The acquisition fund LPP: ‘In ten years with four companies in the top 30’
Interview Diederik Jan Antvelink
The investment fund Logistics Platform Partners (LPP) is looking for a takeover in logistics with a war chest of 40 million euros. The fund, set up by the owners of food carrier Nedcargo, aims to acquire two players from the Dutch top 100 this year. ‘Now is a good time to invest in Dutch logistics companies,’ says partner Diederik Jan Antvelink.
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Where do the 40 million come from?
The start-up capital comes, among other things, from the sale of Nedcargo’s domestic shipping division in 2018. There are also reserves that we can release through refinancing.
What kind of companies do you turn to?
Everything from about fifteen to a hundred on the list of largest logistics companies can be interesting to us. It is parties with a certain size and position that have proven that they do well in their niches. This is the first phase of our fund. Then we are looking for smaller companies that can be integrated into these platform companies.
Will these companies continue to exist independently?
With Nedcargo, we have taken over many companies and integrated them into our company. With LPP, we focus on strategic participations. We are looking for successful companies whose owner will remain on board for a while and from where we can make further acquisitions. The company will then continue to exist independently and get a shareholder who is willing to focus on growth and digitalisation. In this way, we want to make these companies more robust.
What will your portfolio look like in ten years?
Then we took four or five players from the top 100 and doubled them in size and placed them in the top 30.
In the fall, you encouraged companies to report to you. Has it given much?
I’ve had many cups of coffee with family businesses. These are fun and interesting conversations, but mostly not people who already want to sell. The right hot leads come from accountants and M&A advisors. These are companies that are for sale and already know what they want to do in the coming years.
What do you have to offer those companies?
You can get a strategic takeover and sell your business to a competitor. But then your business will be gone and it will get a different name. It does not happen with us. It is also possible that there are several owners in a family business where one wants to continue and the other does not. There are also companies that want to grow themselves, but do not have the capital and support in the company. We can help with that.
Why not make more acquisitions from Nedcargo?
With Nedcargo, we have grown 50% in the recent period. It’s smaller than I would like. This is because Nedcargo is a food specialist. We are responsible for the logistics of 20% of the products in the supermarkets, and we are now reaching the point where our market share is too large to continue to grow rapidly. Looking more broadly, there are several takeover candidates, such as in construction logistics. However, the challenges are the same in all sectors. Logistics, IT, buying diesel, buying trucks and – very importantly – you need people. If you are bigger and more important, you can better tie drivers to you.
What will happen to Nedcargo itself?
We will transfer the logistics group to the fund. We remove the other interests.
LPP also wants to move to Belgium. Why is it an attractive market?
Belgium is more fragmented than the Netherlands with more local players. There is still a lot to gain. Moreover, the average earnings for logistics companies are higher there. In the Netherlands the margins are 2%, in Belgium it is double or even triple. In addition, the Netherlands and Belgium are increasingly seen as a market. It will not be long before Germany is also part of that region. At some point, a move to Germany will also be necessary to be able to serve the major customers.
Can sufficient returns be achieved in the Netherlands?
This is a good time to get into Dutch logistics companies. I expect the coast will turn the ship. Medium-sized companies can no longer grow because they do not have the money to invest in digitization, driver recruitment and sustainability. We can not keep up. So the margins need to go up. Furthermore, you can actually very well finance transport companies. Banks offer really good opportunities for solid companies with rental structures and factoring. This allows them to improve the return on their equity.
Are you leaving an acquired company after a number of years?
I’m addicted to logistics. So I do not need an exit. All partners in LPP have their sheep on dry land. So I would rather just continue with those companies.
How do you compete with the big private equity investors?
These funds have a clear exit horizon and want to transform a company within that time. We do it differently. At the same time, they have deeper pockets, and we will have to deal with that. But there is not that much private equity on the market yet due to the low margins. The funds are hesitant to take over companies that have to buy trucks and renew contracts every year.
What is your goal for 2022?
We want to make three acquisitions with LPP, one of which is Nedcargo Logistics itself. We have also set aside money to invest in innovation startups.
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