By Aron Adamski, BSc Economics @LSE
OVERVIEW OF THE ACQUISITION
- Acquirer: KKR & Co. Inc.
- Target: Roompot Vakanties (owned by PAI Partners)
- Estimated Value: €1B
- Financing: n/a
- Announcement Date: 18/06/2020
- Acquirer Advisors: n/a
- Target Advisors: OMMAX
US private equity firm KKR announced it had reached an agreement to buy Dutch vacation parks firm Roompot from French PE firm PAI Partners.
The value of the deal is estimated to be €1B. It represents a 100% return on the initial investment for PAI Partners who bought Roompot for €503m from from Dutch PE firm, Gildein, in 2016.
The deal comes as Roompot has been hit hard by the lockdowns and travel restrictions imposed since the pandemic began. Revenues were down 50% in March and 70% in April compared with the same time last year.
Despite the uncertain outlook, KKR is paying a price of more than 12x EBITDA. Roompot had previously planned to launch a formal sale process in March (before the pandemic) and the sale back then had been expected to also raise €1B.
“We didn’t accept a discount because of the crisis, because we believe going forward the business will not be affected” ~ Ms d’Engremont, partner at PAI
COMPANY DETAILS (KKR & Co. Inc.)
KKR is a leading global investment firm that manages multiple alternative asset classes, including: PE, energy, infrastructure, real estate and credit, with strategic partners that manage hedge funds.
KKR has been the most active PE firm worldwide since the crisis began, investing in deals worth over $16.9B since March. It is mainly investing from a fund that specialises in longer-term deals where it can own a business for 10 years or more. It aims to generate attractive investment returns for its fund investors through growth and value creation within its portfolio companies.
- Founded in: 1976
- Headquartered in: New York, United States
- CEO: Henry Kravis, George R. Roberts
- Number of Employees: 1,184
- AUM: $207B
- Market Cap: $26.87B
- EV: $50.51B
- LTM Revenue: $698.58M
- LTM EBITDA: -$51M
- LTM EV/Revenue: 72.31x
- LTM EV/EBITDA: -990.39x
COMPANY DETAILS (Roompot)
Roompot is the second-largest operator and provider of holiday parks in Europe and a regional market leader in the Netherlands, with a strong and expanding position on the coastal regions.
In total Roompot has more than 150 holiday parks in Denmark, Netherlands, Germany, Belgium, France and Spain in its portfolio, from premium resorts to comfortable parks and campsites. Last year it facilitated vacations for 3M guests, representing 13M overnight stays in Roompot’s 17,000 holiday accommodations.
- Founded in: 1965
- Headquartered in: Zeeland, Netherlands
- CEO: Jurgen van Cutsem
- Number of Employees: 2,100
- Market Cap: Private
- EV: n/a
- 2019 Revenue: €400M
- 2019 EBITDA: €82M
- LTM EV/Revenue: n/a
- LTM EV/EBITDA: n/a
Under PAI’s ownership, Roompot has invested significantly in upgrading and expanding its accommodations and opening new parks, developed a strong digital marketing and distribution platform, increased real estate ownership and grown revenue and EBITDA at double digit growth rates.
COMPANY DETAILS (PAI Partners)
PAI Partners is a leading European private equity firm with offices in Paris, London, Luxembourg, Madrid, Milan, Munich, New York and Stockholm.
It manages €13.6B of dedicated buyout funds and, since 1994, has completed 74 transactions in 11 countries, representing over €50B in transaction value.
PAI provides the companies it owns with the financial and strategic support required to pursue their development and enhance strategic value creation.
PAI’s ownership of Roompot represents PAI’s continued strong track record of supporting the growth of consumer companies. It also owns many other consumer companies, including B&B Hotels, Wessanen and Refresco.
- Founded in: 1872
- Headquartered in: Paris, France
- CEO: Michel Paris
- Number of Employees: 87
- AUM: €13.6B
- Market Cap: Private
- EV: n/a
- LTM Revenue: n/a
- LTM EBITDA: n/a
- LTM EV/Revenue: n/a
- LTM EV/EBITDA: n/a
STRATEGIC RATIONALE
Staycations
Roompot benefited from a surge in demand from domestic customers in recent weeks.
“There has been a trend towards staycation [and] this crisis is accelerating that because of the limitations on international travel and people being worried about airports and flights” ~ Daan Knottenbelt, partner and head of the Benelux region at KKR
KKR also believes that holiday parks have an incredible degree of resilience through recessionary times because people trade down in terms of their discretionary spending.
Strong long-term industry prospects
Revenue in the vacation rental segment in Europe is expected to show an annual growth rate (CAGR 2020–2023) of 19.4%, resulting in a projected market volume of $30.5B by 2023.
The projected expansion of the sector combined with Roompot’s strong European position may increase its revenues and profits in the future, yielding KKR’s a higher return.
More capital
KKR will continue to support Roompot’s current management team with its further development into a leading European operator. Roompot will now be able to tap into a bigger war chest as KKR is a bigger PE firm with more funds and resources than PAI.
Regional focus
The investment continues KKR’s track record in the Netherlands with major recent investments including Upfield (formerly Unilever’s Spreads business), Exact Software (a leading provider of accounting software to SMBs) and Q-Park (a European parking services provider).
RISKS AND UNCERTAINTIES
Negative credit rating
Because of the revenue drops in March and April and Debt/EBITDA above 6x, Moody’s has revised down its credit outlook on Roompot to highly speculative, non-investment grade B2. They said Roompot was vulnerable to the fallout from a possible second wave of coronavirus infections and a prolonged recession.
If this was to happen Roompot would make more losses and eventually may become unable to cover its liabilities, leading to insolvency.
