HIG goes local for European push(3)

US buyout firm HIG Capital is planning to hire as many as 30 local professionals in about six months, as it prepares to start spending a €600 million European fund. James Taylor talks to managing director Paul Canning about the firm’s ambitious plans for Europe.

For a firm that has spent nearly 15 years building a formidable reputation in the US, HIG Capital is in no mood to take a patient approach to its European expansion plans.

The firm has just closed its first dedicated European fund, HIG European Partners, which hit its hard cap of €600 million in just a few months. Clearly investors believe that the firm’s successful US formula, where it has operated in the lower end of the mid-market since 1993, can also work in Europe.

HIG is certainly investing heavily to make sure that it does. Co-founder and managing partner Sami Mnaymneh is relocating to London to spearhead the push, while there will also be offices opening in Paris and Hamburg. By the end of the year, HIG expects to have a team of more than 30 investment professionals – all of whom will be recruited from the local markets. From a standing start, this is an ambitious programme.

However, the firm already has nine professionals in place, with seven more due to start in the next six weeks. Paul Canning, who has joined as managing director from UK firm Gresham Private Equity, told PEO that the firm’s reputation in the marketplace made it an easy sell to potential new recruits. The firm was looking to build a team with “a real breadth of experience”, he added. “There’s a real mix of skills – some with operating expertise, others with a more financial or deal-orientated background.”

This would allow the firm to help businesses in a broad range of different circumstances, he said – from those in distress to high-growth market leaders. “We’re looking for businesses below the radar that need some hands-on help; where we can get in there quickly and roll our sleeves up. But you need to be flexible in your approach.” This also applies to deal types – although Canning expects the “sweet spot” to be £5-20 million equity per transaction, this could represent a minority stake or a control investment.

Unlike many of its former competitors, HIG had “resisted the temptation” to move upscale, which made the market attractive from a competitive point of view, Canning said.

So why did HIG choose to make its move now? Canning points out that the firm is not exactly a newcomer to the European market. It has already made European acquisitions from its US base – most recently French group Diam Europe in March – and expanded the European operations of US-headquartered business. It now hopes to bring this experience to bear in the opposite direction.

Its US parent will also act as a useful sounding board for the European team. “It’s great that I’ve got over 80 investment professionals in the US, who’ve done more than 100 deals across every sector,” Canning added.

Time will tell whether the HIG model can be as effective in Europe as it has been in the US. But if it does hit its target of hiring 30 professionals in by the end of the year, it will very quickly become a significant player in the lower mid-market.