TowerBrook Europe private equity view points to lower multiples, tougher rules

TowerBrook Europe private equity activity is being shaped by lower average acquisition multiples and a more demanding regulatory and political setting, according to Joseph Knoll, a managing director at the firm, in an interview with PE Hub. The comments came as Energy Capital Partners and KKR agreed to buy Ireland’s DCC Energy in a transaction valuing the business at about £5.75 billion, or $7.7 billion and €6.7 billion.

Knoll told PE Hub that TowerBrook is “extremely bullish” on investment opportunities for the second half and the foreseeable future, while also pointing to tighter conditions for the broader private equity industry. He cited elevated leverage, sector re-ratings, AI-related disruption and software exposure as factors weighing on industry returns.

In private equity, a lower valuation multiple means a buyer is paying less for each unit of a company’s earnings or revenue, before accounting for the company’s growth prospects, resilience and risk. Knoll said Europe offers lower average multiples than North America, but also carries greater difficulty in buying and expanding companies because of regulatory and political conditions.

What did Joseph Knoll say about Europe private equity?

Knoll said TowerBrook invests in the region where it sees the strongest risk-adjusted opportunity, whether in Europe or North America. He said the firm applies a common approach across both markets through global sector teams, with a focus on disciplined pricing, sector expertise, thesis-led sourcing and operational improvement.

PE Hub identified Knoll as the head of TowerBrook’s financial services sector team and co-leader of its European business services sector team. Recent TowerBrook transactions cited by PE Hub include the acquisition of French sports platform ID Unlimited and the acquisition of MSA Mizar from Columna Capital.

Knoll said TowerBrook is looking for fragmented mid-market companies, including founder- and family-owned businesses where relationships can influence outcomes. He also said price is not the only factor in winning transactions.

On sectors, Knoll told PE Hub that TowerBrook starts with a business model test rather than a sector label. He said the firm asks whether artificial intelligence improves a company’s economics or risks making its products or services more easily replaceable. He identified business services, financial services, healthcare services and the firm’s consumer vertical as areas where AI can improve productivity, customer results or cost-to-serve.

DCC Energy deal advances after earlier rejection

Energy Capital Partners and KKR have agreed to acquire DCC Energy after DCC rejected a £4.95 billion offer from the pair in April, according to PE Hub. The agreed deal values the Irish energy distribution group at about £5.75 billion.

PE Hub reported that the offer represents a 24 percent premium to DCC Energy’s undisturbed closing price and a 33 percent premium to its three-month volume-weighted average price. Volume-weighted average price measures a security’s average trading price over a period while accounting for the amount traded at each price.

DCC Energy sells and distributes energy to commercial, industrial and domestic customers across Europe and the US. PE Hub said the company primarily delivers off-grid energy, including liquid gas, and also provides service station and fleet services. For the financial year ended March 31, DCC Energy generated £15.4 billion of revenue and £634 million of adjusted operating profit.

PE Hub noted that Energy Capital Partners is the infrastructure investment platform of Bridgepoint, which owns PEI Group, the publisher of PE Hub.

Other European private equity transactions

PE Hub also reported that Cinven and La Caisse agreed to jointly acquire Optio Group, a UK-headquartered specialty insurance managing general agent, from Preservation Capital Partners. Optio originates, underwrites and manages specialty risk for more than 60 third-party capacity providers across six business lines and more than 30 products, with 18 offices in 15 countries.

Separately, Mutares agreed to acquire Stellantis’ entire stake in Free2move’s car-sharing business, according to PE Hub. Free2move offers short- and long-term free-floating car-sharing through its own mobile application and operates fleets in 14 cities across Europe and the US. Mutares plans to focus on international fleet management, the shift to battery-electric vehicles, customer experience and urban mobility requirements.

This story draws on original reporting from PE Hub.