TESTIMONIALS

Aphea.Bio - Isabel Vercauteren

Isabel Vercauteren

In June 2017 the Flanders Institute for Biotechnology (Vlaams Instituut Biotechnologie, VIB), Ghent University and the Catholic University of Leuven launched the spin-off Aphea.Bio. This young start-up and spin-off studies micro-organisms that coexist closely with plants, and their effect on agricultural crops. Using advanced biotechnology techniques, Aphea.Bio conducts practical research into thousands of different micro-organisms that may be useful.

Isabel Vercauteren helped get the company off the ground, also in terms of financing. Aphea.Bio was able to raise a total of 9 million euros in capital from around ten different partners.

What prompted you to start this business?

Isabel Vercauteren: Aphea.Bio was started up in response to new scientific insights and technological developments, on the one hand, and the demand for greater sustainability in the agricultural industry, on the other. It has been known for quite some time that some micro-organisms have a favourable effect on crop growth and/or health. The idea of developing crop protection products based on micro-organisms is, therefore, not entirely new in itself. The new scientific insights and results obtained at the Flanders Institute for Biotechnology (VIB) laid the foundations for the launch of Aphea.Bio. Farmers have relied on chemical crop protection products for a long time, but many of these have currently come under pressure due to excessive toxicity or loss or activity and, as a result, the development of resistance. This is why the spotlight is being trained on alternative crop protection products such as biostimulants and biological control agents: a market that has been growing strongly, year after year (>13%), and for which a global market value of over 12 billion euros is forecast by 2022. Aphea.Bio is an R&D company developing superior products for a more sustainable agriculture based on novel, naturally occurring bacteria and fungi. Aphea.Bio can count on a strong team of scientists and technical experts led by Steven Vandenabeele, CSO. The entire development process takes up quite a bit of time. First, we identify the organism, and then we cultivate it. This is followed by tests performed in the greenhouse. This pipeline is continuous, and takes up around two to three years. The next step consists of field trials. We also experiment with the various product formulas. The last phase involves the registration process, which takes two to five years to complete, on average.

How difficult was it to raise the start-up capital?

Isabel Vercauteren: It took approximately ten months to raise the necessary capital of 7.7 million euros. Considering that this was an investment in a start-up in the field of Research & Development – which is, after all, a high-risk investment – it took time to persuade investors with venture capital. Being able to present a strong business plan was of crucial importance. In the end, we managed to put together an outstanding consortium of investors, which includes V-Bio Ventures (lead investor), PMV, Agri Investment Fund, VIVES, Qbic II, Gemma Frisius Fund KU Leuven, Group De Ceuster and VIB.

The government-owned independent investment company PMV, (Participatiemaatschappij Vlaanderen) and Flanders Innovation & Entrepreneurship (VLAIO) were also prepared to join us right from the start by financing 1.5 million euros in shares and 1.3 million euros, respectively. What made these partners of the first hour decide to join you?

Isabel Vercauteren: Allow me to quote our investor PMV. On the one hand, PMV believed in the social added value. On the other hand, the investment company anticipates that the sale of the venture, in the long term, could produce a tidy sum. Although Aphea.Bio is only a starting company, it became clear straight the way that this is a unique opportunity. Flanders played a pioneering role in biotechnology, and we can be proud of our knowledge. We are one of those small companies that will be doing some wonderful things in this field, and is in the vanguard of innovation. This is all happening here, and we can justly take pride in this development. To quote PMV, the company enjoys investing in young, starting companies such as ours, and helping them grow. Even if an investment like this also means uncertainty and taking a risk. Some investments go awry, and some turn into amazing success stories. It is not without reason that financiers like PMV provide venture capital. VLAIO was also an obvious choice. The agency provides support to Research & Development projects for innovations that play a key role in the realization of a business case that can strengthen the company. This can also be read on the VLAIO website.

You have institutional investors (PMV and VLAIO, linked to the government) on board, as well as private players. Are there any differences with regard to emphasis?

Isabel Vercauteren: Not only were we able to raise the necessary capital with the above-mentioned consortium, but it has also brought us a wealth of expertise. Of course, every party has its own, specific rationale. The Aphea.Bio’s investors’ consortium of investors greatest strength is that we have investors that are rather technology-minded, but also operate close to the market and have close ties to the agricultural industry.

Isn’t negotiating with so many different partners rather difficult?

Isabel Vercauteren: I do not experience it as such. The investors’ consortium is highly complementary and very constructive. After all, we all want the same thing: to make sure that Aphea.Bio becomes a success story.

Return on investment is always a priority for private equity players. Is this something you can concur with?

Isabel Vercauteren: Yes, but this is equally important to Aphea.Bio. Competition is strong. So, if we aim to play a prominent role in the field of alternative crop protection products and wish to remain ahead of the competition, we will need to focus on return on investment each and every day. This is why we are adhering to a strict business plan, in consultation with our partners. Bringing this product to the market is also very expensive. This also means that the private equity players are pushing us to focus on cost efficiency. But this is common sense, right?

How independently can you operate?

Isabel Vercauteren: We have approved a solid business plan, together with our investors. Progress with regard to this plan is explained in our executive boards and adjusted where necessary. We have also made clear agreements and defined milestones. The plan nevertheless allows us to operate highly independently with regard to the day-to-day management of the company.

Private Equity/BVA
Author: Karel Cambien

Axi - Paul Peeters

Paul Peeters

Willebroek-based ICT company AXI is a sizeable player in the industry, offering both hardware and software solutions. CEO Paul Peeters witnessed the growth of the past decades first-hand. But you need capital to grow. AXI’s is a story of serial buy-outs, with different private partners. Paul Peeters is enthusiastic: “You can always learn from private equity experts”.

Tell us more about your company’s antecedents?

Paul Peeters: AXI was established in the eighties, as a spin-off of the ICT service of the VEV (Flemish Economic Alliance, Vlaams Economisch Verbond). We chose to become an Oracle partner. In the last twenty years, we have offered our IT services to a series of specific sectors, including retail, the public sector, the care sector and service/industry. Retail accounts for approximately 50 percent of our turnover. AXI has an active presence in the Belgian and Dutch market, and its own offices in Breda. We have excellent references, on either side of the border, working with leading partners in their respective industries. Currently AXI generates a turnover of approximately 55 million euros with a workforce of 250 employees.

Who are your shareholders today?

Paul Peeters: In early 2017, PE player Indufin came on board, replacing ING. Indufin holds a slight majority stake. I myself own 20 percent of the company, together with six of my colleagues after an MBO (management buyout). We also offered a large number of our employees the opportunity to buy shares in the company. Seventy-three employees took us up on our offer, and currently hold a joint stake of 25 percent. The remaining shares are in the hands of two former directors/company officers.

Why did you choose Indufin as your new private equity partner?

Paul Peeters: Obviously we gave this matter a lot of thought. We studied various proposals after ING and Cytindus notified us that they wanted to sell their shares. But Indufin proved the best match. We clicked from the start. It felt as if we spoke the same language, shared the same vision. Which is important, and even crucial, when you decide to go in business together. But it was the human aspect that sealed the deal. While AXI is an ICT company, it is first and foremost a people business. In other words, AXI wants to be a value-driven company, something that Indufin also finds very important.

You know the company inside and out, which is why you own part of the company, together with six of your colleagues. How did you raise the private capital for this acquisition?

Paul Peeters: I had been a shareholder for quite some time, albeit with a small stake. As a result, I had the funds to increase my personal stake in AXI after all these years.

Did you consider any alternatives to private equity? An IPO for example?

Paul Peeters: An IPO was never an option. We did look at an industrial solution, meaning we examined the option of offering another ICT company, that is familiar with the industry’s ins and outs, a majority stake in our company. But we soon abandoned this idea. Because we want to write our own story, and Indufin gave us the freedom to do this. Other than that, it’s all about trust, and so far this feels right for us. We felt that we were on the same wavelength from the outset.

What are the main advantages of private equity?

Paul Peeters: It feels right when you’re on the same wavelength, as is the case for AXI’s management with Indufin. At the end of the day, we know our business inside and out. Our PE partner has no say in our business plan. A PE partner gives you financial peace of mind. They also advise us. And in Indufin’s case, their advice has proven very valuable. And finally, Indufin also has an excellent network. Their contacts and business contacts help open doors. And now that we are looking at growth through acquisitions, in addition to organic growth, their network and experience with such transactions undeniably offer added value.

Are there any downsides to private equity?

Paul Peeters: Not really, but obviously openness is key in such a business relationship. I have also heard the stories about private equity. Let me rebut them straight off. You shouldn’t be afraid of this concept. The main thing is to make good agreements from the start. You need to be aware of your partner’s expectations. And you need to discuss a future exit scenario from the outset.

Some say that private equity players are only interested in the bottom line?

Paul Peeters: I don’t really get that feeling with our new partner. Yes, we do report to them every six weeks. But this is common sense, right? But there is much more to it than just figures. Their interest extends beyond financial matters. Let me give you an example. For example they want to know how we deal with our employees, what our HR policy entails. They also identify with the story we tell our customers, as well as give us very useful tips regarding customer intimacy. So in that sense, they are the perfect sounding board for us at management and board level.

AXI’s mission statement explains that it values CSR or corporate social responsibility. How does Indufin feel about this?

Paul Peeters: They encourage us all the way. They also value respect and trust. Entrepreneurship is founded on people. It means giving your employees the chance to organise their work in function of their private life. Or to help them learn and become more proficient or plan their career. We do everything we can to foster team spirit with teambuilding events. Indufin is our greatest supporter, in a sense.

Did you already discuss the exit strategy?

Paul Peeters: No formal agreements were made to date, but we did discuss it briefly when they came on board. In my experience with private equity, this primarily is an organic process. You both feel that the time is up. Currently this is not our concern. We feel comfortable with each other. A recap (an equity restructuring) with the same player is also an option. An exit is not always the answer.

AXI has great ambitions for the long term. Do Flemish private equity players have the financial clout to help you pursue these ambitions? After all, Anglo-Saxon funds tend to have deeper pockets.

Paul Peeters: Currently our ambitions are completely in line with those of our private equity partner.

Private Equity/BVA
Author: Karel Cambien

Destiny - Daan De Wever

Daan De Wever

Daan and Samuel De Wever were just shy of thirty when they founded their own telecommunications company, called Destiny, in 2008. Destiny provides telecommunications services and cloud solutions to the business world, to small and large companies. The De Wever brothers have plenty of ambition and appetite. Being a challenger for the big players on the Belgian market? Why not? Gladly even. Rolling out a European strategy in the long term? Most certainly. “But you need to get other financial partners on board in every growth phase.”

Destiny is celebrating its tenth anniversary. What’s the status quo?

Daan De Wever: I was just 28 when I founded this company with my brother Samuel (22). We were really young but we were ready to conquer the market, like real entrepreneurs. Our initial ambition was to be a small but ambitious challenger for the big boys on the Belgian market, like Proximus or Telenet. I think we’ve already succeeded quite well in our endeavour, among others because of our recent acquisitions, including three in Belgium. We grew very fast from the outset. Our headquarters are in Zaventem but we have already opened two offices in the Netherlands (one in Heerlen and one in Amsterdam). But as you can guess, fast growth means you need help, so we needed capital in other words.

How did you get through the first capital raising round?

Daan De Wever: In 2009, one year after we founded the company, it was obvious that our own start-up capital of a few hundreds of thousands of euros was no longer sufficient. So we went in search of partners, hoping to raise approximately 1 million euros of seed capital. At the time, two investment funds (ING, Sherpa Fund) and two business angels decided to invest in us. In 2015, the time had come for the next step, which is why we joined forces with a Dutch fund, called Mentha Capital, which is still on board.

How do you look back on that first capital round today?

Daan De Wever: A company needs different partners in every phase of its growth. The initial investors no longer were the right partners to support our growth and our ambitions. Overall, I think it was a positive experience. But there are certain things I would do different, with what I know now. I would definitely “give away” less of the company. The initial investors got a lot of shares for relatively little money. Of course, they bear part of the risk, and I understand that, but still. Let’s put it this way: their contribution was sufficient for the first phase of our growth, but that’s all there was to it. What I take away from it is that you need to do everything yourself as an entrepreneur. Financial backers are also interested in the bottom line, in their profit, even though they promise you the world on a plate. So you need to be realistic. And young entrepreneurs need to realise this. Anyway, in 2015 the time had come for the next step, to achieve our ambition.

How difficult was it to find the right private equity partner who wanted to invest in the project?

Daan De Wever: To be honest, it was quite easy. There was a lot of interest because Destiny continued to grow. We needed a financial partner who had the clout to help us with our internationalisation strategy. Ultimately we decided to go with a Dutch fund, called Mentha Capital. We immediately realised that we would be expanding our operations to the Dutch market. With Mentha’s support, we made four acquisitions in the past few years, three of which in Belgium and one in the Netherlands. Thanks to Mentha’s financing, we are growing faster than ever. When they came on board, Destiny had a turnover of 15 million euros and 2 million euros EBIDA, which has since increased to 40 million and 8 million respectively. We would have never grown this fast without private equity.

What is Mentha’s greatest added value?

Daan De Wever: Two things stand out. One: they bring a lot of insight and competence to the table, in every phase and especially for every investment. And this goes quite far, believe me. Which makes you, the entrepreneur, feel like they have your back. Two: private equity is like a good marriage. You need a good match. And that certainly is the case with Edo Pfennings, the partner at Mentha Capital. I like to call him my perfect sounding board and it is a well-known fact that every CEO needs someone to touch base and check ideas.

Which formal agreements did you make with the private equity player?

Daan De Wever: We listed everything. Including a consensus on the strategy. We soon agreed that expanding our operation to the Netherlands was a logical next step as part of our international ambitions. And also: we wanted to continue to be independent. A buyout is not an option for the immediate future. We have a lot of leeway on the operational level. They don’t force us into acquisitions or potential targets. We are free to appoint our own board. One thing that is important is a possible exit. That is something I think you need to talk about, because sooner or later you’ll need a new partner, for your new ambitions. I prefer a long-term strategy when I think of our company. To enter the European market, and expand our operations beyond Belgium and the Netherlands is our goal. Whereas a private equity player tends to look at the short term. You need to be realistic. In a few years, you’ll turn another page, and start a new chapter with a different financial partner. In the longer term, we hope to have a company with a turnover of roughly 500 million euros. Which means we’ll need to seek fresh capital to the tune of 100 million euros.

Do you think there’ll be any interest and from whom?

Daan De Wever: There are players of this calibre in Flanders, like the GIMV among others. But we may also choose to partner with an Anglo-Saxon or another Dutch fund. We’ll see. In any event, it has to be someone that believes in our story of growth. Something tells me there’ll be a lot of interest again.

Private Equity/BVA
Author: Karel Cambien

Grandeco - Patrick Molemans

Patrick Molemans

In the category of ‘model companies’, niche company and textile firm Grandeco comes very close to attaining the highest distinction. The SME, which has grown almost too big to merit this distinction, employs a workforce of approximately 300 and is present all over the world and is a wallpaper specialist. In 2007 GIMV took over the majority (91 per cent) of Grandeco after parent company Balta opted for an exit. At the request of GIMV, Brabant-born and bred Patrick Molemans took on the extra muros leadership of the company as its CEO in 2014. “You simply can’t have a better private equity partner than GIMV.”

Balta sold the company to GIMV in 2007. Why?

Patrick Molemans: Grandeco’s activities were not compatible with Balta’s core business (floor covering). Balta therefore wanted to divest it. At the time of the sale to GIMV Grandeco was certainly a profitable company. GIMV is only interested in SMEs with good prospects for the future and opportunities for growth. Guiding this process along is one of GIMV’s basic competences. GIMV holds 91 per cent of the shares. The minority is held by myself and several members of the executive board.

It is ten years later now. What was the proven added value of GIMV? What have you learned besides figures, keeping tables up-to-date and thorough checking?

Patrick Molemans: To understand everything perfectly you must make a distinction between the first period (2007 to 2013) and the second. At the end of 2013, I was recruited by GIMV to become CEO and roll out a strategy. The problem with Grandeco was that it had a subsidiary in Vosges that was not profitable. At the height of productivity, this subsidiary employed 150 persons. Grandtil (the name of the French company) had been choosing wrong channels and offering the wrong products for too long. It also took our French subsidiary too long to understand that the market, and particularly the distribution aspects, was changing at lightning speed. In the end, Grandtil was completely insolvent. Nevertheless, GIMV’s confidence in Tielt remained unwavering. Proof: GIMV injected 3 million euros in fresh capital in the firm’s head office and provided further assistance through strategic guidance.

Can you tell me more about this?

Patrick Molemans: A legion of measures were adopted, such as a new management and shifting the focus from pure production (push the market) to a more market-driven approach (pull the market, or in other words: developing a sixth sense for what the market demands). Under the leadership of GIMV we paid more attention to our own brand, opted for renovated and modern offices and ultimately adopted a more marketing-driven approach, which included better internal as well as external communication. All in all, this was a turnaround.

Growth thanks to capital

Is GIMV a shareholder that directs business operations with a wagging finger?

Patrick Molemans: Not in the slightest. GIMV is neither a know-it-all nor patronising, but a highly driven social partner in our development. As a CEO, I can hardly imagine a better parent company. Koen De Jonckheere, CEO of GIMV, has assured me more than once that we – and no one else – are the captain of our ship. If there is too much interference, we should always let him know. That says everything, doesn’t it? GIMV has nevertheless appointed a chairman of the executive board: Tom Van de Voorde. His only concern on behalf of GIMV is: to help us attain our growth ambitions.

Which concrete agreements apply between you as a manager and your management board, on the one hand, and GIMV on the other? In other words: how independently can you operate?

Patrick Molemans: There is plenty of room for independent operation. A concrete example: decisions regarding all smaller investments are taken autonomously. Cases above 250,000 euros are put before the executive board. Our autonomy is substantial. Several years ago, we compiled a business plan that provides for growth. Having started with a turnover of 50 million euros in 2013, which was increased to 64 million in 2017 we intend to achieve 75 million in 2019. Profits should also grow from 5 million to over 10 million. I have entered into this engagement together with my management board, and so shall it be. We are still identifying plenty of opportunities for growth, both in terms of territory and products, or new distribution channels. To make a long story short: the general lines have been clearly set out, we compile mid-term reviews and are pretty much left to ourselves with regard to the rest. You can hardly imagine a better partner.

Mutual engagement

Normally speaking, a private equity player will not remain on board this long. This seems to be exceptional, or doesn’t it? Why is GIMV still a permanent anchor?

Patrick Molemans: Considering the difficulties in France and the economic crisis around 2009, it could hardly be otherwise. GIMV will probably remain on board for some time. I have made a commitment to make the company greater and stronger by 2019. We are well on our way to achieving this goal.

If a new shareholder steps in, will this have to be a private equity player, strictly speaking?

Patrick Molemans: What every business needs, and this applies to Grandeco as well, is a good home base, regardless of whether this is a private equity player or an industrial partner. No matter how satisfied we are with GIMV as a financier, our preference goes out to an industrial partner in the next phase, one that speaks the same language we do in all facets of the business.

Learning lessons

How did you bridge the crisis years together? And which lessons have both of you learned from this?

Patrick Molemans: The company in Tielt has always demonstrated tremendous resilience. GIMV has even given this new impetus by asking us to respond quickly in the event of a malaise or an impending problem. The ship was, so to speak, also pushed gently in another direction during the crisis years: from a pure volume player to a company that focuses, in the first place, on added value. This was achieved by innovation, for example, which is enabling us to upgrade wallpaper and increase the number of possible applications. The focus on sustainability and digitalisation has also contributed to a decisive turnaround. We are the only ones in our sector that can offer digital printing at the right price-quality ratio.

In your opinion, are there any disadvantages to private equity? Can’t banks do what private equity does?

Patrick Molemans: Banks cannot think along with you in the same terms. They want security, above all. However, I think there are two possible disadvantages to private equity. One: you have no control over an exit scenario. The one who has the money calls the shots; that’s only logical. We are lucky that GIMV has continued to have confidence in us. Even when things were going poorly in France, the plug was not pulled and GIMV demonstrated a great deal of patience and confidence in us. Two: a private equity does not have the same business, product and brand knowledge that the management has. But except for these two points, I see primarily benefits.

How do you envision the future of your company? Would you ever consider a buy-out, for example? Or is it once private equity, always private equity?

Patrick Molemans: Certainly not. In a next phase the company will benefit most from attracting an industrial player that focuses, in first place, on profitability and further growth. GIMV was primarily interested in making an investment in order to get the ship ready for battle again. So, you see, each business passes through various stages, and each stage requires a different solution. If a good candidate appears, GIMV will in all cases be given the credit it deserves and look back at its achievements with pride.

Private Equity/BVA
Author: Karel Cambien

House of Talents - Steve Rousseau

Steve Rousseau

Steve Rousseau has succeeded in catapulting his “House of Talents” to a higher level in less than ten years. His mission is to devise solutions for shortage professions in every possible industry. But his endeavour soon snowballed to such an extent that Sofindev came up with the capital to shore up the growth. Because the sky is the limit!

House of Talents is a real growth company. Can you give us a quick overview of your activities and explain why growth is so important?

Steve Rousseau: House of Talents was established in June 2008 as an HR specialist in shortage professions and now consists of 10 different companies, namely Sales Talents, Care Talents (nurses), Financial Talents, HR Talents, Executive Talents, Next-ICT, BTS Food (a temp agency specialising in employees for butchers), Arcq , Chaintec Group and Digitalents. The group employs just under 1,000 specialists in various niche markets, with offices in Kortrijk, Waasmunster, Antwerp, Leuven, Brussels and Liège. In 2017, House of Talents posted organic growth of 56 percent. This figure will probably increase to 120, 130 percent if you take the acquisitions into account. In 2017, this should result in a turnover of just under 60 million and 14 percent EBITDA margin. In 2017, our strategic focus, much like the previous years, was on (organic) growth and the start-up of new initiatives or acquisitions (such as Arcq and Chaintec). Growth benefits all of our employees. But growth can also be relative. From the outset, the emphasis was always on sustainable profitable growth. In other words: yes, we are interested in growth, but not at the expense of everything.

Most people associate growth with growth pains. Did your company have to contend with growth pains? You also devise creative solutions for HR problems, but did you have any of your own?

Steve Rousseau: One of our main problems continues to be finding motivated employees. But this also happens to be our specialty and core activity. Many companies find that their growth is hampered by a shortage of new employees while this proved a strength in our organisation. Various (non-specialised) colleagues in our sector rely on us to find new employees.

You also need capital to grow, in which case you have plenty of options to choose from. Entering a partnership with another company. An IPO. Or private equity. Why did you choose the latter option and how did you go about this?

Steve Rousseau: You need capital to grow, that’s a fact. But things are slightly different in our case. We only used our private equity partner for new investments, not because we were short of capital. We can finance organic growth and the start-up of new companies ourselves. We needed additional capital however because we are focussing on acquisitions. We opted for private equity because we are too small to go public (and we never really considered this option either). After three years of very strong expansion, my former “silent” partners decided to withdraw from the capital of HOT. At the time, we tasked Ernst & Young (EY) with finding a partner and they oversaw the entire process. In the end we had about 18 non binding offers, and I made a conscious choice to go with Sofindev.

What was their proven added value?

Steve Rousseau: Very simple: the combination of a network, professional expertise and a proven track record.

Are there also downsides to having a private equity partner? Did this have an impact on your balance sheet, on your debts? Did it feel like someone is constantly looking over your shoulder?

Steve Rousseau: While our debt has increased, we have structured it in such a way with the banks that they don’t paralyse us, allowing us to continue to focus on growth. I’m an entrepreneur and as such it was important that I found the right partner, who enables me to keep running my business. Clip my wings and you will no longer get any eggs, it’s that simple. Sofindev understood this from the outset and instead of limiting me, they support me, inspiring me to continue to develop and grow my business. There is definitely a click, this is definitely a win-win situation for both parties. We clearly chose a partnership model with Sofindev. The strategy is jointly discussed and confirmed and we are in full charge of the operations side. We discussed the investment horizon and made clear agreements about the future exit strategy from the beginning of our temporary partnership. All the stakeholders around the table did their homework thoroughly in other words before moving forward and committing.

Private Equity/BVA
Author: Karel Cambien

iTeos - Michel Detheux

Michel Detheux

Right across from the Charleroi airport, the Walloon biotech company iTeos is working towards a better world. CEO Michel Detheux and his forty employees are full of idealism as they fight the cancer monster. iTeos Therapeutics is active in immunotherapy and in a few years, hopes to be launching two medications to help relieve cancer patients from their misery. This year the model business raised 75 million dollars, intended in part to fund the costly testing and research phase. This promising biotech company is now opening an office in Boston as well.

Who are the driving force and shareholders behind iTeos?

Michel Detheux: Benoît Van den Eynde and I started the company in 2011 on a fifty-fifty basis, with only minimal funds, however. Our first round of financing in 2012 raised 3 million euros. The university at Louvain-la-Neuve and various business angels (such as the famous Walloon financier Jean Stéphenne), among others, decided to share in our journey. Other backers included Fund+ (Désiré Collen, ex-Thrombogenics), Pierre Drion (ex-CEO Petercam) and the Ludwig Institute for Cancer Research.This renowned cancer research institute – along with technology from the UCL de Duve Institute – was iTeos’ scientific foundation. Additionally, the Walloon government provided us with 6 million euros in support. In 2014 a strategic alliance followed with the pharmacological giant Pfizer and SRIW, the Walloon investment firm. Pfizer has currently pulled out again. Our big break, financially speaking, was this past year, when we managed to raise 64 million euros of additional capital. I believe this to be unprecedented one of the most important for our sectora preclinical stage biotech within Europe. Eighteen shareholders brought in that capital together. Our main investor is now the American venture capital fund MPM, controlling one third of our company. You could say MPM is a real leading force. The rest follow in their wake.

64 million euros is a whole lot of money. Why is so much private capital needed?

Michel Detheux: We actually need even more. The Région wallonne will be adding have been a major partner with several grants and refundable loans for another 30 million. So, we now have funds amounting to approximately 100 million euros altogether. It’s all due to our business model. Immunotechnological research is extremely expensive and additionally, the research process is very slow. Our competition has even larger budgets, from 300 million to 1,500 million euros.

So, how do you intend to differentiate yourselves from the big boys?

Michel Detheux: iTeos has one single ambition: to be world-class. Within five to seven years, we want to bring two best-in-class medications to market.

Private equity investors always want a return on their investment. Will they have the necessary long-term patience?

Michel Detheux: Five to seven years is indeed a long time, though our investors know this is a sector that requires plenty of patience. We think we have found a solution to their desires though, namely an IPO, a.k.a. the stock market. Bringing a new medication to market will cost us about a billion in any case. That means raising a few hundred million (300 to 350 million) in funds. In this country, with the exception of the GIMV, that isn’t so simple. So, we need to go public. That’s why we’re adding the Boston office. Another possibility would be for iTeos to get a major partner on board. Those are our two long-term funding options. The initial investors are aware of that. At some point they may decide to continue sharing the journey, or opt for a return on their initial investment instead.

It’s striking how many financial partners are involved. Doesn’t that complicate things? Will the rules of corporate governance apply if things get critical?

Michel Detheux: Corporate governance rules are an ideal guideline if it ever comes down to it. We’ve communicated this principle clearly to all our backers from the start. We strive to incorporate corporate governance for all aspects of our company: HR, legal, business development and, as you see, financial matters as well. That’s a good thing too. If we ever hit the stock market, this part of the job will be done already, together with our backers. They’ve all declared their approval of this approach.

Please, summarise private equity’s advantages and disadvantages for us.

Michel Detheux: I’ll begin with the benefits. In our sector, private equity is the only option. Without private equity we’d never be able to realise our entrepreneurial vision. That’s why I always call private equity the smart money. Private investors really do more than just hand over the money. They have their own networks. Besides, and don’t underestimate this, they often have extensive market knowledge, much more than you’d guess at first. Finally, you can count on private equity players to be there for you, even under difficult circumstances.

Disadvantages?

Michel Detheux: I can’t think of any. It’s only logical that a company will need to prove itself and fulfil the promises it’s made to its backers. The fact that iTeos attracted investors from across the globe is proof that this team meets its promises and has managed to gain international recognition in record time. American, Swiss and Chinese investment funds showed an interest, along with the original stakeholders.

In conclusion: iTeos is now opening an additional office in Boston. Why?

Michel Detheux: I’m going over there myself with my family to get things moving and work on visibility. A presence in the US is simply a requirement in this sector. After all, Boston is the Mecca of the American pharma sector. To prepare to be listed on Nasdaq – as is our intention – you need to be on location. The most bankers, the greatest investors and most prestigious legal firms can all be found on the East Coast of the US. There are approximately 1,500 biotech companies in Boston alone, compared to 2,000 for all of Europe. That says it all.

Private Equity/BVA
Author: Karel Cambien

Lineas - Geert Pauwels

Geert Pauwels

Lineas is the private railway company, founded in 2011, which was formerly known as B-Cargo, NMBS Logistics and as B Logistics from 2015 to 2017. The privatised company, which was separated from NMBS, is specialised in rail freight, and is in full evolution mode today, in 2018. Some even speak of revolution mode.

Since the coming of Argos Wityu, the originally French private equity player with European tentacles, business has been booming, each and every day. With 7,000 wagons and 200 locomotives, Lineas is one of the largest privately owned companies in its sector in Europe and still growing. Losses were transformed into profits. Ex-Mc Kinsey boy Geert Pauwels leads the professional dance at Lineas and is overjoyed to have a partner like Argos.

Every privatisation requires money. In your case, partly from the state and partly from a private player. How easy or difficult was this search? Based on the presumption that there is enough money in the market, as people always want to say.

Geert Pauwels: When we separated from NMBS we were very fortunate that the historical losses were taken over by the former shareholder. However, this does not mean that we were able to immediately turn a profit after the demerger. Of course, this was a different story for interested parties. If it was an easy search? Not really, even though three parties demonstrated a principal interest. As the rail freight sector is not a typical sector, considerable time was spent on both sides in sounding everything out. Argos gave us the best feeling on all fronts.

What were the requirements, the rules, laid down by the private equity player? Did this mesh with what the government wanted?

Geert Pauwels: It has to be said: our case was not an easy one for more than one reason. To count a few: we operated at a loss, we were active in an atypical (albeit misunderstood) sector, we wanted a turnaround and with the NMBS we had an unconventional shareholder on board. Our vision differed considerably on a number of points. However, we made it. Argos is certainly not the shark that some private equity players are often held to be. The opposite is true. I have an ideal sounding board in the top executives of Argos, Gilles Mougenot and Richard Reis, with whom I can communicate openly and transparently on all fronts. They are managers that think along with you, In fact, they do even more than that. They pursue lofty human and moral values. This gives me an exceptionally good feeling. Our overall business plan was compiled in consultation with the shareholder. We opted for a double turnaround. The first turnaround was a question of survival, while the second focused on sustainable growth. For both parties – the management and the private equity player – it was clear that there were a number of crucial aspects to consider. One of these was cost-cutting, in the first phase. In the growth phase, which is where we are today, Lineas aims to come forward as a partner that produces sustainable solutions in the field of ecology (CO2 emissions) and mobility (the traffic congestion problem). It was crucial that new and attractive solutions were found for a modal shift. This is only possible if you offer the corporate world a good alternative in which you can guarantee your customers a good price, reliability and convenience. We are achieving our objectives, step-by step, and currently have 13 connections from Antwerp to foreign destinations across all of Europe. I repeat: we both want the same thing, our management and the private equity house. I do believe that there is an exceptional cross-pollination between our management and the private equity house. Argos recently asked the top management for a financial engagement. Jointly with around ten managers, we are the minority shareholders. I believe this is a good thing, because this reinforces commitment and motivation.

Trust in all banks

During the past few weeks an almost academic discussion was held in the media on the question of whether or not the government should provide risk capital? According to Geert Noels this is disruptive to the market, while others such as Rudy Aernoudt tend to disagree with this point of view. What is your opinion on this?

Geert Pauwels: This is a difficult discussion. Europe explicitly stated, when we were converted into a subsidiary and also later on when the company was privatised, that the state would not be permitted under any circumstances whatsoever, to finance the company after the debt assumption. In our case we had no other choice but to apply to the private equity market. Whichever way you look at it, we are happy with this. The envisioned turnaround was possible thanks to private equity. In the past – consider the losses at B-Cargo – a different approach was taken. These are the facts.

How capital-intensive is your business and can Belgian players, with their rather limited resources, cope with this? Will you need to appeal to Anglo-Saxon funds with more possibilities sooner or later, whether you want to or not? In accordance with your ambitions, we would think.

Geert Pauwels: Of course, we have to consider the long term. However, it is reassuring that we have entered calmer financial waters. Our current cash flow is sufficient to cover all our investments. This has opened doors. The banks also demonstrate confidence in our approach and, contrary to how it was in the past, are now also willing to grant us loans.

Still, your current partner will inevitably consider an exit at one point or another?

Geert Pauwels: I have no idea who the next shareholder will be and this is not something I am concerned with at present. In the present phase, we are concentrating on our operational growth plan. What I do know is that Argos is fully committed and has even declared itself prepared to join us in our search for the best possible partner after its exit.

The importance of a long-term strategy

Have you ever thought about floating the company on the stock market in order to collect the necessary funds? Could that be an alternative to private equity?

Geert Pauwels: When we embarked on the privatisation process, we took everything into consideration. The possibility of stock market flotation was also investigated. When we finally decided to take the private equity option this was a very conscious decision. The biggest advantage to private equity is the focus on longer-term developments. A listed company is constantly required to present it figures. Private equity is more patient, I think. If performance is temporarily declining, or money is needed immediately for an investment, our partners will always be prepared to think along with us.

Still, a business undertaking has to have a longer long-term strategy than a private equity player, right? Experts say that managers should count in decades. Isn’t this at odds with the rather short long-term policy – 5 to 7 years – that a private equity player pursues by definition?

Geert Pauwels: I have never had this feeling with the French private equity player. Aside from the shareholder, a business has to be able to make plans on both the short term (“the trains have to run every day”) as well as on the short term. Therefore, there is a double focus. As a manager, I have to focus on two options, all the time. What I have noticed is that our current shareholder is understanding about everything, and also contributes his thoughts to our strategy. That gives me a good feeling.

Hidden gem

Some private equity funds still find it difficult to find sufficient opportunities in the markets. Would you call Lineas a good candidate for a private equity player? Is Lineas a scale-up, in other words, or even a hidden gem?

Geert Pauwels: That’s for others to decide. What I do know is that our society needs a company like Lineas, for climatological reasons, for mobility and because we are at the service of the corporate world. The economic world can never come to a standstill, although the contrary sometimes appears to be true. In this respect, we provide ecological solutions. Today, we are the largest private player on the rail transport market in Europe, and we will continue to hold our ambitions high. We are all working together on a fantastic project. By the end of 2020 we aim to be active in 30 countries (now 13) through full-scale investments in a European network, on the one hand, and innovation, on the other. There is still a great deal possible in the field of digitalisation in mobility. Examples include self-driving wagons or locomotives. The question is if we will be able to guarantee economic as well as financial added value on the long term, regardless of who the shareholder is. To be honest, and also in all modesty: we think that we are making great headway in both fields, and are therefore sufficiently attractive.

Private Equity/BVA
Author: Karel Cambien

NG Data - Luc Burgelman

Luc Burgelman

Luc Burgelman’s professional life is divided between Ghent and New York, the ‘Big Apple’. The Flemish data mining company, of which he is the founder and joint shareholder, has grown explosively in only five years, primarily on the international market. “As an entrepreneur you can have lofty dreams and a fantastic business plan – which I and my initial partners had – but you have to find a way to accumulate capital to achieve this. Private equity turned out to be a good choice.”

What kind of company is NG Data and what is its background story?

Luc Burgelman: The impetus for the company was provided by four entrepreneurs – friends who shared a dream: Jurgen Ingels, Steven Noels, Frank Hamerlinck and myself. Frank and I knew one another from the IT company Porthus, which we both left at a given point in time. After Porthus was sold we were wondering: what’s next? We heard more and more people speaking about customer intimacy.

Today, the consumer is the centre of attention more than ever before. This is something that all businesses, whether large, medium or small, can only confirm. It is also a worldwide phenomenon. With NG Data we set up a company that could provide the corporate community – particularly banks and telecom companies –with a sort of customer data base. These are sectors that collect large amounts of data about their clients, but actually do very little with it. When I was in Silicon Valley I discovered a new trend: data mining and data analysis. The time was absolutely ripe for this in 2013. Or to say it with a witticism: NG Data google-ises, as it were, the data of banks and insurance companies to further enhance customer loyalty or guide their customers even more strongly in a specific direction. We now have branches in Paris, London, Amsterdam, New York, Mumbai and Singapore. The Belgian market was clearly too small for our big dream.

And then it starts: you can’t do anything without money, right?

Luc Burgelman: Let’s be clear about this right from the start: we needed a lot of money. In situations like this, you look into the various options. Borrowing money was an option, but not the preferred option in our case. A heavy debt balance is not an attractive perspective for a technology start-up. Loans and mountainous debts do not have a positive effect on valuation of the company. Private equity seemed to be the ideal scenario and it appears that we were right in this. In an initial round we, the founding fathers, went in search of Belgian financiers that were also a sort of business angels. We first applied to ING, and then turned to Michel Akkermans and subsequently to Jos Peeters of Capricorn. In the meantime, we had completed several new capital rounds, and also got the Dutch firm Holland Private Equity and the French firm ID Invest on board. Our shareholdership has become highly diversified and spread out.

How do you set to work in concrete terms? Wouldn’t you say that the more parties you have to negotiate with, the more difficult it is?

Luc Burgelman: We compiled a Business Plan 2020 and worked it out down to the smallest details with the management and the initial founders. If you are negotiating with private equity players, you have to be completely open about the organisation, your ambitions and your strategy. If you do this, and the financiers have faith in your project, things will become a lot easier. We have been able to pull 50 million euros from the market in just five years’ time. You can hardly imagine a bigger vote of confidence. It is subsequently up to the management to ensure that we live up to our commitments, each and every day. Dealing with big players like this is never easy. We, the founders, had a big advantage: we already had a good track record (with Porthus, among others) and had numerous relations in private equity circles. Once you start negotiating with several players and you gain their confidence, more and more doors will start to open for you.

What is something you must never forget in your relationship with private equity players?

Luc Burgelman: There are two things that I consider to be essential. First: general corporate governance takes precedence over everything. This is why we have appointed an audit committee and a remuneration committee. Second: you should preferably have a partner that helps open those doors. This is something we experienced in France with ID Invest, which has an extensive high-level network.

What are the main advantages of private equity?

Luc Burgelman: Private equity helps you to quickly conquer a place in the market. That is one. Two: private equity introduces you to a network that you would otherwise not have. Three: if you have money you will be able to grow faster.

Is there a downside?

Luc Burgelman: If you collect a lot of money a little loss is inevitable at first. There’s nothing dishonourable about this. Just look at Showpad, that’s the exactly same story. The rule applies: you have to invest before you can start making money. But everyone, management and financiers alike, has the same feeling: at a given point of time the business concept is as good as it can possibly be. Our software is also becoming increasingly innovative and high-performance. The market knows how to value this. We are already looking at new opportunities in still untapped markets like Australia, for example.

How far does the patience of these big players stretch? Aren’t you permanently under threat of an exit?

Luc Burgelman: We have opted for partners who feel at home in today’s technology-oriented world. They understand better than anyone else that success can’t be ordered. If the bond of trust between the shareholder and the management is strong, there will also be a lot of patience. Our job consists of capturing and creating value. Judging by the feedback, everything is in order. It has to be a perfect match. We are on exactly the same wavelength as the six directors of NG Data.

No ‘puppet on a string’ feeling, then?

Luc Burgelman: Everyone has his own job to do: we have to run the company, and they have to play a supervisory role in this. We still feel happy with regard to both sides.

Private Equity/BVA
Author: Karel Cambien

Theo Coertjens International - Pascal Wuillaume

Pascal Wuillaume

Antwerp-based (Brecht) Theo Coertjens International is a leading producer of preserved meat products, for the hospitality industry, catering companies and wholesale industry. Originally a small, family-owned butcher’s, the company has since become a modern, medium-sized company, whose products are sold on the Belgian market and in several European countries. But nothing can be achieved without spending money, especially in case of a management buy-in. As Pascal Wuillaume knows all too well. “The most difficult thing was to convince the previous owner to sell his company.”

Tell us more about your company’s antecedents?

Pascal Wuillaume: Theo Coertjens founded his company with his wife in 1959. Over the years, the company became a leading player in the Belgian and Dutch markets, exporting to France and Italy. Last year, Theo Coertjens International generated a turnover of approximately 9 million euros. Theo Coertjens, who was 85 years old at the time, set about finding a buyer to ensure the company’s continuity. Robur Capital and myself (as CEO) invested in the company and jointly acquired all the shares. I have over 20 years of experience as a CEO of international companies. Until recently, I was the CEO of Saey Home & Garden and before that I managed the Fountain Group, a listed company that produces hot beverage dispensers.

Was it always your dream to become the owner or co-owner of a company?

Pascal Wuillaume: It was not exactly a priority, but when the opportunity presented itself, I did grab it with both hands. On the one hand, I was looking for an experienced partner to take a company to the next level and ensure its sustainability for the future through PE. On the other hand, I find sharing a vision important, being able to work with a partner in an atmosphere of mutual trust. I was looking for a partner with financial expertise, but who could also share their ideas on business management and business development. At Fountain I had learnt that a solid private equity partner can be a huge asset and when I met Robur I knew that they were just right.

Nothing can be achieved without money. Sometimes there’s a big gap between dreams and reality and private equity can bridge that gap in some cases. What are the biggest advantages of private equity?

Pascal Wuillaume: There are several advantages. For starters, a private equity firm has a general and a more in-depth financial knowledge. It also generally brings plenty of experience to the table, as well as a large network of valuable contacts. And this is very important when mapping out a company strategy. In my opinion, every company must pay attention to its own ‘valorisation’. Robur had all the necessary know-how for this.

How difficult was it to find a private equity (PE) firm?

Pascal Wuillaume: Obviously there are plenty of firms to choose from. It helped that I was familiar with the world of PE, having worked with such firms for twenty years. Ultimately I only met with one partner, who proved to be the right partner from the outset. We immediately felt a click. Searching for and finding the right partner is also all about timing: I had to be available when a PE is searching for a CEO.

Why Robur?

Pascal Wuillaume: People don’t stress this enough, but the two parties really need to click. And that is exactly what happened with Robur. But there was more to it. I think that Robur is also different from the traditional PE firms. It really is a fund by entrepreneurs for entrepreneurs. They understand the problems and challenges you face as a CEO because they’ve all experienced them themselves. The support you get is really valuable. We speak the same language, which is really important.

What did you find most difficult about sealing the deal?

Pascal Wuillaume: Convincing the seller who also happened to be the company’s owner was, admittedly, quite a laborious process. Theo was 85 years old. But ultimately, we succeeded in our endeavour, thanks to Robur and to Theo’s entourage. The main argument was that the company would benefit in the long term from entering a new phase. Now the company culture must be gradually adapted to the new ambitions.

Which fundamental agreements did you and Robur Capital make?

Pascal Wuillaume: I prefer not to comment on this…

It has been said that PE firms look forward from day one to the exit with the largest possible leverage. Is this true?

Pascal Wuillaume: Every company has its price, regardless of its size and a PE firm needs to make a profit on this. I think it’s vital that everyone is aware of this. In any event, Robur has committed to helping the company develop a long-term strategy. This company wants to grow, among others with a well-thought-out export strategy. If you are asking me whether we agreed on a term for Robur’s exit then the answer is very simple: no, we didn’t.

Private Equity/BVA
Author: Karel Cambien