Nikos Stathopoulos: a good buy means finding ‘something more’

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Nikos Stathopoulos has a tan, no tie . . . and brims with confidence. You would expect nothing else of the executive who was the driving force behind BC Partners’ purchase of Acuris, the news and data supplier.

Five years ago the buyout group snapped up the company, then Mergermarket, in a £382m deal including debt. Today Acuris is back on the market and is likely to fetch £1bn or more.

Sitting in his company’s European headquarters in London, the Greek expatriate cannot talk about the sale because the auction is live. Instead, he wants to chat about how to select the best assets to buy.

Financial engineering alone is not enough, he says. It is vital to look at how to nurture a business, from acquisitions to new markets and new products. “We don’t invest in one-trick ponies. We have to buy businesses that not only grow but have multiple levels of growth.”

That’s been said by others, of course, but BC Partners sits on a €7bn buyout fund, which makes this private equity veteran a man to listen to. Industry insiders are licking 
their lips at the dealmaking they expect over the next few months.

It is not always easy and dealmaking has come with growing pains. BC Partners had a sluggish fundraising for its latest flagship fund after the troubled buyouts of Fitness First gyms and Phones 4U shops. It has also faced setbacks in European investments, notably 
in retail, but its successful exits include the $2.4bn sale of France’s Antelliq to Merck in December.

Mr Stathopoulos learnt his trade in the buyout team of Apax Partners in the late 1990s. 
He was part of the team that bought Tim Hellas Telecommunications, the Greek mobile phone operator, but despite his deep involvement in that transaction he left Apax for BC Partners in 2005.

Mr Stathopoulos, who notes that actor George Clooney is a friend, has nine deals under his belt at BC Partners, including the acquisition of cable companies Com Hem, for €1.8bn in 2011, and United Group, for €2.6bn in September.

He still says that finding an edge on assets is tough. That, though, is like the manager at Chelsea, Mr Stathopoulos’s favourite football team, complaining about having to decide team tactics for the next game. It is top-flight stuff.

“Investing is very much about conviction,” says Mr Stathopoulos. “To get to that conviction you must have something more than your peers […] so that you’re able to pay more. It’s not just based on the business plan.”

The “something more” can be what you bring to the business. He explains: “How can you grow it faster than other people? What other M&A do you feel this company can do?”

Mr Stathopoulos says buying the right company is critical — and the ability to generate high returns isn’t always a prerequisite. “What you need to do is not [just] select the right asset but be also a very good owner of this asset. That’s where I think our industry has evolved in the last ten years.

“It [has] learnt to become better owners of assets, more active owners of assets,” he says.

Mr Stathopoulos has also gained experience from deals that have run into difficulty.

In 2008 he led the acquisition of Migros, Turkey’s largest food retailer, in a $3.25bn deal. 
It remains the country’s largest leveraged buyout. BC Partners has hugely increased the number of stores and Migros’s sales have doubled annually.

In recent months, however, the investment has been under pressure following 
the collapse of the lira/euro rate. Still, Migros keeps growing.

“One of the lessons is the impact that the macro environment — which we sometimes underestimate, especially in emerging markets — can have on the value of a business,” says Mr Stathopoulos.

He stresses that the factors that made Migros an “attractive investment” are still there 
but concedes that the transaction emphasises the importance of patience “and waiting 
for the clouds to clear”.

To date BC Partners has sold 80 per cent of the company and has more than doubled 
its money, according to a person familiar with the transaction.

Private equity usually invests on a three to five-year horizon but BC Partners has held 
on to Migros for more than 10.

Mr Stathopoulos says: “We are not under pressure to monetise our remaining stake
as we are sitting on a fast-growing asset but it does prove that private equity is (and sometimes has to be) patient capital. ”

A large part of Mr Stathopoulos’s reputation in the industry is that he sees what others don’t. His competitive spirit is fierce and he takes to the basketball court to burn it off.

One veteran who has worked with him says: “He’s got personality. 
Some people in private equity are just deadpan.”

But he also divides opinion, and has a reputation among rivals for ruffling feathers 
when pursuing deals.

A fellow dealmaker said: “He is very ambitious, very charming and very good at networking. To be a great deal guy, you have to be aggressive but not have sharp 
elbows and you want people to do business with you.”

But Mr Stathopoulos is not running out of deals. 
In his view, private equity groups need to keep looking for opportunities despite concern 
that buyout groups are paying through the nose and that debt levels for deals continue 
to rise.

He says: “The only way you can do this is if you continue investing at the same 
pace across your investment period.”

He explains: “If you take for granted the fact that you cannot time the market, 
the only way you can hedge yourself against this is if you can invest with the same or roughly the same pace.

“Otherwise, if you call it wrong for 2018 and you put 50 per cent of your fund in one year 
and it proves to be wrong, then you’re going to have a nightmare recovery.”

The soaring price of assets has led to concern that private equity groups will be unable 
to repeat the returns that originally lured institutional investors — and that the industry will be no more than a bunch of asset gatherers.

This doesn’t worry Mr Stathopoulos: “I don’t think it’s a bubble.The fundamentals of companies remain strong. I think, if you look at the proportion of debt and equity that finances transactions, it’s not [at] the levels [of] 2007-08.”

He does not anticipate a massive correction either: “I think there’s going to be an adjustment in values, and you see this already in the public market. But if the environment, in interest rates, inflation, and earnings growth, remains roughly where it is, I don’t think we’re going to see a crash.”

Mr Stathopoulos is unconcerned about the $2tn of unspent capital, so-called dry powder, that is waiting to be deployed on deals.

He says: “The dry powder out there today reflects something like two to three years 
of deployment. This does not indicate excess supply. [Our industry] has proven to be very patient [with regard to] capital.”

He says that even in a high-valuation environment, people 
“have found pockets in which to invest”.

Returning to Acuris, he says: “We’re not rocket scientists who saw [the company] and nobody else did.” He says the reason for the success is what else BC did to generate value.

Acuris has seen double-digit growth in its earnings before interest, tax, depreciation and amortisation, and this has been helped by nine new acquisitions, new products and markets and heavy investment in technology.

At the same time, BC Partners has shed a lossmaking division, though Acuris still has more than 1,300 people and has offices in 70 locations.

The push for growth has paid off. The 2014 purchase price represented a punchy 11 times multiple on earnings and since then the business has more than doubled in value. Two years ago GIC, the Singapore state fund, bought a 30 per cent stake that placed a value of roughly £1bn on the company.

Acuris, has attracted interest from both trade and private equity groups after BC Partners appointed bankers at JPMorgan and Goldman Sachs, and may fetch an even higher valuation.

It has been a sage bet. BC Partners has already taken more than twice the original investment off the table.

Nikos Stathopoulos CV
Born November 1969 Athens, Greece

Salary Undisclosed

Education 1987-91 Degree in business administration, 
Athens University of Economics & Business

1993-95 MBA, Harvard Business School

Career

1995-98 Management consultant, BCG

Partner, Apax Partners

2005-present Partner, investment and executive committee member, BC Partners

BC Partners
Founded 1986

Assets €20bn

Employees 156

Office locations London, New York and Hamburg

Ownership Employees

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