Insights from HSF’s private equity team

How does the HSF private equity team differentiate itself in the market?

John Taylor, partner and the head of the private equity practice in London: We have a multi-capability private equity practice, advising clients across the full lifecycle of investments from fundraising and capital deployment, supporting their investments all the way to exit. We work across all capital structures and execute extremely complex transactions and strategies in multiple jurisdictions. Our private capital team leverages our full-service offering and the multiple sector strengths within our wider firm.

Our team continues to grow strategically. In the past 12 months, our hires of Eleanor Shanks as head of international private equity in London, venture and growth capital partner Dylan Doran Kennett and leveraged finance partner Ambarish Dash have bolstered our private capital practice in London.

Dr Christoph Nawroth, partner, Düsseldorf: In Continental Europe, recent hires include private equity and venture capital partner Gregor Klenk in Frankfurt, as well as finance partners Dr Fritz Kleweta, Sergio Cires and Laure Bonin into our Frankfurt, Madrid and Paris offices respectively. The teams in continental Europe and London are fully integrated and offer our clients seamless advice wherever this is needed.

We’ve a strong client portfolio, advising the likes of EQT, Aquiline Capital Partners, H.I.G. Capital, GIC, and CPPIB on deals ranging across the likes of energy/renewables, infrastructure, TMT, life-sciences, and financial services.

Can you discuss some of the trends that are impacting your clients?

Joseph Dennis, partner, London (JD): In the UK, the recent stabilisation of interest rates has resulted in cautious optimism for sellers to begin work on exits that have been sitting patiently in the pipeline. As rates begin to ease, we expect to see the gap in pricing expectations beginning to close.

Christopher Theris, partner, Paris: In continental Europe, the sheer number of elections and similar political events has resulted in a cautious market. We’re also seeing the use of bilateral processes at the inception of deals, moving away from a more typical auction or auction/bilateral hybrid arrangement.

‘The City of London is arguably the top global financial centre and has a huge range of intrinsic advantages.’

JD: Our private equity team were first movers in identifying the trend towards funds specialising along sector lines. Some years ago, we positioned our private equity practice to be closely aligned with our top-tier sector focused M&A practices, along the same sector lines as our key sponsor clients and targets. We are now well positioned to advise multi-strategy and multi-geography sponsors active through their full investment lifecycle across each of the geographies in which we operate, and we and our clients are really benefiting from this approach.

What role do you see for continuation funds?

Jonathan Blake, head of international private funds strategy, London: Continuation funds are part of a broader growth trend in secondary opportunities. Although the global economy is showing positive signs of stability, achieving the exit multiples that GPs would expect for their high-performing assets is still uncertain in current market conditions.

Stephen Newby, partner, London: The structure of a continuation fund offers LPs an opportunity to either liquidate or continue to hold their position. It also offers an opportunity for secondaries investors to participate, often with one ‘anchor’ investor that underwrites the existing LPs that decide not to rollover.
These options give GPs a good alternative to a full exit, especially where the GP is confident in its ability to add further value to an asset that will help to achieve even greater returns over the medium term.

Michael Jacobs (MJ), partner, London:To compliment continuation funds, we are seeing more structured pre-exit syndication and introducing a wider pool of investors into later stage assets – in part to drive liquidity and partial exits, and also a consequence of the broader ‘private for longer’ theme. The ‘private IPO’ concept is part of this trend.

How is the industry reacting to the change in government and the new policies that affect private capital?

Eleanor Shanks, partner and head of international private equity in London: The private equity industry as a whole wants to play its part and will continue to make the case to governments of the sector’s significant contribution to the whole economy, including to growth and productivity. It is a significant driver of private investment in the UK as it is globally.

There are some specific tax policy proposals that were in Labour’s manifesto that the government are currently considering, and we all appreciate the complexity balancing the incentives and the country’s fiscal position – in driving that investment and growth which in turn drives receipts for the revenue.

MJ: The City of London is arguably the top global financial centre and has a huge range of intrinsic advantages – its competitiveness has been boosted in recent years with the Financial Services and Markets Act and the Edinburgh and Mansion House reforms, alongside the UK’s listing regime reboot. While it is hard for any individual policy decision to change this, we would caution the government to not take the City for granted.

Subject to unexpected circumstances, what might we expect for deal activity at the start of 2025?

David D’Souza, partner, London: The focus on Distribution to Paid-In Capital (DPI) means the UK pipeline continues to deepen. Reassuringly, it is also widening across sectors which may have been slower in the last few years.

Alberto Frasquet, regional head of corporate EMEA, Madrid: In Continental Europe, private equity funds are likely to continue to look at assets in the pharmaceutical/healthcare, infrastructure and energy (particularly data centres), education and software sectors – these appear to be the most attractive for investment.