OMERS Private Equity, the buyout arm of the C$77 billion ($58 billion; €54 billion) Ontario Municipal Employees Retirement System, has agreed to sell shipping services company V Group to global buyout house Advent International, its first exit in Europe.
OMERS, which held a significant majority stake in the business alongside management, is reinvesting in a minority stake together with new majority shareholder Advent and V Group management.
Financial details of the transaction were not disclosed.
“OMERS led the way among Canadian pension funds when we first established a private equity office purely focused on lead direct deals in Europe in September 2009,” Mark Redman, global head of OMERS Private Equity, said in a statement.
“I am delighted that we have demonstrated ultimate proof of concept with this exit and am confident the global team shall continue to generate the long-term, stable returns necessary to meet the OMERS pension promise.”
Redman declined to disclose the exact return OMERS PE would receive from the sale, but told Private Equity International it was “healthy”.
OMERS PE acquired V Group from British private equity house Exponent Private Equity in 2011 in a deal valuing the business at $520 million.
V Group manages the running and maintenance of more than 1,000 vessels on behalf of 300 clients, and provides a variety of related services to these and other third party vessels, OMERS said. The group operates across 31 countries through 70 offices and employs more than 3,000 people.
As well as growing organically, V Group made several acquisitions, including Bibby Ship Management and Selandia Ship Management Group.
“There was a lot of work around systems and controls as well, in terms of improving those, and also particularly around key account management, in other words the ability of the business to manage and develop its key customers,” Redman said of OMERS PE’s work with the business.
Redman added that shipping services has proved to be a resilient sector through economic cycles.
“Ships keep sailing, they always sail, and as a consequence the business had a degree of resilience,” he said.
“The outsourcing trend whereby ship-owners look to outsource shipping services to third-party managers is a slow but developing trend as well.”
OMERS had been approached several times by a number of parties looking to acquire V Group, particularly in the last year, Redman said. There was no auction process around the sale; Advent approached OMERS directly.
In a statement, Advent said following its investment V Group’s growth strategy will “remain focused on further geographical expansion and deepening its range of services organically and through complementary acquisitions”, and that the firm would support management in making “significant investments” in technology, systems and operations.
Redman told PEI he would be “disappointed” if OMERS PE did not make an acquisition in Europe in the next year.
“It’s a tough market and it’s difficult to identify opportunities, businesses with the right profile, particularly in very highly-priced times,” he said. “But I’m confident that in the European context we’ll do one or two transactions on the buy side next year.”
For OMERS – like much of the market – 2016 has been “more of a selling year than a buying year”, Redman said. As well as V Group, OMERS PE has completed three other exits this year and has made just one acquisition, North American healthcare business Forefront Dermatology.
Redman added that he expects the OMERS PE’s European team to grow in the next year.
“I would expect to add two or three people, maybe somebody on the ops side in particular as we develop out our portfolio abilities.”