07 - Macro-to-Micro - Sector Spectrum
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Our sector spectrum

Equistone’s multi-sector European investment strategy allows us to develop deep industry insights without narrowing our field of vision, explains Oskar Schilcher.

OVER THE DECADES, Equistone has built a strong reputation in specific sectors, from specialist manufacturing to business process outsourcing and financial services to name but three.

We have also developed region-specific sector expertise, such as in healthcare in Germany, consumer and travel deals in France, and many sub-sectors and niches that don’t neatly categorise, but that offer outstanding value.

On the ground, among M&A advisers and management teams, our track record is all we need to establish sector credibility, win deals and develop companies. But I am conscious that some of Equistone’s special skills can be less clear to those not immersed in those parts of the economy.

I therefore wanted to share some behind-the-scenes insight into how our multi-sector strategy works.

This is always a truly collaborative exercise, so to do the topic justice, I have included anecdotes from colleagues from across Equistone, to exemplify how we have leveraged sector knowledge, both in our better-known sectors, as well as those overlooked areas of the economy that offer outstanding value and provide many of our biggest successes.

Sharing sector expertise across regional markets

The ability to share sector-specific insight across borders is a key differentiator for Equistone. Meilleurtaux and a recent international bolt-on for Small World provide two illustrative instances from the financial services sector.

// When the French team were assessing Meilleurtaux, one of their first ports-of-call was the UK financial services team, which has unrivalled experience in insurance services.

“I called the UK team and said ‘we’ve found this wonderful but unusual French financial services retail business. Can we discuss?’ The value of fast and candid access to that kind of highly informed cross-jurisdictional insight cannot be overstated.” – Guillaume Jacqueau

// When the UK team was carrying out a French bolt-on for Small World, the French team connected them with the right local advisers and provided a local perspective.

“Our colleagues in Paris immediately made us locals. This de-risked the process and Small World’s management team were delighted we could add this capability.” – Andrew Backen

By sharing expertise across borders, we can radically accelerate our learning curve in attractive or emerging industry areas. A recent example of this is our growing portfolio of telecoms investments.

// Equistone has developed significant experience in European telecoms. A recent string of investments in the sector started with Camusat in France, then WHP in UK, and then Amadys in Belgium. Each instance involved collaboration and deep knowledge-sharing between deal teams and our investment committee.

“Amadys’ latest add-on was based in the same village as WHP. The conversation between the two management teams is an example of the natural, organic value creation that can be applied by an international investor that is focused on value and growth.” – Andi Tomkinson

A vivid example of just how powerful this access to international insights can be is in our latest edition of Platform (Issue 07, pages 12-15), where we cover how the CEO of German marketing services portfolio company PIA flew to Birmingham to help the ITG deal team during their assessment of the opportunity.

“Equistone’s local presence and international collaboration allow us to develop sector insights that competitors in our size range, be they country funds or sector specialists, have a hard time replicating.” – Paul Harper

This multi-sector cross-region experience can also highlight interesting discrepancies and opportunities.

// When a German temporary staffing business, TUJA, was brought to investment committee, the UK members, following several underwhelming domestic experiences in the sector, expressed well-informed caution, but also an openness to understanding differentiations of the German market. This made for a very insightful discussion, concluding in unanimous support for the investment. The deal became one of the firm’s most successful, delivering an IRR of 241%.

The temporary staffing sector is one with rapidly shifting dynamics and regional differences, and for many years after TUJA we decided to stay on the sidelines. Our international perspective allowed us to analyse and decline many opportunities, with the benefit of hindsight largely good decisions. However, it also helped us to recognise the qualities of a business in the adjacent engineering and consulting sector, the Paris-based Vulcain.

“Doing one deal in France, Germany and the UK can be more valuable than having done three in one market. We will have a different type of experience, and that can be more additive.” – Grégoire Châtillon

The value of multi-sector pragmatism

Undefined gems

Equistone’s multi-sector strategy ensures our sectors retain permeable boundaries, so the team can recognise value in sub-sectors that don’t neatly dovetail. Here are two revealing examples from the speciality medical and engineering sectors.

// When Equistone’s German team invested in Sunrise Medical, a wheelchair and mobility aid business, it was able to deploy both its knowledge of the healthcare end-market globally as well as its deep affinity with specialist engineering.

“Without Equistone’s deep experience in both of these sectors, as well as local expertise, it’s hard to see how the potential of Sunrise Medical could have been identified, or how it’s risk-profile could have been fully understood.” – Marc Arens

// RENA is a high-tech specialist manufacturer that changes the surface of materials. It wasn’t the sort of business any investor would claim to be a ‘specialist’ in. But by virtue of Equistone’s deep and varied track record, it was able to assemble a local deal team with deep experience in machine-building companies that shared many characteristics with RENA to fully comprehend its strategic position and win the asset in a competitive auction.

“We are now supporting RENA’s management to focus on those international end-market sectors where it’s IP-differentiation will be most effective and where we expect strong and sustainable growth.” – David Zahnd

Cyclical stars

Few private equity firms would want to devote their fund to companies operating in highly cyclical sectors. Equistone’s pragmatic multi-sector strategy allows us to ‘rule-in’ those sectors: we can be patient and highly selective. Take the construction industry for example.

// When Equistone backed German prefabricated house-maker Oikos from Fund V, few investors were targeting the sector, doubtless in part because of cyclicality. Having ‘ruled in’ the deal as the final (26th) investment for the already well diversified Fund V, Oikos turned out to be far from a generic construction play. Oikos was a specialist manufacturing business with huge potential to consolidate its market, improve margins with technology-enablement and drive multiple expansion through ESG investment. Its sale to Goldman Sachs in May 2021 generated a very strong return.

// Before Oikos, came Equistone’s Fund IV investment into OTTO, a HVAC player also in Germany, with construction as its end-market. After a successful partial exit, a total return exceeding 10x now appears feasible.

// Another current portfolio company is Willerby, a UK manufacturer of static caravans which has a different and very attractive end-market, but which nevertheless manufactures using raw materials to high ESG standards. More recently, the French team have invested in modular buildings company GSCM.

We don’t want to rule out any sector at any point in time. We will just move the bar depending on our enthusiasm. Sometimes those sectors we might feel cautious about can offer the most attractive opportunities, precisely because other investors won’t even consider them. Our sector expertise and experience through multiple macro cycles allow us to dig beneath generalisations.

Untouched diamonds

Some sectors just fall out of fashion. A pragmatic multi-sector strategy positions Equistone to get that ‘one great deal’.

Like any investor, Equistone hasn’t called every retail investment perfectly. But our overall track record in the sector is strong, precisely because we had no pressure to enter the sector. This has allowed us to secure major successes investing in strong consumer brands such as Kurt Geiger, Jack Wolfskin, Hobbs and Maison du Monde. The firm’s deep experience across Europe’s retail markets means that when we see a truly special opportunity – such as Fund VI’s Courir, for example – we can swoop in (see PLATFORM, issue 2).

Few people want to talk about retail right now. And yet the sector constitutes some of Equistone’s top-performing current investments, in the face of Covid. If you are too top-down, you can miss some really attractive opportunities.

// When the French team first looked at office supply business Bruneau, its retail-like dynamics made it appear too exposed to ‘internet giant’ competition. But the team’s deep experience of retail sector dynamics allowed it to get comfortable with the risk. It was a contrarian call – and the right one. The business was sold to Towerbrook in 2021, providing a stellar return.

// Vertbaudet was not quite ‘untouched’ when Equistone bought it in 2021, but it’s past difficulties perhaps made it otherwise ‘untouchable’. The French team’s deep experience in the retail sector, including with Bruneau with which it shared many common features, gave the team the confidence to recommend it for Fund VI, where it stands as a promising asset.

If you are truly expert, you will be able to discern those rare diamonds within an unloved sector. It might mean the vast majority of investments in that sector don’t clear the funnel, but the outlier that makes it through can offer an outsized return.

Sectoral value-creation tools

Even in sectors where Equistone has completed dozens of deals and add-ons, we do not impose a cookie-cutter playbook on management teams. Instead, we have built sector value creation tools that are designed to be flexible, bottom-up and facilitate knowledge-sharing within and between teams.

We have sector tools, but we are not prescriptive. Even businesses that seem very similar are too unique. To maximize value, an approach needs to always be customized, drawing from a broad spectrum of levers.

// When Equistone’s UK team was assessing insurance business A-Plan, the financial services deal team involved a colleague focused on consumer deals, given the retail aspects of A-Plan. He put the team in touch with specialist consultants who ran retail data analytics to help the company optimise its approach to roll-out expansion, improving performance. The business was sold to HgCapital for a 2.8x return.

“In financial services, it’s not that different to our general value creation tools. That’s why it’s useful that none of us are 100% financial services focused. When you are sitting on a company board, being able to bring ideas from different sectors, sub-sectors or companies is very helpful, to ensure you are looking widely for solutions.” - Dominic Geer.


Last year, Equistone developed a dynamic Sector Knowledge Database that allows its deal teams to quickly filter and analyse the hundreds of deals that were considered over the past fifteen years by industry sector and drill down to specific subsectors. The database helps them to spot patterns within sectors and identify where areas of experience and expertise are distributed across the firm, which they could draw on to inform live transactions and investment committee discussions. 

A lower mid-market leader in financial services

Equistone has a long history of success in financial services, both in the UK and on the Continent.

An early landmark deal was the flotation of insurance company Admiral Group into the FTSE 100 in 2004, making a double-digit money multiple. The deal is still referenced within the longstanding UK financial services advisory community.

Since Admiral, the UK team has made 12 primary financial services investments averaging one financial services deal every other year, and achieving consistently high returns. Successes include A-Plan Insurance, Wealth at Work and Together, and Equistone is currently invested in Small World Money Transfer and again in Wealth at Work. The team has evaluated hundreds of opportunities in the sector. This level of activity, longevity and track record places Equistone as one of the leading UK lower-mid-market investors in financial services.

Meanwhile, the French team has also seen a string of strong financial services exits, such as retail insurance broker Meilleurtaux, which made an 8x money multiple, and Finaxy, sold to Ardian in 2020 for 3x.

The firm has appetite to invest across the full spectrum of financial services. But this regulated and complex sector is not for the generalist investor, rarely rewards casual interest. Equistone has built up a deep bank of knowledge and a large network of expert advisers to help us address opportunities that fit our criteria. The main sub-sectors in Equistone’s focus are lending, insurance (including insurers, brokers and hybrid ‘managing general agents’), wealth (including financial advisers, asset and wealth managers), payments, and service providers into each of these end markets. The advisory community structures its specialist teams along these lines too, making Equistone’s expertise and track record an important qualifier to engage.

Tech-enablement is a theme across all sub-sectors. Most fin-tech opportunities are too early-stage, but the team has enjoyed great success in applying technology to traditional business models, with past investments such as Global Blue and A-Plan, and now with Wealth at Work and Small World, both of which are in the midst of transformative digitalisation projects.

A full version of this article appeared in PLATFORM 07, Summer 2022