2016 Annual Review - Bridgepoint · PDF file2016 Bridgepoint Annual Review 2016 Bridgepoint...

2016 Annual Review

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Contents2 Introduction4 Bridgepoint at a glance8 What drives us10 Locations12 Our investments in 201630 Managing Partner’s overview38 Investment and sector expertise52 Current investments54 Responsible Investing61 Bridgepoint Charitable Trust64 Offices

Our aim is to deliver attractive returns to our investors by investing in companies and building stronger, broader-based businesses with greatly enhanced long-term growth potential.As a long-established, experienced and responsible private equity investor we help companies and management teams by investing in expansion, operational transformation or via consolidating acquisitions. Bridgepoint funds typically take controlling stakes in well-managed companies valued up to €1 billion. We are attracted by opportunities in sectors and niches with strong underlying growth and global competitive advantage or in cash generative businesses with high visibility of earnings.

InTROduCTIOn InTROduCTIOn

2016 Bridgepoint Annual Review2016 Bridgepoint Annual Review

Chris Busby Partner, Head of investment in the uK

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2016 Bridgepoint Annual Review 2016 Bridgepoint Annual Review

Bridgepoint at a glance

assets under management

returned to investors in 2016

of committed capital raised to date

add-on acquisitions made in last 10 years

committed to eight investments by Bridgepoint funds in 2016

Investments made in last 10 years

over 75,000 employees in current portfolio

€12.4bn

€1.6bn

€21.6bn

323

€1bn

64 75,000

BRIdgePOInT AT A gL AnCe BRIdgePOInT AT A gL AnCe

Investors by type*Bridgepoint has a blue chip investor base comprising public and private pension funds, asset managers, family offices, sovereign authorities and insurance companies around the world.

Investors by location*Bridgepoint has investors across the globe with over 250 investors from 30 countries.

3%

3%

4%

6%

5%

7%

52%

57%33%

5%5%

20%

Non-corporate pension

Financial institutions and Family offices

Asset Manager

Corporate Pension

Sovereign entity

Endowment and Foundation

Insurance

Bridgepoint

Americas

Europe

Asia Pacific

Middle East & Africa

*BE V, IV and BDC III only

6 7BRIdgePOInT AT A gL AnCe BRIdgePOInT AT A gL AnCe6

2016 Bridgepoint Annual Review

Revenue

eBITdA

12%12%

Portfolio growth in 2016


Issa Hassan Associate, London

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What drives us

WHAT dRIves us

We are driven by a set of values about how we do business, underscored by our duty to invest responsibly. These are shared across our Firm and are fundamental to our professional and personal conduct. We believe they define us and help us maintain the highest levels of corporate governance and apply the highest standards of professionalism across Bridgepoint.

Performance-drivenWe settle for nothing less than superior performance achieved by entrepreneurship, initiative, intelligent judgement and teamwork.

ThoughtfulWe always seek to make a difference – for investors, companies or in our duty as a responsible investor within the broader community.

straightforwardWe are straightforward, open professionals who act without arrogance and embrace the views of others without prejudice.


WHAT dRIves us


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10 11LOCATIOns LOCATIOns

2016 Bridgepoint Annual Review 2016 Bridgepoint Annual Review

Frankfurt Istanbul London Luxembourg Madrid new York Paris shanghai stockholm Warsaw

Local ambition, global reachWe have a local presence in every major european private equity market. With a network of eight european bases and offices in new York and shanghai, we can deploy resources effectively when identifying and completing transactions as well as manage value creation in the businesses we support.


12 13OuR InvesTMenTs In 2016 OuR InvesTMenTs In 2016

Our investments in 2016In 2016 our Bridgepoint Europe and Bridgepoint Development Capital funds performed strongly thanks to our team’s skill in exploiting our investment and operational resources.

With a focus on six sectors, our teams not only have in-depth understanding of markets and extensive industrial networks and relationships, but are also able to bring market knowledge to bear in accelerating growth in our portfolio companies.

During the year we targeted sectors with strong underlying structural growth drivers growing ahead of the broader economy or where Europe had a global competitive advantage. In addition, an intentional tilt towards greater diversity of trading revenue in these times of volatility can also be detected in our new investment activity this year.

With a long-standing track record of acquiring sector leaders operating in fragmented markets, Bridgepoint worked with management teams to transform these investments into platforms for consolidation and value creation.

Generating ‘internal growth’ through operational improvement was also an important driver of earnings growth in 2016. Bridgepoint is well resourced to deliver far-reaching business transformation thanks to an extensive team that includes operational support, portfolio development (especially in China and the US) and procurement.


Identifying value In 2016 we invested €1 billion in eight new businesses with a total enterprise value of €1.9 billion

Business growthFund investments collectively generated 12% and 12% year-on-year average revenue EBITDA growth

Returning proceedsBridgepoint investments returned over €1.6 billion of capital to investors with 13 realisations

“ Bridgepoint and the management teams in which our funds are invested are excited by the opportunities presented by the times.”

Guy Weldon Chief Investment Officer

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Acteon is a leading global player in the design, manufacture and distribution of dental equipment, imaging technologies and consumables.

Its product portfolio includes a complete range of dental equipment including ultrasonics and polishers, imaging equipment including intra-oral cameras and x-ray systems, and dental consumables ranging from anaesthetic to hygiene products. Medical equipment includes endoscopes and surgical equipment sold under its COMEG brand.

Its products are sold in over 50 countries and 80% of revenues are generated outside France. The group operates four manufacturing facilities across Europe with the majority of products assembled or manufactured in-house. The company is a global leader in dental

equipment and imaging technologies with No 1 market positions across a number of products including ultrasonic instruments and intra-oral cameras.

As healthcare spending and access to dental care worldwide grow, so too does the market for dental equipment which historically has always shown resilient growth rates. There will also be opportunities for the company to accelerate its growth plans by targeting add-on acquisitions in under-exploited yet highly profitable geographies and by continuing to develop market leading technologies.

This investment was made by BDC, the Bridgepoint fund that invests in small and mid-cap companies.

Acteon€145m 800Revenues employees French dental and medical technology company

Sector Healthcare

Location France

Directors Olivier Balouka Marie-Laure Pochon

Bridgepoint representatives Olivier nemsguern Jean-Baptiste salvin

Website www.acteongroup.com

“ A true market leader in a fragmented dental products sector acquired at a time when spending on dental care worldwide is on the increase.”

Olivier Nemsguern Partner, Bridgepoint development Capital, France

not disclosedTransaction size

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CalypsoFounded in 1997, Calypso has a global footprint with 22 offices in 19 countries and a worldwide client base of nearly 35,000 professionals at more than 160 financial institutions in over 60 countries. Over 50% of the company’s employees are engaged in R&D across five global development centres.

Calypso’s software has a reputation for ease of use, innovation and an ability to meet increasing rigorous regulatory real-time data reporting and is widely recognised as a leader in its field, especially in mid-sized institutions. Its products provide solutions for trading, risk management, regulatory reporting, controlling and accounting within capital markets, investment management, clearing and liquidity management functions.

The company operates in a market with favourable trends: constant pressure on financial institutions to improve risk management and return on capital,

while at the same time managing margins and increased regulation, have created the need for integrated solutions able to reduce operating costs, improve capital allocation and comply with regulations; and the move to outsource software requirements to those third party vendors with the requisite technological advantage.

Consequently, the global market for capital markets software is estimated at over $3 billion, with long-term growth potential of more than 6% per annum and Calypso’s addressable new contract growth is even greater.

With Calypso’s products benchmarking as the best technology available in its segment, the company is well positioned to gain market share from the replacement of legacy systems in institutions as they outsource and from its existing client base as the company introduces new products.

global provider of capital markets software for banks and asset managers

neW InvesTMenTs neW InvesTMenTs


Sector Media & Technology

Location London / san Francisco

Directors scott Collins C.J. Fitzgerald Thomas gavin Pascal Xatart

Bridgepoint representatives david nicault Xavier Robert denis villafranca

Website www.calypso.com

$200m 700Revenues employees

“ There is constant pressure on financial institutions to improve risk management and return on capital. Calypso has been at the forefront of addressing this growing demand with a single, integrated platform that is acknowledged as both reliable and scalable across asset classes.”

Xavier Robert Partner, Head of Bridgepoint’s investments in the Media & Technology sector


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Cruise.co.uk is a market-leading online travel agent in the UK specialising in cruise holidays via a website that attracts 17 million visitors annually.

Cruise.co.uk has a unique model based around attracting visitors to its content-rich website which functions both as a research portal and initial gateway into the booking process. The website is used to collect data on the customer which is then passed to an agent who provides tailored, expert advice to the customer and completes the booking process.

The company consistently wins market share from smaller online providers and high street travel agents, as well as the cruise operators’ own websites and enjoys market-leading repeat booking

rates from its clients. Growth is further underpinned by increased demand from an ageing population and increasing supply from new ships entering service.

Future growth will also be driven by the fundamental structural shift in the travel sector away from traditional high street travel agents towards online booking, as evidenced by compound growth of 20% seen in the online channel since 2012.




Cruise.co.ukOnline travel agent specialising in cruise holidays

Sector Consumer

Location united Kingdom

Directors steve Bacon James Bilefield seamus Conlon Faisal galaria

Bridgepoint representatives Henrik nordman Adrian Willetts

Website www.cruise.co.uk

£128m 225Revenues employees

“ The company has grown impressively and we will seek to maintain and enhance its trusted expert reputation as we work with management to accelerate business growth through acquisitions and drive further value through digital and marketing expertise.”

Adrian Willetts Partner, Bridgepoint development Capital

£52mTransaction size

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Inspiring Learning is a provider of out of classroom learning for primary and secondary school children in the UK. Operating 10 residential activity centres with over 4,000 beds principally in the North, East and South East of the UK, the company has been providing educational residential courses for schoolchildren for over 30 years. It also offers the residential element of the government’s National Citizenship Service aimed at 15-17 year olds and through its Camp Beaumont Day Centres provides non-residential multi-day camps in London and the Home Counties during the school holidays.

In the UK, Residential Activity Centres enjoy strong support and robust demand from teachers, parents and pupils as a fun, educational activity, with 95% of all UK schools organising at least one expedition a year. Expeditions are typically booked by teachers but paid for by parents. Ring-fenced

government funding is also available to ensure the trips are inclusive and available to all pupils.

Inspiring Learning is the second largest provider in its fragmented private market and is an excellent platform from which to pursue consolidation as smaller competitors struggle to match the range and quality of facilities which can be offered by a well capitalised national provider.

The UK privately-provided RAC market is forecasting strong annual growth over the next five years driven by increasing pupil numbers, supportive government policy and a switch in the provision of RACs from legacy Local Authority operators, who are withdrawing from the market, to well invested private providers.




Inspiring LearningChildrens’ residential activity centres

Sector Business services

Location united Kingdom

Directors Jason Andrews John Bentley Martin Robinson

Bridgepoint representatives Robin Lawson Alan Payne

Website www.inspiring-learning.com

£32m 870 not disclosedRevenues employees Transaction size

“ Inspiring Learning is capable of growing both organically and by acquisition thanks to its strong capital base and a recognised ability to provide the volume and variety of out of classroom learning experiences required by schools nationally.”

Robin Lawson director, Bridgepoint development Capital


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Peyman is the second largest producer of packaged dried fruit, nuts and seeds in Turkey, a rapidly evolving segment of the country’s broader fast-moving consumer goods sector.

Established in 1995, the company initially operated as a wholesaler but in 2001 it began selling its own branded products. In the last eight years it has transformed from being a regional operator to become a national brand name and the second largest player within its sector. It has around 50 products, split across four main, distinctively branded ranges: Dorleo, Bahceden, Citliyo and Nutzz.

Peyman’s products are sold via traditional convenience stores, known as ‘bakkals’, with products reaching around 45,000 outlets throughout Turkey via more than 6,000 supermarket retailers, including the market-leader Migros.

It also exports to more than 30 countries, primarily in the Middle East, the Balkans and Central Asia.

The packaged dried fruits and nuts market in Turkey is valued at €2.2bn and is one of the highest growth sub-segments of the Turkish consumer goods sector.

This is driven by increasing demand for hygienic, healthy, convenient and consistently high quality snacks as evidenced in the shift from unpackaged to packaged snacks consumption.

Over the next five years Peyman will focus on increasing production output, winning market share, significantly expanding the number of outlets where it sells its products and developing adjacent snack offerings to further accelerate growth.



PeymanBranded dried fruit and snacks business

Sector Consumer

Location Turkey

Director Tuncer Akgun

Bridgepoint representatives Hakan Barslan Martin dunn

Website www.peyman.com.tr

TRY353m 406Revenues employees

“ With fresh capital and additional consumer expertise, Peyman is capable of transforming into a larger and broader snack brand.”

Martin Dunn Partner, Bridgepoint


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Sapec Agro is an innovative agricultural business that develops and sells nutrition and crop protection products to help farmers maximise crop yields.

Headquartered in Portugal, Sapec Agro was a primary buyout from a family-controlled business. It has offices in 23 countries worldwide, four manufacturing sites and has sales in over 70 countries. The business focuses on two areas: crop protection to control weeds, insects, and disease via a range of herbicides, insecticides and fungicides; and nutrition, which provides specialty crop nutrition to increase plants’ resilience and growth rates.

With its specialist focus on high value agricultural activities such as greenhouse grown fruits and vegetables, vine and olive production, the company is a market leader in Spain and Portugal and is a growing presence in France, Italy, Mexico and Brazil. It is renowned for its

R&D capabilities (which reformulates existing active ingredients to adapt and register new products for use with high value crops) as well as its expertise in the complex regulatory environment.

The crop protection and nutrition sector has grown over the last 15 years through economic cycles, with future growth underpinned by a rising population and increasing demand for food. The business enjoys one of the largest registered portfolios in Europe.

In the next five years Sapec Agro will continue to reformulate and develop existing and new products as well as expand geographically into new markets. It is also expected to contribute to the consolidation of its sector.



sapec AgroAgricultural crop protection and nutrition business

Sector Manufacturing & Industrials

Location spain / Portugal

Directors eric van Innis nuno Loureiro

Bridgepoint representative Héctor Pérez

Website www.sapecagrobusiness.com

€237m 945Revenues employees

“ An opportunity to use its leading-edge R&d and expertise in the complex regulatory agro environment to drive further revenue growth, enter new territories, launch new customised products and explore consolidation.”

Héctor Pérez Partner, Bridgepoint, spain

€456mTransaction size

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Smyk is the leading retailer of children’s apparel, toys and accessories in Poland with a developing presence in the wider CEE region and a reputation for its superior quality, range and service levels.

Founded in 1952 as a single, iconic Warsaw store, it has more recently expanded to 130 stores across Poland and, since 2006, entered Germany, Romania, Ukraine and Russia on a smaller scale.

The company leads the market in both apparel and toys ahead of its more global competitors, thanks to a combined offer of recognised international brands and own-label goods that are sold in own stores and via franchising and in-store concessions outside its home territory. Smyk also sells a range of accessories and durables for the childcare market such as car seats, baby carriages and beds.

In Poland the company operates in the fastest growing major economy in Europe and benefits from good market growth as the region’s average spend per child moves towards that more often seen in Western Europe and the USA. This is a trend that the company is responding to with a fast growing digital presence as well as more conventional store openings in its key markets – supported by the consumer’s preference for local brands providing superior value.

As the leading children’s retailer in the region, Smyk is also looking to ways to do business better and for additional future growth – internationally but also from the additional potential offered by targeted acquisitions, thereby ensuring that its heritage and reputation are safeguarded for generations of children to come.

smykChildren’s apparel and toys retailer

Sector Consumer

Location Poland

Directors Michał grom Marek Janeczko Mark Rollmann Xavier Thiry

Bridgepoint representatives vince gwilliam Khai Tan Maciej Zuzałek

Website www.smyk.com

PLn1.6bn 2,681Revenues employees

“ A strong foundation for progress based on a brand that is iconic and well-known for its superior quality, range and leading service levels.”

Khai Tan Partner, Bridgepoint, Poland

€247mTransaction size

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Vitamin Well is a functional drinks business that develops, manufactures and markets a portfolio of vitamin-enriched sports and energy drinks in the Nordic region where it enjoys market leadership and high consumer brand awareness. The company’s portfolio currently consists of four brands: Vitamin Well, Nocco, VW+ and Nobe.

The company has in-house product development, sales and marketing teams in Sweden and sells via a network of distributors in international markets. The business also has a fast-growing export business with almost half its revenues now derived from 27 countries outside of Sweden, including from Germany, the Netherlands and Spain.

The functional drinks segment is forecast to grow significantly in the

Nordic region and Europe generally as levels of consumption catch up with those in the more developed US market. This will be further enhanced by longer-term macro trends of health and wellness, and consumers’ increasing preferences for natural products.

Vitamin Well plans continued growth in its native Nordic region, as well as an acceleration and broadening of its international expansion, complemented with further product innovation and targeted acquisitions.


“ Consumers increasingly seek healthier alternatives to carbonated soft drinks and vitamin Well’s products cater to this growing demand.”

Johan Dahlfors Partner, Bridgepoint development Capital, nordic region



vitamin WellFunctional drinks business

Sector Consumer

Location sweden

Directors Jonas Pettersson Martin Randel

Bridgepoint representatives Johan dahlfors Magnus gottås Johan gustafsson

Website www.vitaminwell.com

seK468m 80Revenues employees



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A message from our Managing Partner2016 will undoubtedly go down as a pivotal moment in Europe’s relations with its member countries and the rest of the world. The surprise vote in favour of Brexit in the UK in June 2016 has had an impact on corporate and political Europe in ways that are yet to unravel. Looking back at the last 12 months, I am struck by one thing in particular: the unpredictability of events.

In reviewing our own performance in 2016, I am pleased to report that our Bridgepoint Europe and Bridgepoint Development Capital funds performed strongly, thanks to our team’s skill in investing, managing and selling businesses well, in far from usual circumstances.

During the year we invested €1 billion in eight new companies with a total enterprise value of €1.9 billion. Bridgepoint-backed businesses also completed 56 add-on

acquisitions as they pursued consolidation strategies to build scale and improve competitive position. New investment activity was also matched by strong divestments with some €1.6 billion returned to our investors in 2016.

By the end of the year, Bridgepoint Europe V, the €4 billion middle market buyout fund we raised in 2015, had committed 56% of its primary capital to 10 platform assets, in line with or ahead of plan. A notable feature of several of the newer assets is the international nature of their revenue base reflecting an intentional tilt towards greater diversity of trading revenue in these times of volatility. This theme is also reflected in the diversity of currency in which each asset is held. The middle market in Europe has become increasingly global with the Fund’s largest currency exposure now the US Dollar.

“ A notable feature of several of the newer assets is the international nature of their revenue base reflecting an intentional tilt towards greater diversity of trading revenue in these times of volatility.”

MAnAgIng PARTneR’s OveRvIeW MAnAgIng PARTneR’s OveRvIeW


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In this regard, following the model successfully executed in Shanghai, we opened an office in New York in 2016 that supports due diligence, revenue development and add-on acquisitions for the Fund’s European assets in the third largest market by revenue for the Bridgepoint portfolio.

Bridgepoint Development Capital, our lower mid-market buyout and growth capital business, reached two milestones: it made its 14th and final platform investment from BDC II, its €350 million fund; and significantly, it successfully raised its successor fund, BDC III, exceeding its target of £500 million to close on its hard cap of £600 million. It’s a great result that positions the BDC business well for the next three to four years, that saw it attract significant commitments from a number of longstanding investors in previous Bridgepoint funds.

The environment for investing As 2016 drew to a close, to the surprise of many commentators, relatively positive external market conditions in Europe continued and in particular, the UK economy was surprisingly robust. However, we shouldn’t be fooled by this: it represented something of a “phoney war”.

As the reality of Brexit comes nearer, and uncertainty rises, in 2017 we expect corporate investment and employment decisions to slow with a potential dampening effect on the UK economy showing through.

With QE remaining central banks’ primary defence against unpredictability and volatility, two notable benefits from an investment perspective have emerged: supporting asset prices and fuelling debt markets. Although helpful when selling companies, it meant that acquiring assets required even smarter origination, greater clarity of investment case as well as pricing discipline. And for businesses already part of the Bridgepoint family, it allowed us to ensure that the better margins and covenant terms available in the favourable debt markets were used appropriately to optimise their financial structures.

Portfolio performance In 2016 Bridgepoint’s funds’ investments collectively generated 12% and 12% year-on-year average revenue and EBITDA growth. This is real demonstration of our portfolio companies’ continuing resilience and skill in driving long-term value creation in what, in

MAnAgIng PARTneR’s OveRvIeW 78MAnAgIng PARTneR’s OveRvIeW


2014 2014

12% 12% 12%11%

9%

14%

Revenue growth EBITDA growth

2015 20152016 2016

Portfolio performance

“ We will continue to limit exposure to purely domestic uK business preferring instead uK exporting companies… as a result, we believe that our funds are better insulated from the negative potential consequences of Brexit.”

MAnAgIng PARTneR’s OveRvIeW 33

Frédéric PescatoriPartner, Head of investment in France


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MAnAgIng PARTneR’s OveRvIeWMAnAgIng PARTneR’s OveRvIeW

Europe in any case, remains a relatively low-growth and uncertain market.

This is reflected in the level of add-on acquisition activity across our funds. Transactions totalling €8.6 billion have been completed to date by Bridgepoint Europe IV with significant acquisitions by Wiggle (of Chain Reaction Cycles) in the UK and Groupe Thom in France (of the 38 store Oro Vivo chain in Germany and of 370 stores of Stroili in Italy) as well as smaller in-fill transactions at Moneycorp and Oasis. Bridgepoint Europe V also completed important in-fill acquisition activity at Azzurri, Balt and Element Materials Technology.

Returning capital to investors All private equity funds are judged by their ability to drive IRR and capital returns while actively investing in longer-term growth and value creation across their portfolios to maximise value. In 2016 Bridgepoint investments returned €1.6 billion of capital

to investors with 13 exits, including the €1.8 billion sale of French property management services group Foncia, the £835 million sale of Oasis Dental Care to Bupa in the UK, and five exits at BDC including those in Sweden of specialist care services supplier to the high acuity autism segments Solhaga and transport management software provider Memnon Networks, and in the UK of Beck & Pollitzer, the engineering services company.

Bridgepoint’s Capital Markets team also took advantage of buoyant conditions in the European leveraged loans market to arrange debt totalling €2.5 billion, allowing us to secure more borrower-friendly and flexible terms in the financial structures of the companies our funds own whilst enabling us to return €1.6 billion of capital to investors.

People and Talent In 2016 we welcomed 34 new team members across Europe and recognised in particular the

“ Acquiring assets required even smarter origination, greater clarity of investment case as well as pricing discipline.”

2013

2014


Capital returned to investors

€1.6bn

€1.8bn

€2.0bn

€1.2bn

2015

2016

Gwenaëlle Le Ho Daguzan director, Paris

Amaury Blanloeil senior Associate, Bridgepoint development Capital, Paris

Edward Woods Partner, London


36 37MAnAgIng PARTneR’s OveRvIeW MAnAgIng PARTneR’s OveRvIeW


“ These times are not without risk. external factors create big challenges for us and the businesses we own.”

contribution of two colleagues who were promoted to the partnership, Emma Watford and Edward Woods.

Our ability to develop our own people and attract new colleagues remains critical to our success and we are fortunate in the breadth and depth of talent we can call upon from our team. People who work at Bridgepoint have many things in common but above all else is an absolute determination to build successful businesses. It is in this spirit of wishing to succeed and evolve successfully that we have introduced a number of initiatives such as team surveys and diversity and inclusion programmes across the Firm to ensure that we do so.

2017: looking ahead As the reality of Brexit approaches and political changes within the Eurozone take shape, we expect corporate investment and employment decisions to become more challenging.

This said, our funds invest across the whole of Europe and we have deliberately been careful in our portfolio construction. So, for example, we will continue to limit exposure to purely domestic UK business preferring instead UK exporting companies likely to benefit from a post-Brexit weakness of Sterling. As a result, as we enter 2017, we believe that our funds are better insulated from the negative potential consequences of Brexit, whilst being positioned to take advantage of new investment

opportunities arising from Brexit-related dislocation across Europe.

All of this translates into three very clear objectives for the year ahead: for our flagship Bridgepoint Europe funds, it’s about high quality origination, pricing discipline and driving portfolio performance harder whilst for our lower middle market business BDC, similarly, it’s about driving portfolio company performance and making a great start to the investment period for its newly raised BDC III fund.

For wider Bridgepoint more generally, it’s about assessing what makes most sense strategically for the future development of our business and what will have the most enduring positive impact on our Firm.

These times are not without risk. External factors create big challenges for us and the businesses we own. Yet the ambition of colleagues across Europe, China and the US remains undiminished. It’s also very encouraging that the management teams of the companies in which our funds are invested are similarly excited by the opportunities presented by the times. I thank them and our own teams for their hard work and dedication in the last 12 months and remain confident that their efforts in 2017 will be similarly rewarding.

William Jackson Managing Partner

Aaron Collins Associate, London

Christopher Brackmann director, Frankfurt

38 39InvesTMenT And seCTOR eXPeRTIse InvesTMenT And seCTOR eXPeRTIse

Investment and sector expertiseOur aim is to invest in high-performing, market-leading, well-managed businesses that have the potential to grow through expansion, operational transformation or via acquisition.

We focus on six core sectors: Business Services, Consumer, Financial Services, Healthcare, Manufacturing & Industrials and Media & Technology. Each sector team is organised on a pan-European basis but with a global outlook, with teams working across offices and continents to build knowledge and ensure proper understanding of the dynamics of the space as well as to identify new and add-on investments.

As a result, we have been able to identify and acquire businesses where significant value can be created under our ownership and where in turn businesses are able to exploit our reach and know-how to enhance their operational performance, growth prospects and market position.


What we like to invest in We are attracted by opportunities by market leading growth companies with ‘buy and build’ and operational improvement potential and in businesses that focus on sectors where Europe has global competitive advantages or where we can exploit expansion potential as much outside as in Europe. This is typically reflected in companies trading ahead of the broader economy or in businesses with high visibility of earnings and contracted income.

Bridgepoint is especially known for helping to create value through market consolidation by identifying and arranging funding for add-on acquisitions for platform investments operating in fragmented sectors or securing operational improvement to drive earnings growth. In 2016, Bridgepoint portfolio businesses made 56 add-on acquisitions.

Funding and resources Bridgepoint is currently investing two funds with distinct but complementary strategies: Bridgepoint Europe V, a €4 billion fund which is focused on investing in market leading businesses that are typically valued between €200 million to €1 billion; and BDC III, a £600 million fund managed by our lower middle market and growth capital fund, focused on high growth companies valued up to €150m.

Our investment teams are also able to call upon expertise from a range of specialists whose skills include operational expertise to improve business performance, growth prospects and market position and an in-house Capital Markets team specialising in debt finance structuring. Bridgepoint also pioneered the development of in-house procurement expertise using the latest technology to drive best procurement practice and achieve significant cost reductions.

In addition, Bridgepoint’s operations in Shanghai and New York ensure that we are able to accelerate the development of portfolio companies in these markets, leading due diligence on the operations of proposed new European platform assets and identifying, reviewing and executing add-on acquisitions, accelerating value creation via revenue development initiatives and operational improvement in respective markets and, supporting exit processes with potential Chinese or US acquirers.

“ …especially known for helping create value through market consolidation and arranging funding for add-on acquisitions.”

€957m Business Services

€1.86bn Consumer

€376m Financial Services

€694m Healthcare

€675m Manufacturing & Industrials

€949m Media & Technology

Investments by sector

Denis Villafranca Partner, Paris

Marion Combette Associate, Paris

13%

7%

34%

12%

17% 17%

40 41seCTOR eXPeRTIse: BusIness seRvICes seCTOR eXPeRTIse: BusIness seRvICes

Business servicesA focus on defensible, high quality, growth companies that can lead industry consolidation and expand internationally helps us to drive value within business service sub-sectors. Meanwhile, we are closely monitoring opportunities in cyclical industries such as the oilfield services segment.

Emma Watford Head of Business services sector

2016 Bridgepoint Annual Review2016 Bridgepoint Annual Review2016 Bridgepoint Annual Review

Our interest in business services companies can be sub-divided into professional services and asset and facility services. Within this, we are attracted to international businesses in fragmented markets with defensive characteristics. We also consider route-based assets, where a company’s market positioning leads to both defensibility and growth.

In terms of thematic trends, we are attracted to service business that can help companies respond to ever-tightening regulation and compliance, particularly in sectors with a significant safety or environmental risk exposure. This theme led to our investment, at the end of 2015, in testing specialist Element Materials Technology.

Technical consulting also continues to be of interest, following successful past investments in companies such as ERM, an environmental consultancy. We’re particularly interested in larger firms that can access expertise without being overly reliant on a small number of specialists.

We believe that tech-enabled outsourcing is the next phase of the outsourcing trend for professional services businesses, as these firms realise that carving out back-offices and process divisions to other providers simply transfers people rather than translating into meaningful efficiency savings.

In cyclical industries, timing can be key, and we are particularly cognisant of the oil price at present. Following volatility and pressure on the oil price this year, we anticipate a gradual recovery over the medium term, given production decline forecasts and high production costs as reserves deplete. This should provide opportunistic investment opportunities.

Investment and portfolio performance

2016 was a strong year for our business services team across both Bridgepoint Europe and Bridgepoint Development Capital, with exits in the UK including industrial services business Beck & Pollitzer and outsourced drug development services provider Quotient Clinical, and in France, property management business Foncia and staffing and recruitment company Penelope.

In terms of new investments, Element Materials Technology is an excellent example of a highly defensible, international growth proposition. The company operates in the global outsourced materials testing market, with laboratories across the US and Europe. During the year, we also invested in Inspiring Learning, which operates in the very attractive niche of residential activity centres and school trips.

Prices remain competitive for many of the sub-sectors that Bridgepoint specialises in, and so we expect buy-and-build to remain an important driver of value for investments in this sector over the coming years.

of our portfolio is currently invested in the Business Services sector

Invested in 15 deals in the Business services sector in the last 10 years

€1.6bn17%

42 43seCTOR eXPeRTIse: COnsuMeR seCTOR eXPeRTIse: COnsuMeR

ConsumerThe consumer sector is a major part of Bridgepoint’s DNA. In 2016 we made a number of investments reflecting both the target sub-sectors and growth profile we’re interested in – especially in businesses highly attuned to technological shifts affecting consumer behaviour patterns.

Jason McGibbon Head of Consumer sector


Deal activity in the consumer sector was particularly buoyant during 2015-2016, with Bridgepoint successfully completing six of the c.60 private equity consumer investments in our size range in Europe. Our experience in the sector has enabled us to identify areas of potential ‘above trend’ growth that are perhaps counterintuitively at odds with the overall consumer environment across the region.

In 2016 slow GDP growth masked significant changes in habits, preferences and technologies that will underpin the major consumer success stories of tomorrow.

Health and wellness continue to be major consumer preferences as well as government priorities and we are committing to it with investments such as Turkish dried fruit, nuts and seeds company Peyman and Vitamin Well, a Nordic functional drinks business. Peyman generated impressive growth during 2016, driven in part by a government ban on unhealthy snack food types in schools nationwide. A similar health trend in the UK can be detected in Bridgepoint Europe V’s investment in the Zizzi chain of restaurants which now sells over 3,600 vegan pizzas every week, following their introduction earlier that year. In Poland, biscuit manufacturer Dr Gerard was the first local biscuit maker to completely remove trans-fats from its products.

Acceleration of consumer tech trends is leading to increasing experiential and leisure spend, a trend that we had identified when making investments in the Nordic Cinema Group and in restaurant chains.

We are also conscious of the normalising effect of rapid technological change that will have a profound impact on consumer business models. Yesterday’s disruptive technologies are tomorrow’s incumbents and it seems tomorrow is already here for millennials who habitually adopt the latest consumer internet innovations. This means consumer services relating to online, networks and geo-location technologies quickly become mainstream and so provide investment opportunities.

We also see a major opportunity to strip out the least satisfying elements of the consumer experience, such as waiting to pay or queuing to sit. The efficiency of transaction will become an important differentiator and those businesses that can provide a seamless experience, without sacrificing personal service, stand to benefit. Witness sandwich chain Pret A Manger which is increasingly catering to busy, on-the-move consumers who want the same consumer quality and choice even at functional locations and transport hubs.

We are also seeing many more consumer brands following their customers internationally. Today, consumer sector business plans frequently feature internationalisation targets; this plays well into Bridgepoint’s own strengths. For instance, during 2016, our French jewellery chain, Histoire d’Or acquired an Italian rival Stroili Oro and German Oro Novo. Indeed virtually all of our consumer portfolio now works with Bridgepoint’s network across Europe, the United States and in China.


In 2016 Bridgepoint invested in four new consumer investments: Cruise.co.uk, Peyman, Vitamin Well and Deliveroo, reflecting our investment themes.

Consumer spending and confidence also held up well across our consumer sector portfolio companies, with little discernible impact from Brexit during 2016, as reflected in the consistently positive like-for-like sales at Pret A Manger and the Azzurri restaurant chains in the UK, as well as in France and Italy, enhancing the progress of Histoire d’Or during the year.

of our portfolio is currently invested in the Consumer sector

Invested in 16 deals in the Consumer sector in the last 10 years

€2.1bn34%

44 45seCTOR eXPeRTIse: FInAnCIAL seRvICes seCTOR eXPeRTIse: FInAnCIAL seRvICes

William Paul Head of Financial services sector


Financial servicesFinancial services are in flux, as new technologies collide with regulation and challenging monetary conditions. For investors experienced in the sector, this spells great opportunity in both fintech and for services businesses.

We divide our financial services coverage into ‘technology’ and ‘services’. Both aspects present exciting business propositions at this point.

During 2016 we established a dedicated effort around financial technology. ‘Fintech’ became a major buzzword in 2016, the year that technology permeated virtually all aspects of consumer transactions, most conspicuously with contactless payment, via card and mobile phone, and feeding into different habits and expectations of ease, convenience and an ability to transact whenever and wherever.

Institution-focused fintech also represents a major opportunity. Amid a sustained period of low or even negative rates of interest, financial institutions – particularly banks and insurers – are looking hard at the profitability of their core activities, so that speed of process and cost reduction have become major strategic priorities. On top of this, regulatory scrutiny demands ever more sophistication in terms of information tracking and disclosure across multiple business lines, further driving demand for customised automation.

Unlike the traditional financial services sector, which is predicated upon layers of trans-national and national regulation, fintech is highly scalable across borders and therefore fits well with Bridgepoint’s international coverage. In addition, the fintech and financial software market in Europe is highly fragmented and offers opportunity for consolidation.

On the flip side, fintech is attracting high levels of capital given the ‘hype’ in the sector. However, we believe there are compelling and enduring fundamental drivers that we are well placed to exploit through our network and experience with existing fintech investments such as alternative assets software provider eFront, and Calypso, a market leader in capital markets technology.

The services segment is subject to longer-term shifts and is no less interesting for it.

The entire insurance vertical interests us, as insurers focus more on their core business processes. We expect opportunities in areas such as broking, compliance and claims management, as well as new business models around capital deployment.

Asset and wealth management stands to benefit from ageing populations as well as regulatory changes such as the Retail Distribution Review in the UK. As the market polarises towards quality players, Bridgepoint is leveraging its experience with past investments in firms such as Tilney and Quilter Cheviot to invest in larger consulting firms with a specialist product and an opportunity for international expansion and consolidation.

In the lending vacuum left by the banks, there is opportunity for niche lenders and we also see technology-driven, quality and scalable firms focused on prime customers as an attractive segment.


Our investment in Calypso is a good example of how we use our financial services experience with other in-house expertise, in this case our Media & Technology capabilities. The company, which is a global leader in capital markets technology, was acquired on a proprietary basis from its founders.

In November, we sold 1st Credit, a debt purchaser, in a £130 million trade sale. Our other financial services investments continue to perform well, in spite – and sometimes because of – wider market volatility.

of our portfolio is currently invested in the Financial Services sector

Invested in four deals in the Financial services sector in the last 10 years

€520m7%

46 47seCTOR eXPeRTIse: He ALTHCARe seCTOR eXPeRTIse: He ALTHCARe

Jamie Wyatt Head of Healthcare sector


HealthcareSophisticated patients, innovation, and a rapidly transforming pharmaceutical value chain are driving growth, while high valuations made 2016 a good year to realise assets. 2016 was a busy year for M&A across our three sub-sectors of interest: services, medtech and pharmaceuticals.

We divide our Healthcare coverage into services, medtech, and pharmaceuticals. 2016 was a busy year for M&A across these sub-sectors, including some notable ‘big pharma’ transactions. We have exploited prevailing high valuations with a number of successful sales, while rebalancing our portfolio towards more global healthcare markets.

Macro growth drivers in the healthcare market are well rehearsed – ageing populations, innovation and the need to achieve scale. Meanwhile, with 85% of the European market directly or indirectly publicly funded, there is funding pressure as mature markets are unable to increase allocations to match underlying growth demand.

Beneath those headlines, we see interesting opportunities. The demographic time bomb, long-trailed, is now actually happening as baby-boomers move into their 70s. But unlike the generation before them, they are very well informed and sophisticated buyers of healthcare, with respect to available treatments.

Demand for high quality care from this educated consumer base creates the opportunity for differentiated healthcare businesses that are able to tap into the 15% of the market that is privately funded – a trend that has benefited both Oasis Healthcare and Care UK.

In recent years, we have continued to rebalance our portfolio from predominantly single country services, towards more exposure to the global healthcare markets of medtech and pharma.

The pharma sector began reconfiguring its business models 30 years ago and that trend continues to create huge ‘niches’ such as outsourced clinical research (a $30 billion market) and contract manufacturing (up to $60 billion). This has thrown up huge opportunity for growth businesses. In addition, recent years have seen an IPO boom in the US biotech sector, providing a war chest to fund biotech research. Outsourced providers of such services are seeking to consolidate in order to reap quality and cost benefits in their service of global pharma companies.

Medical device technology is also a global market, driven by an increasing pace of innovation. Technology that can, for example, improve the way that medical procedures are conducted, while reducing risk to the patient, can be quickly scaled and rolled-out globally, resulting in an outsized impact on lives saved and improved.


In line with our refocusing towards global markets, in late 2015 Bridgepoint Europe V acquired Paris-based Balt, a global business that designs and manufactures stents, catheters and other interventional neuroradiology devices.

During 2016, we exploited favourable valuations in the sector, with the sale of Oasis Dental Care to BUPA for £835 million following a nation-wide roll-up of dental practices and significant investment in marketing and clinical infrastructure, and the exit of MédiPôle Partenaires in France.

Looking ahead to 2017, we will continue to rebalance our portfolio in favour of medtech and pharma. We will consider further opportunities to support appropriate care for the elderly.

In this regard, when assessing new prospects, we assess the quality of a service first. Only then do we look at the business model. We consider this the correct approach both from an ethical and business perspective, given the highly regulated nature of the market, and a growing prevalence of independent quality reviews, scoring systems and the competitive advantage of favourable ratings from the recipients of care.

of our portfolio is currently invested in the Healthcare sector

Invested in 12 deals in the Healthcare sector in the last 10 years

€1.4bn13%

48 49seCTOR eXPeRTIse: MAnuFACTuRIng & IndusTRIALs seCTOR eXPeRTIse: MAnuFACTuRIng & IndusTRIALs

Manufacturing & IndustrialsEurope is full of remarkable manufacturing and industrial companies. It is also a sector that is being transformed by technology and buoyed by emerging market demographics. We invest in differentiated businesses with robust technology and good growth prospects that will benefit from our international network.


Chris Bell Head of Manufacturing & Industrials sector

This thematic approach to the manufacturing and industrials sector helps us to uncover businesses that stand to gain disproportionately from major shifts in global demographics, consumer behaviour and technology.

All things being equal, the prevailing low growth in Europe and recession in many major emerging markets during 2016 should temper return expectations. But all things are not equal – the emergence of an extra billion consumers has created anomalies and pockets of hyper-growth. The rise of an emerging market middle class, long predicted, is now a reality. As economies such as Brazil, Nigeria and Russia emerge from recession, and stronger growth in China resumes, this theme will return ever more strongly in the years ahead. Many countries in South East Asia and the sub-continent are just at the start of this journey.

The manufacturing buzzword of 2016 was ‘robot’, and with good reason. Long-trailed by science fiction, automation technology has precipitated a seismic shift in the manufacturing sector, driven by recent leaps in computer speed combined with the networking possibilities of the internet. As inanimate objects go online, demand for new industrial products will experience a renaissance. On the back of these advances, an industrial innovation ‘push’ in manufacturing techniques that began in the automotive industry is now being extensively exploited across the economy, from supermarkets to oil refiners. Meanwhile, with labour costs in Europe and China on the rise, automation is seen as the only way to increase economic and productivity growth.

We also see a growing societal preference for resource efficiency feeding into the industrials and manufacturing sector. This is the hypothetical ‘ESG opportunity’ of corporate reporting becoming reality, as businesses demand efficiency and a cultural shift among consumers makes a virtue of thrift.

Bridgepoint Europe IV’s investment in Austria-based AHT Cooling Systems is a case in point. The company makes large refrigerators for supermarkets such as Aldi and Lidl, which are simple to install, maintain and move, and highly cost-effective. The company has delivered more than a million fridges, excellent growth prospects and first-class customer service. This plays into a sub-trend in the sector: product and service convergence. AHT’s customers demand not just excellent fridges but a dependable, fast service that keeps downtime to an absolute minimum.


Recent years have seen Bridgepoint sell a number of industrial and manufacturing businesses to achieve outstanding returns for our investors, such as the sales of speciality chemicals company CABB and SPTS, an equipment provider to chipmakers.

At the end of 2016 we completed one of Iberia’s largest private equity transactions, with the €456 million acquisition of a Portuguese agro-chemicals company from Sapec Group. The company’s crop protection and nutrition products help farmers to maximize their yield, increasing their efficiency while catering to the growth of consumers and consumption. The business has highly defensible product-specific formulations for specific crops.

While the macro outlook is less certain in terms of GDP growth and global trade, we remain confident that our thesis-led approach to the sector will continue to enable us to find unique angles and improvement strategies for Europe’s best growth companies.

of our portfolio is currently invested in the Manufacturing & Industrials sector

Invested in eight deals in the Manufacturing & Industrials sector in the last 10 years

€1.2bn

12%

50 51seCTOR eXPeRTIse: MedIA & TeCHnOLOgY seCTOR eXPeRTIse: MedIA & TeCHnOLOgY

Media & TechnologyTechnology has become a cross-sector enabler. Software companies, especially when vertically focused, can offer not only double-digit growth and high margins, but also defensive characteristics. Meanwhile, media continues to be a strongly performing sector for us.


Xavier Robert Head of Media & Technology sector

Tech touches everything. As such, the mutual benefit of collaboration between our technology expertise and other Bridgepoint sectors is becoming ever more fruitful.

Fintech is a case in point. Our acquisition of capital markets software provider Calypso in 2016, was off-market. Our financial services expertise meant we understood the pressures faced by Calypso’s client base. Relieving those pressures is a function of efficiency and technology. So, in this sense, Calypso’s clients, investment banks, are technology businesses. The combination of the two – financial services and tech expertise – made us very relevant to the sellers and allowed us to acquire the company off-market. Highly unusual for a company of its size.

Meanwhile, software focused on industry verticals is the perfect business model for an investor such Bridgepoint, as it is both highly scalable and defensible, given the specialist knowledge required.

We tend to focus more on the corporate rather than consumer tech markets, with a preference for enterprise software, subscription-based models and companies with rich proprietary data sources. However, if a company can dominate its vertical, we consider B2C, as is the case with our investment in Wiggle, an online bicycle accessories store.

Our track record in the media sector has been strong and our interest remains undiminished. In mid-2015 we invested in the Nordic Cinema Group, with the conviction that fears around home cinema technology damaging the market were overdone. We continued to invest in the company’s expansion of sites and in best practice efficiencies and digitisation. This resulted in the company being successfully sold to AMC, the largest cinema group in the world, two years after our original investment.

As the pace of innovation increases, we deliberately scan the sector for major disruptors, in the belief that if you look at a threat long enough, it becomes an opportunity. We believe virtual reality technology could be a game-changer across multiple media industries (not just video gaming) and we are closely monitoring its development and impact.

Artificial intelligence is finally coming of age and will have profound impact across all sectors. To take just one example, the anticipated advent of autonomous cars at some point in the coming years will be transformative not just for transportation, but habits, lifestyles and a wide range of service industries.

Block-chain technology is our third horizon technology. Again, while its immediate application is likely to be in financial services, the potential of a technology that can record an event transparently yet completely securely will have untold ramifications across sectors.


Our technology portfolio, which cuts across many other sectors, has the potential to outperform non-tech driven business models, given scalability and the current pace of innovation and disruptive change.

Meanwhile our existing media businesses continue to perform impressively. Dorna SBK, the sports business with exclusive rights to promote and manage MotoGP, continues to enjoy strong growth in a booming market for sports TV rights and sponsorship.

of our portfolio is currently invested in the Media & Technology sector

Invested in nine deals in the Media & Technology sector in the last 10 years

€1.5bn17%

52 53CuRRenT InvesTMenTs CuRRenT InvesTMenTs


Portfolio company Date acquired Transaction size Revenues Fund

Acteon* 2016 Not disclosed €145m BDC II

Balt 2015 Not disclosed €68m BE V

Care UK 2010 £414m £620m BE IV

Compagnie Stéphanoise de Santé (C2S)* 2011 Not disclosed €175m BDC I

Diaverum 2007 Not disclosed €617m BE III

Estera 2015 Not disclosed $82m BE V

Moneycorp 2014 £212m £137m BE IV

AHT Cooling Systems 2013 Not disclosed €399m BE IV

DMC Power 2007 Not disclosed $28m BE III

Flexitallic 2013 €450m $160m BE IV

Sapec Agro 2016 €456m €237m BE V

BigHand* 2012 £48m £28m BDC I/II

Calypso 2016 Not disclosed $200m BE V

Dorna SBK 2013 Not disclosed €335m BE IV

eFront 2015 €300m $110m BE IV

MVF* 2015 Not disclosed £50m BDC II

Nordic Cinema Group 2015 SEK4.7bn SEK3.1bn BE V

Trustly* 2014 Not disclosed SEK295m BDC II

Portfolio company Date acquired Transaction size Revenues Fund

A-Katsastus Group 2006 Not disclosed €111m BE II

Anaveo* 2015 Not disclosed €47m BDC II

Cambridge Education Group 2013 £185m £120m BE IV

Element Materials Technology 2016 Not disclosed $310m BE V

Inspiring Learning* 2016 Not disclosed £32m BDC II

Inspired Thinking Group* 2014 £28m £90m BDC II

KGH Customs Services* 2013 Not disclosed SEK608m BDC I/II

Leeds Bradford Airport 2007 £145m £32m BE III

LOC Group* 2013 Not disclosed £60m BDC II

TüvTurk 2009 TRY347m TRY133m BE IV

Azzurri 2015 £250m £245m BE V

Cruise.co.uk* 2016 £52m £128m BDC II

Dr Gerard 2013 Not disclosed PLN350m BE IV

Fat Face 2007 £360m £220m BE III

Groupe Thom 2010 €599m €630m BE IV

Hobbycraft 2010 Not disclosed £157m BE IV

Peyman 2016 Not disclosed TRY353m BE V

Pret A Manger 2008 £364m £760m BE III

Smyk 2016 €247m PLN1.6bn BEV

The Dining Club Group* 2015 Not disclosed £19m BDC II

Vitamin Well* 2016 Not disclosed SEK468m BDC III

WiggleCRC 2011 £180m £357m BE IV

Current investments

Business Services

Healthcare

Financial Services

Manufacturing & Industrials

Media & Technology

Consumer

* Denotes a Bridgepoint Development Capital investment

* Denotes a Bridgepoint Development Capital investment

54 55

ResponsibleInvestingWe have built responsible investing principles into our work and business practices and recognise that being a responsible investor is good for business.

That is why we have adopted a rigorous approach to the governance of our firm as well as the companies in which we invest. We have also put in place relevant ‘ESG’ principles to demonstrate our commitment to embed these criteria into our decision-making and ownership practices as well as into those of the companies our funds own.

This approach is overseen by our Audit & Risk Committee which comprises senior members of the team and is led by the chairman of our Advisory Board. Bridgepoint itself is also a signatory of the United Nations Principles for Responsible Investment and supports and endorses the recommendations of the Walker Guidelines on greater disclosure and transparency in private equity.

ResPOnsIBLe InvesTIng


Bridgepoint is a signatory of the United Nations Principles for Responsible Investment


Michael Black Managing Partner, Bridgepoint development Capital


56 57ResPOnsIBLe InvesTIng ResPOnsIBLe InvesTIng


“ A commitment to embed esg criteria into our decision-making and ownership practices as well as into the companies our funds own.”

Daniel Wagener director, London

The group board, Bridgepoint Advisers Group, has executive responsibility for setting the Firm’s strategy and ensuring that the shared values and business objectives we have set ourselves are upheld and met. Its members include:

John BarberBenoit BassiMichael BlackChris BusbyRaoul Hughes

An experienced leadership team

A list of partners and other colleagues is profiled in full on the Bridgepoint website (www.bridgepoint.eu)

The Firm supports and endorses the recommendations of the Walker Guidelines for greater disclosure and transparency in private equity.William Jackson

José María MaldonadoFrédéric PescatoriGuy Weldon

Governance Bridgepoint has a number of governance structures to ensure that it remains accountable and transparent and that there is complete alignment of interest between the Firm and its investors.

A Group Board, Bridgepoint Advisers Group, takes executive responsibility for the strategic direction of Bridgepoint with a particular focus on:

• policies, standards and procedures required to give effect to the Group’s strategies and goals

• control of Bridgepoint’s finances• regulatory and risk management• ESG matters and the setting of

ESG policy and targets• output of the Group’s key

committees, including the Conflicts Committee, the Allocations Committee, the Audit and Risk Committee and the Remuneration Committee.

A number of committees also exist to handle day-to-day operations within the Firm: the Bridgepoint Europe Operating Committee, Portfolio Management Committee, Bridgepoint Europe and Bridgepoint Development Capital Investment Advisory Committees and Bridgepoint Development Capital Board. These run the day-to-day operations of Bridgepoint and report to the Group Board and Partners’ Group on a regular basis.

Investment decisions are reached through an Investment Advisory Committee (for each of Bridgepoint Europe and BDC) comprising members of the group board as well as other partners with specific sector or operating experience.

The role of the Committee is to consider advice from the various advisory companies within the Bridgepoint Group and to assess and recommend

potential acquisitions, divestments, refinancings, restructurings, developments and financings of investments and investee companies in relation to the funds managed by the Firm and to recommend the expenditure of due diligence costs. Advisory Board The Firm also benefits from the input of an Advisory Board which provides insight, knowledge and experience to allow Bridgepoint team members to make better informed decisions about investments and developments as a Firm.

It comprises figures from different aspects of corporate and political life who are able to provide us with external perspectives on strategic, political, social and other matters to supplement the expertise of the Bridgepoint team.

Risk Management A partner-level General Counsel is responsible for ensuring that the Firm respects and adheres to internal policies and operating procedures. Internal guidelines are also in place to eliminate conflicts of interest, taking into account the Firm’s obligations under its fund management agreements and fiduciary duties. In addressing conflicts, it seeks to do so with integrity, professionalism and in the best interest of its investors.

Each Bridgepoint fund also has an Investors’ Committee drawn from representatives of investors in that fund to provide a forum for discussion of the fund’s investment strategy or performance and any potential or actual conflicts of interest.

58 59ResPOnsIBLe InvesTIng ResPOnsIBLe InvesTIng


Integrating responsible and sustainable investing into our portfolio

Intelligent frame heating with hot

gas from the cooling process

– no electrical power needed

Nickel-free zips used to avoid skin allergies

Carbon footprint of factory in Bangalore

reduced using lighting sensors and

solar panels

Fat Face The UK’s leading ‘active lifestyle’ clothing brand

AHT Cooling Systems The company is the leading manufacturer of conventional ‘plug-in’ refrigeration equipment

AHT cabinets are fully recyclable

– more than 96% of the used

components and materials can be

re-used

Made in a factory which supports workers and their families with an education and health

programme and an on-site nursery for children

Energy-saving compressor technology with ‘green’

refrigerants R290 (Propane) and R600a (Isobutane).

Refrigerants used do not have any negative impact on the ozone layer and have no

impact on global warming

Sustainable production process to ISO 14001 environmental management system

Sliding glass lids keep goods at the right temperature and are energy-saving

Factory assessed by an independent third party to ‘SMETA’ (Sedex Members Ethical Trade Audit) guidelines every year

Washed in a laundry that recycles water using an effluent treatment plant

Cotton sourced through the Better Cotton Initiative

ESG in practice ESG and sustainability considerations are present throughout the Bridgepoint investment process – before we make an investment, while we are invested and when we finally sell a company – and are a key part of the governance of the funds’ portfolio companies.

Ben Marten Legal Counsel, London

Prior to making a new investment, Bridgepoint identifies material environmental and social risks and opportunities by requiring pre-investment proposals to include an analysis of ESG issues for consideration by our Investment Advisory Committee. In particular, we will expect companies to comply with relevant environmental and employment laws, especially in relation to employees’ health and safety, rights and welfare.

We also expect each portfolio company to assess material environmental risks of their operations and to work towards relevant international good practice standards, setting targets for improvement. This is typically included in our 100-day plan when we acquire a business.

After we make an investment and a company becomes part of our portfolio, we work with management teams to implement appropriate ESG policies and procedures relevant to their sector. For example, we typically seek to improve energy and water use, waste recycling and more ethical supply chain management. We encourage them to work with like-minded trading partners to assess material risks and to mitigate future risks with targets and timelines for improvement.

Portfolio companies are also structured in such a way that major decisions can only be reached with the agreement of Bridgepoint.


60 61ResPOnsIBLe InvesTIng


Our charitable foundation – Bridgepoint Charitable Trust (‘BCT’) – was formed and is funded by the Firm and its employees. It provides support to charities nominated by our teams across our network and considered by trustees who are drawn from across the Firm. BCT also matches the fundraising efforts of individual team members and supports the charities sponsored by colleagues or companies having a close relationship with the firm.

In 2016 we committed over £240,000 to charities, including three previously adopted by Bridgepoint offices – Orchestre à l’Ecole in France, Nobody’s Children in Poland and Aenilce in Spain.

These were joined by two new charities. Firstly, a UK charity that aims to reduce the number of elderly

persons who suffer from chronic loneliness and who are in need of support. It recruits and mobilises volunteers to host discussion / catch up groups and afternoon teas or meals in their homes for elderly people, typically people aged 75 and above (see www.contact-the-elderly.org.uk).

And United World Schools, a UK-based charity which provides education to isolated communities who do not receive the benefit of government education systems, typically in the Far East (see www.unitedworldschools.org).

With these two new donations, BCT will have given almost £2 million to charities across Europe – in France, Germany, Poland, Spain, Sweden, Turkey and the UK.



£2m

£240,000given to charities across europe

Committed to charities in 2016

Bridgepoint givingIn 2016 we’ve supported

Aenilce

Contact the Elderly

Fundacja Dzieci Niczyje

Gut Hausen

Orchestre à l’Ecole

United World Schools

United World Schools was a charity supported by Bridgepoint in 2016

Charles Barter general Counsel, London

62 63


ResPOnsIBLe InvesTIng ResPOnsIBLe InvesTIng

BCT will support the Invisible Face of Loneliness, a national campaign tackling loneliness across the UK. This sets out to continue the work of the charity by allowing it to employ a dedicated Business Development/Campaign Manager and create 25 new groups nationwide that will save 200 older people from chronic loneliness and give 300 volunteers the opportunity to support those most in need.

www.contact-the-elderly.org.uk

A clever piece of technology has been helping three Bridgepoint investee companies raise lots of money for their chosen charities. It’s called Pennies, a financial technology charity – the digital upgrade of the traditional collection box, helping customers make their pennies count for charity when they pay by card – in-store, online or in an app.

Pennies works with three of Bridgepoint’s portfolio companies businesses, Zizzi Ristorante, ASK Italian and Hobbycraft in the UK. To date, over £1 million has been raised thanks to customers of these companies from more than 4.8million donations, since December 2010.

By making their customers’ pennies count, this has made a big difference to each of the charities they have supported: Cancer Research UK, Great Ormond Street Hospital, and Together for Short Lives.

The BCT donation will fund the building and running of a new school in Sdao in Northern Cambodia for a year, including the employment of two teachers, after which UWS will partner the school with one in a more affluent country who will then take on its running costs. The village currently has no functional school.

www.unitedworldschools.org

united Kingdom

Contact the elderly united Kingdom

united World schools

How a penny has made a difference

64 65OFFICes OFFICes


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Offices

Bridgepoint Advisers Limited, a subsidiary of Bridgepoint Advisers Group Limited, is authorised and regulated by the Financial Conduct Authority

Vincent-Gaël Baudet Partner, Paris

www.bridgepoint.eu

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