector
team had been targeting facilities
management as an attractive market
for investment for some time in advance
of the transaction. The Cinven team
brought to bear deep experience in
support services through successful
prior investments in both COMAX and
Gardner Merchant, as well as experience
in the Nordic region. As a result of
Cinven’s knowledge of the sector and
tracking of Coor, the Cinven team had
developed an excellent relationship with
its management team, which is widely
regarded as the best in the sector in
the Nordic region, and became the
management’s and the seller’s preferred
buyer. Aided by this and by the Cinven
Financing team, Cinven was able to
secure the transaction.
Our investments
continued
Business Services
As the clear market-leader in IFM
in the Nordic market, Coor provides
packaged support services through
a differentiated business model that
combines a broad service portfolio
with a consultancy-led approach.
With Coor, Cinven also identified
a company with a strong and highly
regarded management team that could
develop and build long-term, blue-chip
customer relationships with companies
such as Volvo, Ford, Ericsson, SAAB
and Nokia.
— expanding the product offering,
partly by moving further into
production-related services
to capture additional revenue
opportunities with existing
customers; and
— strengthening the Nordic platform
by continuing to expand the
business outside Sweden and
pursuing attractive and valueenhancing acquisition opportunities.
During its ownership of Coor, Cinven
has worked closely with management
As a platform for expansion and
to increase sales, realise identified
consolidation, Coor provides the
cost savings and improve cash
opportunity to grow in new geographies generation. This has included:
and new segments such as production- — emphasising sales growth through
winning new contracts (e.g. SAS,
related services, in addition to capturing
IPOS, Sandvik, Chr. Hansen,
organic growth opportunities across
Danmarks Radio);
the Nordic region. Cinven’s strategy for
— designing and implementing a
Coor is to focus on its core business
working capital optimisation
as a highly successful, pan-Nordic
programme;
facilities management player with
industry-leading financial performance. — continuing focus on implementing
identified cost savings, accounting
for around 10% of the operating
The main drivers of growth include:
cost base;
— capturing the growth in facilities
management by taking advantage
— completing add-on acquisitions in
order to increase Coor’s presence
of outsourcing opportunities in
in less well represented parts of the
Coor’s core Nordic market;
Nordic region (e.g. SAPA); and
— increasing business with existing
customers by maintaining its strong
track record of high-quality service
delivery;
31
— strengthening the divisional
management teams outside
Sweden through internal promotion
and recruitment of selected highcalibre individuals (including the
new Managing Director of the
Finnish business and a new
Business Development Manager
in Norway).
Our investments
continued
Business Services
Spice
Company description
www.spiceltd.co.uk
Spice is a leading provider of
outsourced infrastructure support
services in the fields of utility and
energy. Spice was founded in 1996
with an original contract servicing
Yorkshire Electricity and today
principally serves utility companies
in the UK with a growing international
presence. From its original contract
worth £3 million per annum, Spice
has grown organically and by
acquisition to in excess of £300 million
in revenues per annum, by offering
custom and value-added solutions.
Utility and energy outsourcing
UK
December 2010
£360 million
£312.3 million
Approximately 3,300
Pascal Heberling, Yalin Karadogan
Chairman Sir Roy Gardner
CEO David Owens
Activity Location Acquired Transaction value Sales* Employees Cinven representatives Senior management
*to end April 2010 (pro-forma)
32
Cinven origination
The company consists of four
divisions:
— electricity infrastructure: providing
engineering, design, and consultancy
services to distribution networks and
the private sector;
— water network infrastructure:
providing installation, maintenance
and specialist consultancy services;
— energy efficiency consultancy and
procurement services; and
— billing services, which focuses on
imbalance analysis and recovery
for the utility industry.
Spice was acquired in December 2010
in a proprietary primary public-to-private
transaction that was sourced directly by
Cinven. The Business Services team
identified Spice as a potentially attractive
investment opportunity during a review
of the UK outsourcing services sector.
The team concluded that Spice, having
been built by acquisition, had significant
unrealised organic and operational
potential, which required a step-change
in approach and management.
Our investments
continued
Business Services
Cinven origination continued
Cinven received support from its
industrial advisor, David Owens, with
whom Cinven had worked on previous
opportunities and who has since taken
on the role of CEO of Spice. He most
recently served as Chief Executive of
Thames Water between 2006 and 2009.
Cinven approached the Spice board
with an unsolicited indicative offer
that was rejected. However, Cinven
was allowed further access to the
management team and information,
allowing a formal offer to be launched
in September following a period of
due diligence. Cinven’s Financing team
helped to protect against an interloper
bid by signing up the two main
incumbent banks. banks.
Cinven’s Business Services team
identified Spice as an attractive
investment opportunity that would
benefit from de-listing and a more
cohesive strategy around its separately
managed businesses. The team viewed
Spice as well positioned to take
advantage of increasing outsourcing
activities in the utility and energy
industry, driven mainly by the need to
reduce costs and comply with regulatory
requirements. Spice operates in a
highly attractive market segment
supported by strong regulatory
and environmental drivers, creating
opportunities for the business to
grow by winning new customers,
33
and attracting a larger share of
customers’ expenditure with a more
complete ‘cradle to grave’ offering.
There are also opportunities outside
the UK, particularly for the Billing
Services unit.
Cinven’s strategy for the company
is to:
— strengthen divisional management;
— promote organic growth through
a more commercial business
approach;
— implement operational
improvements;
— expand internationally, organically
and through acquisition; and
— position the Energy and Billing
businesses for separate exits.
Following the appointment of David
Owens as CEO concurrent with the
de-listing of Spice, Cinven announced
the appointment of Sir Roy Gardner as
Chairman. They bring broad business
experience, leadership skills and an
intimate knowledge of Spice’s markets.
Cinven has been working closely with
them to execute a 100-day review of
the business. This review is supported
by external consultants and consists
of several workstreams, including:
— reviewing and adjusting Spice’s
portfolio of activities to identify
opportunities for add-on acquisitions,
disposals and/or alliances;
— identifying opportunities for organic
sales growth and gross margin
improvement, including introduction
of professional contract costing
and tendering processes;
— realising cost savings by
i) establishing professional
procurement functions and
processes, ii) redesigning Spice’s
organisational structure, iii) introducing
shared services and iv) implementing
improved cost and performance
monitoring;
— optimising cash flow by focusing
capital expenditure on productive
projects and optimising working
capital; and
— systematically reviewing management
capabilities, incentive structures and
key performance indicators.
Our investments
continued
Consumer
Camaïeu
Company description
Cinven origination
www.camaieu.fr
Camaïeu is a leading European retailer
of ‘Prêt à Porter’ clothing targeting
women between the ages of 20 to
40 years old. It operates a fast-fashion
model with a flexible supply chain,
enabling it to react quickly to fashion
trends and offer its customers
fashionable clothing at value-for-money
prices through its extensive store
network and growing e-commerce
channel. At acquisition, Camaïeu had
557 stores. By the end of 2010, the
company had grown to more than
940 stores, of which 571 were in
France and the balance in Poland,
Italy, Russia and other countries.
Ahead of Cinven’s acquisition of
Camaïeu, its Consumer and French
teams had followed the company for
some time and developed a strong
relationship with the original
management team. Their clear
understanding of the business
model was based, in part, on Cinven’s
successful investment in CBR, the
German value-for-money retailer.
In the consumer sector, Camaïeu
offers a unique mix of growth potential,
best-in-class margins, strong cash
flows and relative resilience to
customer spending cycles as a result
of its value-for-money product offering.
In April 2007, Modamax, a holding
Activity
Clothing retailer
Location France, Poland, Italy, Russia
Acquired May 2007
Transaction value
D1,470 million
Sales* D809.7 million
Employees Approximately 5,700
Cinven representatives Benoît Valentin, Xavier Geismar
Senior management
Président du Conseil de Surveillance Jean-François Duprez
Président du Directoire Thierry Jaugeas
34
company controlled by Cinven,
acquired a controlling 65% stake
in Camaïeu (with 75% voting rights).
Under the rules of the Paris Stock
Exchange, upon closing in May 2007,
Modamax made a mandatory offer for
the balance of the publicly held shares.
At the conclusion of the process,
Modamax owned 67% of Camaïeu’s
equity; therefore it is still publicly listed.
Cinven was attracted to Camaïeu
by its high return on capital and cashgenerative model, similar to CBR in
the third Cinven fund. The company
had proved to be resilient in previous
downturns because of its focus on
value-for-money basics. Cinven’s
strategy for Camaïeu is focused
on helping the company build on its
market leadership position in France
through the accelerated roll-out of new
stores in France and internationally,
in order to create a highly profitable
and successful international clothing
retailer. This includes:
— accelerating the roll-out of stores
in existing markets, particularly in
France, Italy and Poland, where
returns on capital are very attractive;
— further internationalising the
business by expanding the store
network into new markets with a
focus on other Central and Eastern
European countries, building on
Camaïeu’s successful entry into
the Polish market;
— continuing its strong, profitable
growth track record through the
implementation of best practices
across the existing store portfolio,
increasing footfall and improving
sales conversion;
— developing the e-commerce sales
channel; and
— maintaining the current high-margin
and cash-generative business model.
Our investments
continued
Consumer
35
Under Cinven’s ownership, revenue
growth and operational improvement
initiatives have been the main focus.
These have included:
— reorganising and reinforcing
the management team with the
appointment of the new CEO,
Thierry Jaugeas, a new CFO,
a new marketing director, and
other external hires and internal
promotions;
— accelerating the store roll-out
programme both in France and in
other high-growth geographies to
more than 115 stores per year, while
maintaining attractive returns on
investment. Today Camaïeu has 944
stores, up from 557 at acquisition;
— rebalancing Camaïeu’s geographic
exposure so that approximately 40%
of stores were outside France at the
end of 2010, compared to 24%
prior to Cinven’s acquisition;
— working with the Cinven Portfolio
team to assess market entry
opportunities in Asia and other
markets;
— launching a series of initiatives to
increase like-for-like sales growth
and footfall, including upgraded
store fronts with new window
displays, the launch of a fully
transactional website and pricing
optimisation across the product
range and store portfolio;
— implementing a cost reduction
programme, notably involving the
renegotiation of rental agreements;
and
— moving towards a more customercentric model by investing in
customer relationship management
(CRM), branding and the customer
retail experience.
Our investments
continued
Consumer
Gondola
Company description
Cinven origination
www.gondolaholdings.com
Gondola is the leading restaurant
operator in the UK casual dining
sector, with around 640 sites, trading
under the brands PizzaExpress, ASK,
Zizzi and Byron.
Cinven’s Consumer team identified
Gondola as having a number of the
characteristics of previous successful
Cinven consumer investments such as
Fitness First, Odeon and William Hill:
strong brands, a ‘high volume, low
ticket’ business model and a significant
opportunity for a high return on capital
through the roll-out of new sites.
Gondola was an underexploited
opportunity that needed strategic
redirection and accelerated investment,
which would be best achieved under
private ownership. Through its
successful investment in Unique Pubs,
Cinven was able to demonstrate its
Casual dining operator
UK
November 2006/January 2007
£886 million
£533.9 million
Approximately 14,000
Peter Catterall, Yagnish Chotai
Charles Miller-Jones
Chairman Chris Woodhouse
CEO Harvey Smyth
Finance Director Nick Carter
*to end June 2010 (audited)
36
knowledge, expertise and value-added
input in the UK pub and restaurant
sector and became the management
team’s preferred partner. The company’s
share price was performing relatively
poorly due to an inappropriate
management and capital structure
at the time of its IPO, together with
a share overhang created by the two
principal shareholders. Cinven was able
to secure an exclusive arrangement
with the two main shareholders and
thereafter launched a successful offer
to the public shareholders.
Cinven identified Gondola as an
attractive business with strong growth
potential: a market-leader in a growing
segment of the leisure market (casual
dining) with a high return on capital
employed (RoCE) roll-out model and
strong cash flows. However, the group
was underperforming, both in terms
of its existing estate and in terms of
the pace of its roll-out programme.
Cinven therefore set a strategy of:
— accelerating the roll-out of
successful formats;
— implementing best practice across
the whole group;
— revitalising two of the principal
brands, ASK and Zizzi;
— extending market leadership through
new format launches or acquisitions;
and
team.
Our investments
continued
Consumer
In order to carry out this strategy,
Cinven appointed Harvey Smyth as
CEO and made a series of external
appointments covering finance,
property and the various brands, and
introduced Chris Woodhouse, a highly
experienced retailer, as Chairman.
Together with the newly invigorated
management team, Cinven has made
significant progress:
37
— delivering a number of efficiencies
— accelerating Gondola’s roll-out
programme; increasing average
on the operational side. For example,
restaurant openings to around 35
management has been working with
per year (from 23 previously) while
the Cinven Portfolio team to realise
increasing the expected return from
cost savings in the procurement of
new site openings. The increase in
store fixtures and fittings and staff
restaurants from about 520 at
uniforms through sourcing from
acquisition to around 640 today
Asia. More recently, Cinven has
has been mainly focused on the
negotiated the acquisition of the
strongest existing formats,
international franchise business of
PizzaExpress and Zizzi;
PizzaExpress that was previously
— developing and rolling-out new
owned independently of the
brands such as Byron, a new burger
Gondola Group, and is working
restaurant concept that now has 13
closely with Gondola management
sites and significant growth potential;
to accelerate the growth of the
— undertaking a series of innovative
business in international markets.
revenue initiatives to increase footfall
Cinven’s Portfolio team in Asia is
and sales in restaurants in a very
closely involved in this initiative.
challenging retail environment,
including new product launches, menu
development and collaborations with
partners such as Weight-Watchers;
— upgrading Gondola’s promotional
strategy and investing in its
technological capabilities, building
a proprietary customer database
to increase like-for-like growth and
market share; and
Our investments
continued
Consumer
Maxeda
Company description
Cinven origination
www.maxeda.com
At the time of acquisition, Maxeda
was the largest non-food retailer in
the Benelux region, operating across
multiple retail segments including
department stores, DIY, apparel and
consumer electronics. In 2010, the
group was comprised of brands within
two divisions: Fashion and DIY. The
sale of the Fashion formats was
completed in January 2011, leaving
the DIY division as the last remaining
part of the Maxeda group. The DIY
business is a leading player in the
Benelux region and comprises four
key brands: Praxis and Formido in
the Netherlands and Brico and Plan It
in Belgium.
Cinven’s Consumer team identified
Maxeda (then Vendex KBB) as an
attractive investment opportunity
based on the potential for organic
growth and operational improvement
in the business. Maxeda was an
underperforming publicly-listed
company. Its share price had fallen in
2003, prompting Cinven to approach
the management team to discuss a
potential public-to-private transaction.
Non-food retailer
Benelux region
September 2004
D2,350 million
D2,341.8 million
Caspar Berendsen, Rory Neeson
Chairman Tony DeNunzio
DIY CEO George Adams
CFO Ronald van der Mark
Activity Location Acquired Transaction value Sales* Cinven representatives Senior management
*to end January 2010 (pro-forma)
38
The relationship Cinven built with
the management team, combined
with its deep sector expertise,
provided a competitive advantage
during the limited auction process
which was initiated by the company’s
supervisory board in the first quarter
of 2004. As this process unfolded,
Cinven decided to partner with another
private equity sponsor to acquire the
company and then teamed up with
another consortium, when it became
clear that they shared Cinven’s
strategic vision for Maxeda.
Cinven was attracted to Maxeda
because, although it was a marketleader, it was underperforming against
a number of best practice measures.
Cinven’s strategy, alongside the rest
of the investor group, was to focus
Maxeda on its core retailing business
while improving operations and
rationalising the company. Since
the acquisition, significant changes
have been made to augment the
management team. In 2005, Tony
DeNunzio joined as Chairman of the
executive board and further senior
management changes have since
been made, both centrally and at
format level.
Our investments
continued
Consumer
The management team and the
investor group agreed a strategy
that encompassed initiatives in key
areas such as:
— improving retail execution;
— undertaking store refurbishments
in selected formats;
— focusing on operational efficiency
and cost savings across the
business;
— purchasing (Asian sourcing)
and supply chain improvements;
— restructuring the balance sheet
through the sale of property and
optimising working capital; and
— rationalising the group through
individual format sales.
39
During Cinven’s ownership period,
retailing best practice has been
implemented across all of Maxeda’s
formats and successful formats have
been rolled out in existing markets
and internationally. Since the new
management was appointed, value
creation initiatives have included:
— implementation of improved retailing
best practice across formats,
including better customer service
and the refurbishment of selected
stores;
— working capital management
has been improved, leading to a
significant improvement in cash flow;
— cost savings and restructuring
initiatives including implementation
of company-wide procurement,
increased Asian sourcing (supported
by Cinven’s Portfolio team in Asia)
and closer cooperation between
formats;
— the disposal of the significant
freehold property portfolio has
been completed;
— the capital structure of the business
was improved;
— the company bought back D463
million of Maxeda DIY debt at a
significant discount to par; and
— the sale of individual businesses
including Hema, consumer
electronics and the fashion formats.
Cinven has played a full and active
part in planning and implementing
these initiatives. For example,
Cinven’s Portfolio team in Asia helped
the DIY management team with a pilot
Asian sourcing project that proved
highly successful.
Our investments
continued
Financial services
Avolon
Company description
Cinven origination
www.avolon.aero
Avolon is a global aircraft leasing
business headquartered in Dublin and
with offices in New York, Hong Kong
and Shanghai. Avolon provides aircraft
leases and lease management services
to airlines around the world, focusing on
the acquisition of the latest generation
of narrow-body, fuel-efficient aircraft,
for which there is a liquid market.
Ahead of Cinven’s investment in
Avolon, the Financial Services team
had been targeting sub-sectors within
financial services for opportunities
arising out of the structural dislocation
in the financing markets that followed
the collapse of Lehman Brothers; the
aircraft leasing industry is one of those
sub-sectors. Cinven has significant
expertise in the aerospace sector as
a result of the third Cinven fund’s
successful investment in Amadeus and
the fourth Cinven fund’s investment in
Avio. This experience, coupled with the
Activity Aircraft leasing
Location Ireland (global operations)
Acquired May 2010
Transaction value
US$1,365 million
Total assets under management‡ US$855.3 million
Employees 26
Cinven representatives Caspar Berendsen, Peter Catterall, Maxim Crewe
Senior management
Chairman Denis Nayden
CEO Dómhnal Slattery
CFO Andy Cronin
‡
at December 2010 (actual)
40
Cinven Financing team’s capability,
was critical to the success of the
transaction. After researching the
market extensively, Cinven identified
the management team at Avolon as
the best positioned because of their
experience in establishing one of the
largest aircraft lessors before the
financial crisis.
Leasing continues to be an increasingly
important source of financing for the
airline industry. Currently, more than
40% of new aircraft deliveries are
leased, compared to less than 20%,
15 years ago. However, due to structural
issues with their parent companies as
a result of the financial crisis, two of
the three largest aircraft lessors are
no longer active in the market.
Our investments
continued
Financial services
Against the background of long-term
growth, Cinven’s strategy is to take
advantage of the current market
dislocation to create a leading global
aircraft lessor that can benefit from
the cyclical upswing in the aviation
industry over the next five years as
passenger travel rebounds and
demand for aircraft outweighs supply,
particularly for young, narrow-bodied
aircraft. These are typically the most
liquid assets in the aviation industry
because of the demand in the shorthaul and ‘economy’ segments of the
market and their relative fuel efficiency.
Avolon is particularly well placed to
execute this strategy because it has
an experienced management team
and a ‘clean’ operating platform.
Cinven’s Portfolio team in Asia has
been involved in expanding Avolon’s
capability in these markets, which will
be particularly important in the future
growth of the aviation industry.
41
The investment in Avolon is a
compelling opportunity for the
fourth Cinven fund as a result of the
favourable conditions for purchasing
highly sought-after aircraft, the
contracts that underpin Avolon’s
revenues and a financing structure
that ensures that the business’s
liabilities match the cash flow from its
assets. Along with Avolon’s efficient
operating platform, these factors allow
the company to maintain best-in-class
operating performance and operate
a highly scalable business model.
Cinven has been working closely
with the management team to put
into practice the value creation
opportunities identified at the outset
and to position the business to fully
realise them. Initiatives to date include:
— implementing a disciplined portfolio
strategy by setting prudent
parameters for aircraft purchases
at attractive prices;
— enhancing Avolon’s capability in
Asia by working closely with the
Cinven Portfolio team;
— putting in place funding policies
that ensure that both the duration
and cost of liabilities match the
cash flow profile of assets;
— improving Avolon’s market-leading
position through profitable trading
of assets throughout the cyclical
upswing in prices; and
— recruiting key personnel.
Our investments
continued
Financial services
Company description
Cinven origination
www.partnership.co.uk
Partnership Assurance (PA) is the
UK’s leading provider of impaired,
enhanced and long-term care (LTC)
annuity products for retirees. The
business provides insurance products
to individuals who, because of an
existing medical condition, have a
reduced life expectancy compared
to that of a typical person and hence
qualify for a higher or enhanced
annuity. Impaired and enhanced
annuities offer these individuals a
higher guaranteed rate of income than
a standard annuity. LTC annuities are
products for those entering or planning
for LTC (typically in care homes).
PA was identified as an attractive
investment opportunity by Cinven’s
Financial Services team as part of
a review of the UK life assurance
sector. After familiarising itself with
the company and its growth markets,
Cinven made an approach to the
previous owners to express its interest
in the business. As a result of Cinven’s
understanding of the sector, coupled
with a relationship with management
that was nurtured over a period of
time, the team was successful in
securing a proprietary deal on an
exclusive basis.
Activity Location Acquired Transaction value Sales*
Employees Cinven representatives Senior management
Provider of retirement solutions
UK
August 2008
£148 million
£588.7million
Approximately 300
Peter Catterall, Caspar Berendsen, Maxim Crewe
Chairman Ian Owen
CEO Steve Groves
CFO Mark Dearsley
*to end December 2010 (actual)
42
In PA, Cinven identified an opportunity
to invest in a highly cash-generative
business model in a market with strong
structural growth through the acquisition
of a market-leading company with a
strong management team and
differentiated intellectual property.
PA benefits from:
— intellectual property and unrivalled
actuarial and underwriting expertise.
Unlike its competitors, PA owns the
actuarial data that enables it to price
its products correctly, which in turn
helps PA to negotiate more attractive
re-insurance rates;
— attractive market dynamics with
strong structural growth driven by
the migration away from defined
benefit pension schemes to defined
contribution schemes, demographics
and retirement trends;
— market leadership, where PA is
the clear market-leader in specialist
impaired and LTC markets, both of
which have high barriers to entry; and
— a strong, well respected
management team.
Our investments
continued
Financial services
Cinven’s investment strategy is focused
on growing PA’s core business by
ensuring that it is competitively
positioned to fully exploit the significant
market opportunity. Specifically, as the
UK market moves from a standard
pricing model to individual risk-based
pricing, Cinven is focused on ensuring
43
that PA remains the leading impaired
and enhanced annuity provider by:
— making use of the unique intellectual
property in the business through
the introduction of new products;
— developing distribution channels
to increase market share;
— expanding the executive
management team to increase
the company’s ability to support
the rapid growth;
— increasing awareness and
penetration of the LTC product
into the care market; and
— strengthening the capital position
of PA to improve its credibility
with counterparties.
During the period of Cinven’s
ownership, the company has made
strong progress in a number of areas:
— securing exclusive, long-term
contracts with leading distribution
partners;
— investing in the company’s systems
to help it manage rapid growth; and
— growing both the senior and junior
teams, particularly in the actuarial
function.
The management team continues
to make progress in each of the key
areas that were identified before
the acquisition, as well as on newer
initiatives, such as an equity release
product.
Our investments
continued
Healthcare
Partnerships in Care
Company description
Cinven origination
www.partnershipsincare.co.uk
Partnerships in Care (PiC) is the UK
market-leader in the private provision
of secure psychiatric services. It
provides care services for men and
women with complex mental health
needs and specialises in the areas
of mental health, personality disorders,
learning disabilities and brain injury
rehabilitation. PiC has 23 units in
the UK.
Prior to Cinven’s acquisition, PiC was
a subsidiary of General Healthcare
Group (GHG), itself a highly
successful Cinven investment which
was sold in 2000. Following Cinven’s
sale of GHG, Cinven’s Healthcare
team maintained a dialogue with PiC’s
management. Through this relationship
and Cinven’s knowledge of PiC and
the market it serves, Cinven became
aware of GHG’s desire to divest PiC
in order to focus the group on its
acute care hospital assets. Having
developed a value creation strategy,
Psychiatric care homes
UK
April 2005
£552 million
£186.7 million
Approximately 3,300
David Barker, Alex Leslie
Chairman Kevin Beeston
Group Chief Executive Fred Sinclair-Brown
COO Joy Chamberlain
CFO Peter Thomas
Group Company Secretary Tony Rook
*to end December 2010 (actual)
44
Cinven was able to create a financing
structure. The team’s prior knowledge
and ability to execute transactions also
enabled it to meet the seller’s desire
for a quick close.
Cinven was attracted to PiC by its
leadership position in a growing
market, together with the freehold
property which backed its assets.
Cinven’s strategy for PiC was to
accelerate the growth of the
company by:
— providing the company with
previously unavailable capital to
increase its bed capacity through
new sites, extensions at existing
sites, and selective bolt-on
acquisitions to meet excess demand,
driven by the continued growth of
NHS outsourcing;
— increasing margins by improving
operational performance, through
the optimisation of ward staffing
and reduction in expensive agency
staffing in the existing business; and
— diversifying into the ‘low secure’ and
rehabilitation markets, an opportunity
identified by Cinven and management,
that would enable PiC to provide a
continuum of care for its patients.
Our investments
continued
Healthcare
45
Cinven executed on its strategy during
the first years of its ownership by:
— replacing the bridging loan facility
with a financing structure, which
provided PiC with the ability to
develop the business;
— identifying a number of additional
growth and performance
improvement opportunities;
— enlarging and accelerating the
development plan, which has
increased PiC’s capacity from
800 beds at acquisition to more
than 1,200 currently;
— assessing a number of potential
industry consolidation proposals;
and
— initiating operational improvement
and cost reduction programmes.
Our investments
continued
Healthcare
Phadia
Company description
Cinven origination
www.phadia.com
Phadia is the global leader in in-vitro
allergy testing. The company
manufactures and sells specialised
blood testing systems and associated
consumables and services. It is also
the European leader in autoimmunity
testing. The company has sustained
strong growth in Europe, while
achieving considerable success
in the US and emerging markets.
Following Pharmacia’s disposal of
its non-core Pharmacia Diagnostics
division (since renamed Phadia) in
2003, Cinven’s Healthcare and Nordic
coverage teams identified Phadia
as an attractive acquisition candidate
with significant growth potential.
Cinven monitored its progress as
an independent company that had
achieved strong growth in Europe.
At an early stage, Cinven focused
on developing a strong relationship
with the company’s highly respected
In-vitro diagnostics – Allergy testing
Sweden (global operations)
January 2007
€1,285 million
€366.6 million
Approximately 1,300
Stuart McAlpine, Supraj Rajagopalan
Chairman Daniel L. Peters
CEO Magnus Lundberg
CFO Anders Lundmark
46
management team, led by Magnus
Lundberg. When the company was put
up for sale, Cinven was the preferred
bidder; and this, rather than a higher
offer, led to Cinven being chosen as
the acquirer.
Cinven was attracted to Phadia by its
strong leadership in a growing global
market, based on superior proprietary
technology, together with high margins
and strong, predictable cash flows.
Cinven set a strategy for Phadia’s
incumbent management team of:
— growing the company further in its
existing markets but also in new and
relatively underpenetrated markets,
particularly the US, where the roll-out
required significant investment;
— rolling-out Phadia’s autoimmunity
product beyond Europe;
— expanding into emerging markets
such as India, China and Brazil;
— developing new products (for
example, point-of-care, molecular
allergology); and
— identifying operational improvements
such as best-in-class working
practices across all regions to
increase efficiency and effectiveness.
Our investments
continued
Healthcare
Cinven saw that by implementing
these initiatives, it could build a
business of scale that would be
attractive in a number of exit scenarios.
47
Cinven has created value at Phadia
using a number of different levers:
— expanding the US salesforce
(from around 50 at acquisition to
over 220 today) to make the US
Phadia’s second largest region
behind Europe. By investing heavily
in Phadia’s US sales force, Cinven
enabled the business to grow its
US revenues, accelerating growth
for the group overall;
— developing its market footprint
in other geographies, including
emerging markets, with the help
of Cinven’s Portfolio team in Asia;
for example, the acquisition of
Phadia’s Chinese distributor and
the establishment of new market
companies in India, South Africa,
Korea and the Czech Republic;
— rolling out a series of new products
under Cinven’s ownership including
molecular allergology and Immunocap
RAPID (point-of-care testing);
team; including appointing a new
Chairman, COO, head of the US and
head of Japan;
— implementing a series of initiatives
to improve efficiency with the help
of Cinven’s Portfolio team, resulting
in a significant reduction in the cost
of goods; and
— targeting the fund’s advantageous
acquisition of D46 million of Phadia
PIK notes in 2009 at an average
price of D0.62.
Our investments
continued
Healthcare
Sebia
Company description
Cinven origination
www.sebia.com
Sebia is the global leader in clinical
electrophoresis equipment and
reagents. The company’s systems
analyse proteins in order to detect
various diseases and conditions,
primarily multiple myeloma, which
is a severe form of blood cancer
that typically affects people who
are more than 50 years old.
Cinven’s Healthcare team has been
targeting investments in high-value
diagnostic categories for a number
of years, leading to its investments in
Phadia and in 2010, in Sebia. Cinven’s
French team and Healthcare team
began to build a relationship with
Benoît Adelus, Sebia’s CEO, in 2002
and monitored the business closely
from 2005. Based on Cinven’s
relationship with the management
team, its diagnostics expertise from the
successful Phadia investment, and the
significant emerging markets potential
In-vitro diagnostics – Protein testing
France (global operations)
June 2010
Undisclosed
€129 million
Approximately 400
Nicolas Paulmier, Stuart McAlpine, Pierre Estrade
Chairman and CEO Benoît Adelus
CFO Jean-Louis Bernet
*to end December 2010 (pro-forma)
48
identified by its Portfolio team in Asia,
Cinven was able to submit an offer for
Sebia after receiving privileged access
to carry out extensive proprietary due
diligence before any sales process
was initiated. Cinven’s Financing team
subsequently arranged an all-senior
debt structure, the first underwritten
facility in Europe since Lehman
Brothers collapsed.
Cinven was attracted to Sebia for
similar reasons to those that have been
core to Phadia’s success. Sebia is a
global market-leader in an expanding
segment, and it operates a ‘razor/
razorblade’ business model whereby
an installed base of equipment leads
to regular and predictable income
and cash flows from reagent sales
each time a test is carried out.
Cinven’s strategy for Sebia includes:
— taking full advantage of the growth
opportunities presented by an
expanding market;
— upgrading customers to improved,
higher-value systems;
— further increasing its market share
in countries such as Germany and
the US through superior technology
and customer service;
— accelerating growth in emerging
markets, taking advantage of the
opportunities identified by Cinven’s
Portfolio team in Asia; and
— launching new detection tests for
abnormalities in proteins such as
Hb (haemoglobin) that can be run
on its installed base of machines.
Our investments
continued
Healthcare
Although Phadia and Sebia will
remain separate, the similarities in the
businesses allow for both businesses
to benefit from the sharing of best
practice under Cinven’s ownership.
49
Since the transaction was completed
in June 2010, Cinven has been working
closely with the management team to
execute the objectives set out in the
strategy, including:
— capitalising on the opportunity in
emerging markets such as India,
China and the rest of Asia, with the
help of Cinven’s Portfolio team that
is advising on appropriate distribution
models. These are markets which
are expected to grow faster than
the global market and where Sebia
has an opportunity to significantly
increase its market share;
— executing on the development
and roll-out of new markers and
diagnostic tests, notably Hb and
HbA1c (for diabetes), and the
next generation of instruments;
— devising a strategy to win market
share in the US from its principal
competitor, based on experience
gained from Cinven’s investment
in Phadia;
— introducing best practice reporting
and performance management
processes; and
— sharing of best practice across the
Sebia and Phadia management teams.
Our investments
continued
Healthcare
Spire Healthcare
Company description
Cinven origination
www.spirehealthcare.com
Spire Healthcare is the second
largest private hospital group in the
UK. The group consists of 37 acute
care hospitals and benefits from
the highest bed-per-hospital ratio
of the independent providers in the
UK. Payors include private medical
insurance (PMI) companies, self-pay
clients and the National Health
Service (NHS).
Cinven has a long history of successful
hospital investments, including
creating the market-leader in the UK
(General Healthcare Group (GHG)).
Before Cinven’s acquisition of the
business, the Healthcare team had
been following BUPA Hospitals, a
non-core division of BUPA (the UK’s
largest PMI provider) for a number of
years. Cinven met the BUPA Group
CEO and CFO with an offer to acquire
BUPA Hospitals as early as 2005.
In 2007, BUPA invited selected bidders
to enter into a sale process; Cinven
was extremely well positioned given
Activity Hospital operator
Location UK
Acquired August 2007
Transaction value £1,580 million
Sales* £643.1 million
Cinven representatives Simon Rowlands, Pascal Heberling,
Rebecca Gibson
Senior management
Chairman Robert Cooke
CEO Robert Wise
CFO Rob Roger
Clinical Services Director Dr Jean-Jacques de Gorter
50
its track record with GHG and Générale
de Santé in previous Cinven funds.
Cinven’s track record in the UK
provided a compelling backdrop,
as BUPA was very focused on the
experience and plans of its chosen
partner, partly as the consent of the
UK Department of Health was a
condition of closing the transaction.
Cinven’s strategy for Spire was
to transform a previously non-core
division of BUPA, a large, not-for-profit
organisation focused on health
insurance, into a dynamic and
successful business by fundamentally
redirecting the business model with
a world-class management team
sourced by Cinven. As is typical for
a Cinven investment, the strategy
has a number of value creation
levers, including:
— repositioning Spire as a premium
operator to attract top hospital
physicians, regain lost market
share and improve PMI pricing;
— driving organic growth through
increased capital investment in
medical equipment and expanded
patient services;
— implementing operational and
cash flow improvements and
reducing central overheads
through increased management
focus, systems and controls;
— capitalising on acquisition
opportunities which complement
Spire’s operations and patient
care offerings; and
— realising value from Spire’s freehold
property asset base.
Our investments
continued
Healthcare
51
— introducing new management
Key to Cinven’s investment strategy
reporting systems, including daily
was changing the culture of the
key performance indicator reporting,
organisation by introducing a new
which targets best-in-class operating
management team including a
standards, identifies underperforming
new CEO, CFO and Chairman and
areas and helps to increase
changing a number of the hospital
improved operating margins; and
directors. Following a global search,
— simplifying inefficient systems and
procedures, which has streamlined
the core of the new team was
operations and resulted in a head
identified by Cinven from the bestoffice cost reduction.
performing Australian hospital group,
Affinity. Together with management,
Cinven has made significant progress
in the following areas:
— successfully completing a number
of strategic, add-on acquisitions
(Classic Hospitals, Thames Valley
and London Fertility Clinic) that have
increased the company’s size and
competitiveness and resulted in
significant operating synergies.
Most importantly, the acquisitions
have reinforced Spire’s national
coverage, making Spire the second
largest UK hospital group and a
key partner for all providers of PMI;
— significantly increasing investment
in high value-adding equipment,
services and infrastructure, attracting
top physicians and generating
attractive returns on capital;
Our investments
continued
Industrials
Ahlsell
Company description
Cinven origination
www.ahlsell.com
Ahlsell is the leading distributor of
construction products in the Nordic
region covering the heating and
plumbing, electrical, tools and
machinery, refrigeration and DIY
sectors. Ahlsell originally focused
on heating and plumbing products
in Sweden, where it is the clear
market-leader, but has since expanded
its product range and the markets
on which it focuses, largely through
acquisition.
Before the acquisition, the Cinven
Business Services and Industrials
teams had identified building products
distribution as a potentially attractive
sector in which to invest and had
been tracking Ahlsell as an acquisition
candidate. As a result, ahead of the
previous owner’s sale process, the
Cinven team had built up a good
relationship with both the management
team and seller through its deep
knowledge of the sector and its
prior ownership of Frans Bonhomme.
Activity
Building materials distribution
Nordic region
January 2006
SEK 11,768 million
SEK 19,300 million
Approximately 4,300
Guy Davison, Supraj Rajagopalan
Chairman Rolf Borejesson
President and CEO Goran Nasholm
Vice President and CFO Gunnar Haglund
52
Ahlsell’s market leadership position in
the Nordic region, strong management
team and cash-generative business
model made the company an attractive
acquisition candidate. Cinven had also
identified opportunities to improve
operations, procurement and working
capital. Cinven’s strategy for Ahlsell
has been to grow its core business
both organically and through
acquisitions, which have varied from
large step-change transactions to
smaller bolt-on acquisitions. To date,
significant synergies have been
realised. Other initiatives have led to
improvements in margins and cash
flows, including those to improve
procurement, increase Asian sourcing,
reduce costs, consolidate the supplier
base, and optimise working capital.
Our investments
continued
Industrials
53
During its ownership of Ahlsell, Cinven
has worked closely with management,
originally to increase growth, and more
recently, to protect the business during
the economic downturn. Cinven-led
initiatives include:
— strengthening the management team
by recruiting a new Chairman and
a new head of global sourcing, and
strengthening the country-level teams;
— accelerating the acquisition
programme;
— designing and implementing costsaving programmes to protect
profitability;
— refinancing the business in 2007;
and
— reaching a consensual agreement
with lenders in 2009 to reset
covenants.
Our investments
continued
Industrials
Avio
Company description
Cinven origination
www.aviogroup.com
Avio is a world leader in the design,
manufacture and servicing of subsystems
and components for commercial jet
engines (for example, those that power
the Boeing 777 and Airbus 320) and
military jet engines (including those
that power the Eurofighter Typhoon).
It is a partner to original equipment
manufacturers (OEMs) such as General
Electric, Rolls Royce and Pratt & Whitney.
In addition, Avio’s space unit produces
propulsion systems for space launch
vehicles such as the Ariane rocket and
developed the new Vega launcher. Avio
also develops and supplies jet derivative
engines and automation systems for
naval and industrial applications.
Before Cinven acquired the business,
Finmeccanica and Carlyle had
acquired Avio from Fiat in April 2003.
It was apparent to Cinven’s Industrials
and Italian teams that Avio remained
an attractive investment opportunity
with defensive growth qualities
resulting from the diversified
aerospace group’s exposure to
long-term structural growth and, in
particular, the non-cyclical defence
and space divisions. Making use of
its excellent relationships with both
management and the lead bank,
Banca Intesa, the Cinven team quickly
developed a detailed understanding
Aerospace engine component manufacturer
Italy (global operations)
December 2006
€2,570 million
€1,753 million
Approximately 5,200
Roberto Italia, Simon Rowlands, Andrea Ferrante
Chairman Alan J. Bowkett
CFO Vittorio Rabajoli
54
of Avio’s operations and its key
performance drivers, allowing Cinven
to make a competitive offer for the
business. Together with a respected
panel of industry advisors and
executives, Cinven gained preferred
bidder status and acquired Avio in
December 2006.
Avio has a strong, defensible market
position due to its technological
leadership in key areas, long-term
contracts and diversified business
that is spread across five main areas
of operations. The company is known
for technological excellence and
has partnerships with leading engine
manufacturers, governments and
space agencies. Cinven worked for
nine months prior to acquiring the
business assessing the potential
for expanding the company through
sector growth, internationalisation
and, in particular, improved margins
and concluded that there was
significant growth potential. Cinven’s
strategy for Avio focuses on furthering
the company’s growth both
strategically and operationally through:
— positioning Avio to take advantage
of the long-term structural growth
in aviation;
— capturing increased market share of
the most promising new aerospace
programmes;
— making efficiency savings through
a detailed restructuring of the cost
base; and
— internationalising both the company’s
revenues and its cost base.
Our investments
continued
Industrials
55
Cinven has supported the management
team to help it accelerate the company’s
outperformance of both the broader
market and direct competitors.
Cinven’s value creation has included:
— focusing on specific commercial
relationships to solidify Avio’s unique
positioning and defensible business
model as a Tier 1 partner for both the
major OEMs and the most successful
platforms (for example, the Boeing 787);
— building on the highly profitable military
and space programmes which offer
lucrative long-term contracts and
off-shoring opportunities;
— achieving operational improvements
through the implementation of best
practices in manufacturing
performance, and cash, hedging and
foreign exchange management. The
management team was strengthened
to ensure these operational
improvements were achieved;
— accelerating and broadening Avio’s
profit optimisation and cost base
restructuring programme, with
additional working capital savings
achieved through tighter cash
management controls; and
— developing opportunities to expand
internationally by working with the
Cinven Portfolio team in Asia.
Notably, Cinven helped to set up
two joint ventures with AVIC Dongan,
AVICOPTER and Xian Aero Engines
in 2010, which are leading Chinese
state-controlled aerospace
businesses.
Our investments
continued
Industrials
Frans Bonhomme
Company description
Cinven origination
www.fransbonhomme.fr
Frans Bonhomme is France’s leading
distributor of plastic pipes and pipe
fittings to construction and public
works professionals as well as
plumbing tradesmen, serving them
from more than 400 outlets. The
business has three main drivers:
expenditure on equipment for civil
works projects; EU regulations on
water treatment, which tend to favour
plastic substitution; and general
construction, maintenance and
repair activity.
Cinven owned Frans Bonhomme from
2000 to 2003. The business was sold
in 2003 ahead of the then CEO’s
retirement. Between 2003 and 2005,
when Cinven re-acquired the business,
Frans Bonhomme achieved a
successful management transition,
and further increased its network
density and market share. When the
existing shareholders chose to sell,
Cinven was able to conclude the
transaction quickly, given its prior
knowledge of the business and strong
relationship with the management team.
Activity Plastic pipe distributor
Location France, Spain
Acquired December 2005
Transaction value D893 million
Sales* D661.1 million
Cinven representatives Nicolas Paulmier, Matthieu Servant
Senior management
Président Directeur Général Caroline Grégoire Sainte-Marie
Directeur Administratif et Financier Geoffroy Willaume
Directeur des achats Jean-Louis Ott
56
During the first few years of its
ownership of Frans Bonhomme,
Cinven worked closely with
management to increase growth
via a number of initiatives including:
— increasing the density of the network
of outlets in France, targeting a
significant number of new openings
in the near term;
— growing its presence in the greater
Paris region to gain market share;
— widening the range of products,
for example with the introduction
of protection equipment and boilers;
— promoting sales by continuously
incentivising the sales force; and
Cinven’s strategy for Frans Bonhomme
— refinancing the business in 2007.
also included:
— widening the product range;
— substantially increasing the network When Frans Bonhomme’s market
of outlets in France;
began to suffer severely from the
— growing market share in the greater effects of the economic crisis in
Paris region, where Frans Bonhomme 2008, Cinven acted quickly to
has historically been less strong due defend its investment by:
to its provincial origins;
— focusing on controlling costs
and maximising margins;
— focusing on operational efficiencies;
— refining management and sales
— closing non-profitable sites,
force incentive schemes to improve
reviewing rental agreements and
performance; and
restructuring Spanish operations;
— selectively growing the Spanish
— reducing working capital and capital
operations and evaluating
expenditure, and disposing of noninternational expansion opportunities.
core assets to maintain positive
cash generation and reduce debt;
— introducing a new CEO in June
2009; and
— proactively entering into discussions
with lenders and successfully
agreeing to re-set covenants.
Frans Bonhomme benefits from
an attractive business model and
positioning and is the clear marketleader in France. The company also
benefits from strong cash flows,
given its low capital expenditure.
Cinven’s strategy for Frans Bonhomme
has been to grow the core business
through market share gains in the
fragmented building products
distribution market. The roll-out of
new outlets has opened previously
untapped markets in less densely
populated regions.
Our investments
continued
Industrials
57
Our investments
continued
Industrials
JOST
Company description
Cinven origination
www.jost-world.com
JOST is a leading manufacturer of
Cinven’s Industrials sector team,
alongside the firm’s German team,
identified JOST as a high-quality
company with a sustainable global
market-leading position. As a result of
the extensive due diligence that it had
already performed, Cinven was well
positioned to submit a competitive
offer with a high probability of success.
Cinven gained exclusivity (although
it was not the highest bidder at that
stage) and secured the transaction
in August 2008.
Truck component manufacturer
Germany
August 2008
Undisclosed
€383.6 million
Approximately 2,100
Guy Davison, Bruno Schick
Chairman Dr Klaus Bleyer
CEO Lars Brorsen
COO Dr Ralf Eichler
CFO Alexander Kleinke
58
components for the articulated truck
and trailer industry, including fifth
wheels, landing gear and kingpins.
JOST is the only truly global player in
the market, operating 16 production
facilities and numerous sales, logistics
and engineering sites around the world.
Based on its solid track record and
strong reputation, its key products
have achieved market share of 70%
in the truck markets; it has also
obtained single supplier status
with certain key customers.
JOST is considered the standard-setter
in quality, safety and innovation by clients
who are increasingly focused on brands.
The company enjoys a market share of
up to 70% in key markets and products.
It has exceptionally loyal customers, a
strong brand and a good reputation and
has built a diversified customer-base.
The company’s long-term growth is
underpinned by growing demand for
trucking, driven by increased trade
and globalisation, particularly in faster
growing economies in emerging markets
such as China, Brazil, Russia and India.
JOST’s management is highly respected
in the industry, with a strong track record
of delivering profitable growth, and is
extremely committed to JOST’s future.
Our investments
continued
Industrials
In the summer of 2008, Cinven saw
a decline in valuation multiples and
judged the timing opportune to acquire
this high-quality company. Cinven’s
original business plan took cyclicality
in key geographies into account;
however, it did not foresee the effect
the collapse of Lehman Brothers would
have on the financing markets, which
correspondingly had a materially adverse
effect on the truck industry as a whole.
Since the change in the economic
climate, Cinven’s strategy for JOST
has comprised the following:
59
— working with management to
restructure the company to weather
the economic downturn and position
the company for growth;
— continuing to build JOST’s
market position and expand into
underpenetrated, high-growth
geographies (for example,
China, India, and Eastern Europe);
— making improvements in the
company’s operations and financial
systems, which lagged its design
and manufacturing processes; and
— realising operational and working
capital efficiencies through raw
material cost savings; optimising
the manufacturing footprint; tighter
cash management; and improved
management reporting systems.
Cinven and the management team
swiftly addressed the changed
environment by implementing a series
of rigorous and wide-ranging initiatives
to preserve and protect value, including:
— reducing manufacturing costs,
yielding substantial benefits on
a ‘run rate’ basis;
— reducing the manufacturing workforce,
including agreeing shortened work
shifts with workers’ councils;
— developing an inventory reduction
programme that has generated
significant sums of cash;
— creating a purchasing task-force
to reduce sourcing costs;
— reducing non-critical headcount,
personnel costs, expenses and
consolidating head office;
— eliminating or deferring non-critical
R&D projects and trade fair
attendance; and
The unexpected collapse of Lehman
— re-negotiating financing agreements
Brothers in September 2008 had a
in January 2011.
material impact on the financing markets,
which are critical for truck sales. In 2009,
JOST’s sales and profits rose
demand for heavy trucks fell by around
45% in Western Europe. Manufacturers significantly in 2010 as the market
closed their plants for extended periods recovered across the world, led by
Asia and Brazil.
of time, destocked and reduced 2009
production activity by around 67%.
Correspondingly, demand for JOST’s
products reached unprecedentedly
low levels.
Our investments
continued
TMT
Company description
www.numericable.fr www.completel.fr
Numericable is the only major cable
operator in France, and is also present
in Belgium and Luxembourg. It operates
the leading alternative high speed
network, covering close to 10 million
households and providing high-definition
television, video on demand, very
high-speed broadband internet and
telephony services. Numericable is
the result of a consolidation, initiated
by Cinven and Altice, of several cable
operators. The main components of
the Numericable group are:
— the cable assets of France Télécom,
Canal+ (Vivendi) and TDF (together
renamed ‘Numericable’), acquired in
March 2005;
Cable operator
France, Belgium, and Luxembourg
March/November 2005
September 2007
D3,115 million
D1,370.8 million
Approximately 2,300
Nicolas Paulmier, Thomas Railhac
Chairman Pierre Danon
CEO Eric Denoyer
CFO Thierry Lemaître
Activity Location Acquired Transaction value† Sales*
†
includes Altice One, Completel, Numericable, Noos and Altitude Telecom
60
Cinven origination
— Altice One, acquired in November
2005; and
— Noos-UPC, acquired in July 2006.
Cinven’s TMT team first targeted
the French cable industry in 2002,
which was highly fragmented. Cinven
identified strong potential for growth
In addition, Completel was acquired
with the advent of ‘triple play’ products,
in September 2007 as a stand-alone
higher speed broadband, high definition
TV and on-demand content. Finally,
investment. Completel is the third
Cinven identified a management team,
largest business-to-business (B2B),
infrastructure-based telecommunications and with its help was well positioned
operator in France. It uses its own
to execute a plan to consolidate the
fibre backbone (business districts in
French cable sector.
110 cities), Numericable’s capillary
fibre network, and its own DSL
network. Although legally separate,
the Numericable group and Completel
have common owners and are
managed by the same team.
Central to the investment strategy
for Numericable was the successful
consolidation of the French cable
industry, which would produce
significant synergy benefits. In pursuit
of this strategy, Cinven acquired the
cable assets of France Télécom,
Canal+ (Vivendi) and TDF in March
2005, and combined the three
companies’ operations and networks.
In November 2005, Cinven acquired
Altice One, which comprised the third
largest cable operator in France as
well as cable assets in Belgium and
Luxembourg. In July 2006, Cinven and
Numericable completed the acquisition
of the number two cable provider in
France, Noos-UPC France, from
Liberty Global. In September 2007,
Cinven acquired Completel in a
public-to-private transaction. Though
Completel is separately owned and
controlled, it is run by the same
management team. Finally, in December
2010, Completel acquired Altitude
Telecom, a small B2B operator with
high network and operational synergies.
Our investments
continued
TMT
61
Once these businesses were
consolidated, Cinven’s goal for
Numericable was to integrate the
fragmented market, improve core
operations and increase growth by:
— introducing a leading, experienced
management team identified by
Cinven, that could increase profit
growth through synergies and
efficiencies to bring performance
up to best-in-class standards;
— leading industry consolidation
through further acquisitions
with additional synergies; and
— investing in the network to increase
growth and the penetration of
digital TV, broadband and telephony
across the existing subscriber-base.
While Completel is separately owned
and controlled through arm’s length
arrangements with Numericable,
significant revenue and cost benefits
were identified for both companies,
including:
— a complementary footprint through
the combination of both cable and
DSL technologies;
— complementary service offerings
for both B2B and residential
customers; and
— revenue and operating benefits for
both companies by making use of
their networks and infrastructure
arrangements.
Cinven value creation has included:
— acquiring Noos and Completel in
2006 and 2007, allowing Numericable
to increase its footprint to cover
99.6% of French cable homes and
expanding services into the attractive
B2B segment, increasing utilisation
of the core network;
— consolidating all French cable
assets and creating the clear
number one cable operator in the
European French speaking regions,
with close to 10 million homes
passed and a footprint that
encompasses all of the most
populous French cities and regions;
— increasing revenues by 17%
between 2006 and 2010, through
the consolidation of assets and
Cinven’s operational initiatives;
— capitalising on the growth story
and rising cable company valuations
through a partial sale of the
combined Numericable/Completel
to Carlyle in March 2008; and
— supporting the continued growth of
Completel through the acquisition of
Altitude Telecom in December 2010.
Our investments
continued
TMT
Ziggo
Company description
Cinven origination
www.hetbedrijf.ziggo.nl
Ziggo is the leading cable operator in
the Netherlands, providing television,
broadband and telephony services
across its network, which passes
approximately 55% of all Dutch
households. Ziggo was formed by
Cinven through the merger of three
separate cable businesses: Kabelcom,
Casema and Multikabel (respectively
the second, third and fourth largest
cable providers in the Netherlands).
The combined business is the marketleader in the Netherlands with more
than three million customers.
Cinven had been tracking the cable
industry across Europe for several
years, and had concluded that the
Netherlands was one of the most
attractive markets for cable, due to the
high household penetration of its basic
television service. Cinven’s TMT sector
team had maintained contact with the
major players, management teams and
potential sellers. Cinven understood
the benefits of building a larger cable
platform that could offer state-of-theart products to customers, specifically
broadband, telephony and enhanced
digital TV services.
Cable operator
Netherlands
September 2006/January 2007
D5,450 million
D1,375.7 million
Approximately 2,500
David Barker, Caspar Berendsen
Chairman Andrew Sukawaty
CEO Bernhard Dijkhuizen
CFO Bert Groenewegen
CCO Marcel Nijhoff
62
Our investments
continued
Cinven origination continued
This understanding came from its
deep industry expertise through its
successful investment in the French
cable industry, consolidating the
acquisitions of Numericable, Altice
One, Noos and Completel in the third
Cinven fund. Cinven therefore focused
on consolidating the Dutch cable
market, with particular attention on
three of the four major cable companies
in the Netherlands. By combining
these three businesses, Cinven
created the market-leading cable
operator in the Netherlands. Cinven
had developed a close relationship
with the owner of the Netherlands’
largest cable operator, Kabelcom,
prior to the decision by the owners
of Casema to sell their cable business.
Consequently, Cinven was very well
placed to negotiate the purchase of
both Kabelcom and Casema in parallel
and Cinven proposed a joint deal with
another private equity company. The
material synergies between the three
businesses provided a platform for
attractive offers for both Casema
and Kabelcom.
TMT
63
Cinven’s strategy for Ziggo was to
consolidate the cable market in the
Netherlands, by:
— creating a leading Dutch cable
operator with a ‘multi-play’ offering
of digital TV, broadband and
telephony, in order to capitalise
on the opportunity to sell higher
value services (‘up-selling’) to the
traditional television customer-base;
— realising the substantial synergies
derived from combining multiple
businesses of scale; and
— achieving operational improvements
by sharing best practice across
each company, targeting significant
savings.
To date, Cinven’s value creation
for Ziggo has included:
— up-selling and cross-selling
additional products to existing
and new subscribers with higher
average revenues per user
(ARPU) and promoting sales
of triple play bundles;
— successfully integrating three
companies, resulting in a significant
improvement in profit margins;
— achieving substantial progress on
network upgrades allowing for an
enhanced service offering, including
high-speed internet, high-definition
television and video on demand
services; and
— ensuring significant net debt
reduction and cash generation,
resulting in Ziggo launching, with
the close involvement of Cinven’s
Financing team, two highly
successful bond offerings in
2010 totalling nearly D2 billion,
at very favourable rates. This also
had a positive impact on Ziggo’s
debt maturity profile and elevated
the company’s profile in the
capital markets.
Financing team
Managing debt financing from
origination to realisation.
Cinven’s Financing team helps
the firm’s portfolio companies to
manage their debt facilities and
treasury strategies, structures debt
financings for new investments
and maintains close relationships
with banks and other lenders.
A member of the Financing team is
allocated to each of Cinven’s portfolio
companies and works alongside our
board representatives and the
company’s senior financial managers,
providing advice on matters relating
to debt capital markets, liability
management and treasury policy.
When portfolio companies are engaged
in significant corporate activity, such as
acquisitions, disposals or a refinancing,
the team provides advice on financing
strategy and execution.
Matthew Sabben-Clare, Soren Christensen and Chris Anderson
Financing team
64
Cinven is a responsible owner of
businesses, and when we are involved
in debt financing processes alongside
our portfolio companies, we aim to
balance the interests of all stakeholders
while seeking to maximise and protect
value for Cinven’s fund investors. Our
aim is to ensure that the level of debt
within each of our portfolio companies
is sustainable and does not place
undue strain on the enterprise. We
refinance existing debt facilities to
improve terms wherever appropriate,
and we work with our companies
to help them manage interest rate
and currency risks using suitable
treasury strategies.
Over the last 12 months, conditions
in the debt capital markets have
improved significantly and the number
of companies involved in financial
restructuring in the leveraged loan
market has continued to decline.
Against this backdrop, the Financing
team has helped some of Cinven’s
companies by negotiating with lenders
to create more covenant ‘headroom’.
Cinven has also proactively worked
with portfolio companies to reduce
repayments on, and extend the
maturity of a number of debt facilities,
reducing the risk that they may have
to refinance debt at a time that may
not be opportune.
In recent months, with the improvement
in market conditions for private equity
and debt capital markets, the
Financing team has focused more
on structuring and executing debt
packages for Cinven’s latest
acquisitions, and the refinancing
of healthy portfolio companies’
debt on more advantageous terms.
The syndicated loan market has
recovered its poise in the aftermath of
the credit crunch, and has an appetite
for loans to buyout debt sponsored
by experienced and trusted private
equity firms. Cinven maintains close
relationships with the major lenders
active in this marketplace, as well
as with non-bank institutional lenders
such as CLO managers. The strong
relationship that exists between
Cinven and leading participants in the
leveraged loan market was in evidence
when Cinven acquired Sebia: the
all-senior loan package raised for
this transaction was underwritten on
attractive terms and widely syndicated
with an oversubscription in early 2010,
at a time when underwritten debt
financing for private equity-backed
acquisitions was still hard to obtain.
Another significant achievement
for the Financing team in 2010 was
the US$615 million term loan and
‘warehouse’ debt package raised for
the aircraft leasing business Avolon,
which is owned by Cinven and two
other private equity sponsors. The
US$400 million warehouse facility
offers Avolon committed but flexible
financing, which it needs to buy
aircraft on the most favourable
terms from manufacturers. The market
for this type of financing had been
effectively closed since 2007. Cinven’s
relationship with leading European
banks was important in securing this
critical financing.
Financing team
continued
65
A positive development for the private
equity market in recent months has
been investing institutions’ growing
appetite for high-yield corporate
bonds. This has opened up new
options for refinancing debt, as well
as reducing dependence on senior
debt. Cinven’s Financing team took
advantage of this new development
when in April and October 2009 it
helped Ziggo to refinance F2 billion
of senior and mezzanine debt, reducing
Ziggo’s cost of capital and extending
the maturity of its debt. April’s F1.2
billion tranche was the largest of its
kind by a first-time issuer in Europe
since 2007 and has been named
by International Financing Review
as European High Yield Bond of the
Year, 2010.
The Financing team is involved in
the management of debt financing
from origination through to realisation,
which can include providing
assistance to potential future buyers
and leaving our companies in good
shape in preparation for the next
stage of their development under new
owners. For example, in December
2009, the Financing team helped
to arrange a F1.6 billion underwritten
financing package for the purchasers
of Springer and in April 2010 worked
alongside Amadeus’ management
to negotiate a series of complex
amendments to the company’s debt
facilities that paved the way for its
successful IPO.
Governance and committees
A tried and tested system of
governance that takes the interests
of all our stakeholders into account.
Our Partners bear overall
responsibility for the management
and operation of Cinven and its
funds and take all important strategic
decisions. The entire Partner Group
meets formally every quarter.
When making decisions, the Partners
take the interests of all Cinven’s
stakeholders into account, including
those of the companies we own,
their employees, suppliers and local
communities, the environment and
society as a whole. Cinven’s only
business is the management of private
equity funds, so the issue of potential
conflicts of interest in respect of
corporate advisory work does not
apply to the firm.
To ensure that important decisions
can be made quickly and effectively,
the Partners have delegated certain
areas of responsibility to specialised
committees. These are the Executive
Committee, which is responsible for
day-to-day operational matters; the
Investment Committee, which is
responsible for the critical stages
of investment transactions; and the
Portfolio Review Committee, which
monitors portfolio companies and
realisations. The mandate and
membership of each of these
committees during the period
under review is detailed below.
66
Portfolio Review Committee
The Portfolio Review Committee meets
quarterly and has five main functions:
– to track the progress of each portfolio
company against the strategic plan;
– to facilitate sharing of best practice
across the portfolio companies;
– to ensure that each portfolio company
has the management team and
Cinven resources that it needs in
order to improve operations and
create value;
– to provide oversight of the
Members: Hugh Langmuir, David Barker,
development of each of the
Guy Davison, Nicolas Paulmier,
Cinven funds; and
Peter Catterall, Stuart McAlpine.
– to approve realisations.
Executive Committee
The Executive Committee meets
monthly and reports to the full Partner
Group at its quarterly meeting. It is
responsible for:
– strategic direction and policy of
the firm;
– the management of Cinven’s
human resources;
– risk management;
– regulatory issues and compliance; and
– financial management and control.
Investment Committee
The Investment Committee meets
at all critical milestones of investment
transactions. It considers the following:
– business issues;
– investment case;
– structure;
– price-range; and
– process and transaction cost.
Members: Hugh Langmuir,
David Barker, Guy Davison,
Nicolas Paulmier, Stuart McAlpine.
Members: Hugh Langmuir, Alex Hess,
Andrew Joy, Immo Rupf, Joseph Wan,
Pascal Heberling, Peter Catterall.
Corporate responsibility
At Cinven, we take a responsible
approach to our portfolio companies,
their employees, suppliers and local
communities, the environment and
society as a whole.
We aim to act with integrity at
all times; we value long-term
relationships built on trust;
and we support our portfolio
companies’ corporate responsibility
programmes and initiatives (see
case studies on pages 71 to 72).
Cinven complies with the UK’s
Guidelines for Disclosure and
Transparency in Private Equity
published by the Walker Working
Group, and with comparable
codes throughout Europe.
The Cinven Foundation
Each year, we make donations to a
limited number of charities through
The Cinven Foundation, mainly
supporting education-related
programmes. The charities that
currently receive financial support
from the Foundation are: Barnardo’s,
Eastside Young Leaders’ Academy,
Jeely Piece Club, The Prince’s Trust,
Right Track Scotland, School-Home
Support, Springboard for Children
and Tomorrow’s People.
Barnardo’s is the UK’s largest
children’s charity and runs more
than 400 projects across the country.
Whatever the issue – including
drug misuse, disability, youth crime,
mental health, sexual abuse,
domestic violence, child poverty and
homelessness – Barnardo’s believes
it can bring out the best in every child.
Further information:
www.barnardos.org.uk
Eastside Young Leaders’ Academy
nurtures and develops the leadership
potential of boys aged 8-18, particularly
those who are at risk of social exclusion.
EYLA works alongside schools to
motivate and encourage students,
focusing on respect and self-worth,
promoting a culture of hard work,
academic excellence and civic
responsibility.
www.eyla.org.uk
Jeely Piece Club was set up by
parents in a deprived South Glasgow
neighbourhood to improve opportunities
for their children. It provides a range
of innovative, high-quality services for
children and families while retaining
maximum community involvement.
www.jeelypiececlub.org.uk
67
The Prince’s Trust is the UK’s leading
youth charity. The Trust’s xl programme
works with schools to identify 14-16
year olds who are at high risk of
exclusion. It provides them with an
alternative curriculum that develops
self-esteem, skills and confidence
and leads to a nationally recognised
qualification. (See case study on
page 69).
www.princes-trust.org.uk
Right Track Scotland provides
intensive support to 13-16 year olds
to reintegrate them into mainstream
education or prepare them for
employment or further education
opportunities. It works in partnership
with schools, families and other
agencies.
www.right-track-scotland.co.uk
School-Home Support helps
vulnerable and disaffected children
who are at significant risk of truancy
or being excluded from school by
providing a link between school
and home.
continued
www.schoolhomesupport.org.uk
Springboard for Children provides
a ‘literacy lifeline’ for children with
learning difficulties in inner city
primary schools.
www.springboard.org.uk
The Private Equity Foundation raises
large sums from the private equity
industry and its business partners
to support charities that help young
people to succeed. The Cinven
Foundation makes an annual
contribution to the Private Equity
Foundation.
www.privateequityfoundation.org
Tomorrow’s People helps unemployed
people to get and keep jobs. Since
1984, Tomorrow’s People has
helped transform the lives of 440,000
people by putting them on the road
to employment. (See case study on
page 70).
www.tomorrows-people.org.uk
Matching policy: individual Cinven
employees make significant financial
contributions and donate their time
and expertise to a number of charities.
The Cinven Foundation recognises
this, and made donations to over
27 charities in 2010 as part of its
matching donation policy.
The UN Principles for
Responsible Investment
Cinven is a signatory of the United
Nations’ Principles for Responsible
Investment (www.unpri.org). The
Principles are a voluntary code
that helps investment managers to
incorporate environmental, social
and corporate governance (ESG)
issues into their investment decisionmaking and ownership practices,
with the aim of positively affecting
investment performance.
As a signatory, Cinven has agreed to:
— incorporate ESG issues into our
investment analysis and decisionmaking processes;
— be active owners and incorporate
ESG issues into our ownership
policies and practices;
— seek appropriate disclosure
on ESG issues by the entities
in which we invest;
— promote acceptance and
implementation of the Principles
within the investment industry;
— work together to enhance our
effectiveness in implementing
the Principles; and
— report on our activities and progress
towards implementing the Principles.
We are incorporating the Principles
into our business processes and
practices.
68
continued
The Prince’s Trust: helping to change
young lives.
Around one in five young people
in the UK are not in work, education
or training. Youth unemployment
costs the UK economy £10 million
a day in lost productivity, youth
crime £1 billion every year and
educational underachievement
£18 billion a year.
The Prince’s Trust seeks to tackle
this by giving practical and financial
support to disadvantaged 14-30 year
olds to help them to develop important
attributes such as confidence and
motivation. Through working with
young people who have struggled
at school, been in care, are long-term
unemployed or have been in trouble
with the law, The Prince’s Trust helps
them to realise their true potential.
At whatever stage of their lives young
people reach out for help, The Prince’s
Trust has a programme specifically
designed to give them the support
they need to gain the skills and
confidence to get into employment,
education, training or work-ready
volunteering.
69
The Cinven Foundation
and The Prince’s Trust
One of the Prince’s Trust’s programmes,
the xl programme, focuses on the
personal development of students
in their last two years of compulsory
schooling. Thanks to support from
The Cinven Foundation, a number
of schools with a very real need are
able to reach out to those at risk of
educational exclusion.
Andrew’s story
Andrew’s mother died shortly after
he was born. His sister contracted
meningitis at four, which left her with
severe disabilities. Andrew helps his
father to care for her, which leaves him
with little time to himself, his social life
and his studies.
There are many reasons why a
young person can under-achieve
in school: an unstable family home,
disengagement from academic
learning, behavioural problems or
falling in with ‘the wrong crowd’.
Regardless of the issues facing the
young person, the xl programme seeks
to ensure their continued engagement
in school and their studies.
www.princes-trust.org.uk
As a result of the pressures and
responsibilities at home, Andrew’s
school life was very difficult. He found
The Prince’s Trust xl programme is a
it hard to make friends because of his
network of over 1,000 in-school clubs low self-esteem and lack of confidence.
for 14-16 year olds who are at risk of
Even though he was supported by
truancy, exclusion or underachievement. staff, he still felt isolated.
In 2009/10 The Prince’s Trust helped
Andrew joined the xl club as a quiet,
over 12,000 young people through
self-conscious boy. During the course,
the xl programme. By focusing on
he took part in every activity and
developing skills outside the national
curriculum such as entrepreneurialism, significant developments in his
interpersonal and social skills were
‘failing’ pupils discover a new sense
obvious. He became more confident
of motivation and as a consequence
and engaged in school life and went
improve their social skills and
on to achieve several GCSEs.
attendance.
continued
Tomorrow’s People: helping
disadvantaged young people.
Tomorrow’s People is a national
charity which improves the lives of
unemployed men, women and young
people by helping them into lasting
work. Since it was founded in 1984,
Tomorrow’s People has helped over
440,000 people on their journey back
to work.
Working It Out is a highly successful
Tomorrow’s People programme which
works with disadvantaged young
people, supporting them into jobs or
training or further education. Working
It Out is entirely funded by donations
from supporters such as Cinven.
The young people who join Working
It Out tend to have few qualifications
and poor life and social skills; some are
offenders, some are homeless, many
have been in care and many come from
workless families. These are the young
people who other agencies find hardest
to help. Working It Out helps young
people improve their confidence and
self-esteem; it encourages a sense of
responsibility and gives them the skills
and experience to set goals and make
sound decisions. Working It Out shows
a different side to disengaged young
people and restores others’ faith in
what they are capable of, given the
chance and the right guidance.
The achievements of Working It Out
are impressive:
70
— 80% of participants see the
programme through;
—7
9% of those who complete the
course move into employment,
further education, or training
(45% into work; 32% into training;
23% into education); and
—7
7% are still in employment, further
education or training six months
after finishing the programme.
Working It Out is a very positive
experience for young people as they
have the opportunity to demonstrate
to themselves, their families, members
of the community and employers that
they can succeed and make a real
difference. But, most importantly,
young people say that getting a job
turns their lives around.
Millie’s story
When Millie joined Working It Out she
had one goal – to turn her life around
by getting into work. She was held back
by a lack of confidence, a lack of family
support and a history of drug taking and
petty criminality. Despite these barriers,
she wanted to make something of herself,
so she signed up for Working It Out.
The Tomorrow’s People team focused
on building Millie’s trust and worked
with specialists to help her deal with
her behaviour so that she could move
forward. Millie responded very well
and worked hard, building her selfconfidence and inspiring others on
the course.
While on Working It Out, she decided
she wanted to become a psychologist
and encouraged by the staff, she
passed a life skills ASDAN course,
before completing her GCSEs.
Tomorrow’s People then arranged for
Millie to be interviewed for a college
place and she has not looked back
since – completing A Levels in
Psychology, Sociology and Critical
Thinking. Millie also volunteers for
young people in care, participates in
conferences on the subject and sits
on a panel for potential foster carers.
In 2009, she won a Tomorrow’s People
award for her achievements and in
2010 she won an award from the
Private Equity Foundation – a key
funder of Working It Out.
How The Cinven Foundation
supports Working It Out
Working It Out has expanded rapidly
over the past six years. Cinven’s
contribution means that Working It Out
can help more young people like Millie,
giving them a chance to do things
differently and changing the course
of their lives. Cinven’s support is also
assisting the organisation strategically
to determine its future, building on the
recent evaluation of Working It Out.
www.tomorrows-people.co.uk
continued
Corporate responsibility at Amadeus:
Travel Further.
Through its ‘Travel Further’
corporate responsibility programme,
Amadeus, the travel distribution
services business, optimises its
environmental performance.
The company uses its know-how
to help industry stakeholders
manage environmental impacts.
Environmental management
at Amadeus
Amadeus is an IT provider, so its
direct environmental impact is relatively
low. Amadeus’ environmental efforts
focus both on optimising resource
consumption from its own operations,
and helping the industry increase
sustainability in the long run.
Amadeus’ Environmental Management
Programme (EMP) enables the
business to evaluate, report on and
improve its environmental performance.
EMP includes local environmental
initiatives and compiles and measures
overall resource consumption, making
it possible for the company to evaluate
its performance, and to create and
follow up on environmental targets.
Amadeus’ operations are global and in
2010 the company initiated a resource
consumption inventory exercise which
looked at its top 10 sites worldwide,
measuring resource consumption
(electricity, gas, water, paper, and
waste) and identifying best practices.
www.amadeus.com
71
The results will be used to monitor the
optimisation of the use of resources
and to help establish targets.
The Amadeus Data Centre in Erding,
Germany, one of the largest private
data centres in Europe, received
certification from TÜV SÜD in 2010,
which designated it as an energyefficient data centre. This certification
was the result of a one year process,
during which the Amadeus data
processing centre conducted a
full review and focused heavily on
optimising its energy efficiency by
working with independent experts from
TÜV SÜD. Of particular interest were
the power supply, the cooling and
climate control processes and the IT
equipment used, as well as the facility’s
procurement, installation and deinstallation processes and procedures.
Amadeus’ facility in Sophia-Antipolis,
France, which has a work-force of more
than 3,000 people, has joined a local
commuting scheme that seeks to
minimise environmental impact and
traffic congestion through car-pooling,
cycling, walking, public transportation
and alternative means of transportation.
flight management module can help
airlines save significant amounts of fuel
and reduce greenhouse gas emissions
by accurately estimating data related
to the calculation of fuel consumption
needs. Airlines using the Amadeus
Altéa DCS have already reported
significant fuel savings.
Calculating carbon dioxide (CO2)
emissions per airline passenger is a
complex task as different calculators
can produce significantly different
results for the same itinerary. Amadeus
has agreed to use the International
Civil Aviation Organisation’s (ICAO)
CO2 calculator, aiming at reaching
an industry standard calculation
methodology. A common industry
calculator would provide travellers with
coherent emissions reports, regardless
of the distribution channel used.
Amadeus has also entered into a
Memorandum of Understanding
with the International Air Transport
Association (IATA) for participation in
its Carbon Offsets Services Program.
The programme intends to use a
common industry standard for the
offsetting of carbon emissions.
Amadeus looks forward to continuing
Helping the travel industry to
its cooperation with IATA and other
manage environmental impacts
partners in order to make offsetting
Amadeus’ continuous R&D investments available through its information
permit development of state-of-the-art
systems.
technologies to help airlines and other
industry players reduce emissions. Its
Altéa Departure Control System (DCS)
continued
Coor Green Services: a first
in environmental labelling.
Coor, the Nordic integrated facilities
management business, has launched
a new labelling system for sustainable
facilities management services –
Coor Green Services. In the past,
environmental initiatives in the
service management sector have
been limited to individual services
or products. With this labelling
scheme, Coor is the first facilities
management provider to take a
holistic view of the environmental
issues that concern its customers.
Coor Green Services covers the
company’s entire service provision
process – including all facilities
management services – across all of
the workplaces, real estate locations
and production facilities in which it
serves its customers.
www.coor.com
72
Coor Green Services has created
a service mark to ensure recognition
for the scheme: an outstretched hand
and a leaf. The hand represents service
provision, while the leaf is a symbol
of the environment. This logo will be
displayed wherever environmental
standards have been satisfied and
will be an important guarantee of
high environmental standards.
There are two levels of the Coor Green
Services environmental label: gold and
silver. To qualify for either, the services
provided by Coor are evaluated
according to relevant environmental
criteria, some of which are mandatory.
To achieve the gold standard, an
operation must satisfy all criteria; to
qualify as silver, the mandatory criteria
and over half of the others must be
satisfied. The gold standard represents
a real challenge: the criteria are stringent
and will be adjusted upwards over
time. By adjusting the criteria yearly,
Coor’s environmental labelling
scheme guarantees a high standard
of environmental care.
Contacts
Cinven Limited
Warwick Court
Paternoster Square
London EC4M 7AG
Tel +44 (0)20 7661 3333
Fax +44 (0)20 7661 3888
Cinven S.r.l.
Via Manzoni, 30
20121 Milano
Tel +39 (0)2 3211 1700
Fax +39 (0)2 3211 1800
Cinven GmbH
Main Tower
Neue Mainzer Strasse 52
60311 Frankfurt am Main
Cinven SA
4 square Edouard VII
75009 Paris
Tel +33 (0)1 44 71 44 44
Fax +33 (0)1 44 71 44 99
Cinven HK Limited
Suite 5812‑14
Two International Finance Centre
8 Finance Street
Central
Hong Kong
If you would like further
information about Cinven
please visit our website at
www.cinven.com
Cinven Limited is authorised
and regulated by the Financial
Services Authority. Cinven is a
registered trademark.
Tel +852 3665 2880
Fax +852 3665 2980
Tel +49 (0)69 90027-0
Fax +49 (0)69 90027-100
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Annual Review 2010

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