Turning its back on an “overheating” London, business buyout specialist Aurelius has focussed its attention — and its £175m war chest — on potential Scottish targets.
The mergers and acquisitions (M&A) company, which was last year named the “German Private Equity Firm of the Year” in the international M&A Awards, confirmed it has already singled out one mid-sized business ripe for takeover.
Aurelius’s UK managing director, Tristan Nagler, admitted that Scotland was now the most attractive area in Europe for private equity transactions. “We are a cash rich buyer coming to a market where there isn’t that much competition,” he explained. “Edinburgh has a very sophisticated M&A scene that has been going a long time, so it’s a well-advised market.”
The executive said he expected to complete about eight deals a year, with the UK as a whole taking the greatest proportion. “We do not have a spending deadline,” said Nagler, “nor do we have a timetable for selling on the businesses we acquire.
“The UK is becoming more and more of a focus for us. We have come to a view that it’s a much more interesting place than most of continental Europe,” he added, “with everything pointing to a strong recovery.”
Aurelius has completed one previous Scottish deal, the 2010 takeover of CalaChem, a Grangemouth-based chemicals company which it still owns.
On Nagler’s shopping list this time are manufacturing concerns and businesses within the food and drink sectors. His preferred targets are mid-sized firms valued up to £20m and with turn-overs around £30m. He has ruled out anything with an “oil and gas price tag”.
As a company that likes to buy “real businesses” rather than service sector firms, Scotland and the north of England have considerable more targets, while London “was overheating in recent months making it more of a sellers’ market”, stressed Nagler, who admitted: “We often like investing into uncertainty, because fortune favours the brave.”
Listed on the Munich stock exchange, the Aurelius ethos claims it “focuses on the acquisition of companies with development potential through operational engagement … With a strong capital base, international contacts and a large team of specialists in financial and corporate management we will bring your company back on the road to success”. In addition to its Munich and London offices it has subsidiaries across most of Europe, Asia and North America.
In a pre-emptive move, Aurelius has been forced to post a web site statement denying it has any connection with the Argentinian economic crisis.
“You might have seen press coverage about an Aurelius and some other hedge funds suing Argentina for repayment of old government debt and these law suits potentially causing Argentina to default on its debt,” says the statement. “Aurelius Capital is a hedge fund from New York which was set up a few years ago. We as AURELIUS here in Europe have no connection whatsoever with them.”
Meanwhile, it has been announced that the number of Scottish companies seeking help with exports rose by nearly 30 per cent last year. The country’s development agency also reported that established international suppliers claimed they would earn at least £1.2bn over the next three years.
Scottish Development International (SDI) officials — working through the development agency Scottish Enterprise — said they supported more businesses wanting to expand overseas during 2013-14 than ever before. In all 2,708 companies approached the SDI for advice, an increase of 29.1 per cent on the previous year.
Published as the highlights from Scottish Enterprise’s annual report, with the full version to be released later in the year, there was significantly no real-terms growth in exporting companies since 2012. Most, however, upgraded their three-year international sales projections from £818m to £1.2bn — a rise of 53 per cent.
“These results underline the fact that Scottish companies have reached a real turning point where international exporting has become an integral part of growing their businesses,” commented SDI chief executive, Anne MacColl.
“This record level of demand for our support demonstrates that Scottish businesses are becoming more confident, developing a more international mindset and crucially embracing markets worldwide.”
MacColl added that Scotland’s high-profile events throughout 2014 offered an unprecedented chance to promote the quality of the country’s products and services whilst showcasing it as a great place to invest. “We have a real opportunity to use this as a springboard to radically transform Scotland’s economy,” she said.
Speaking at the Commonwealth Games Business Conference, staged in Glasgow alongside the sporting events, Scotland’s finance secretary, John Swinney, said: “With our economy now back above pre-recession levels — exceeding our pre-recession peak and at least 25 per cent ahead of the UK — it’s vital that we support companies as they capitalise on this growth and expand internationally.”
He, too, felt the Commonwealth Games had concentrated huge international focus on Glasgow and Scotland. “The games are already delivering a significant economic legacy that will benefit Scottish businesses and communities for years to come and we are committed to working with Commonwealth countries to extend that ambitious economic legacy,” stressed the minister.
“We have an important and distinct economic story to share in terms of our successful approach to tackling the recession and our strategy for increased and sustainable economic growth,” added Swinney. “We must continue to strengthen our growth through innovation and entrepreneurship and boosting Commonwealth and international trade will be a key focus.”
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