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Three Hills accelerates portfolio growth with 14 M&A transactions in 2022

22 December 2022 Portfolio Insights

Three Hills Capital Partners (“THCP”) is pleased to report that 2022 has been particularly active for M&A activity across its portfolio, with eight companies completing 14 transactions throughout the year. THCP’s expertise in M&A and operational value-add form a core part of its value creation toolbox, which have become even more vital avenues for growth given the current macroeconomic backdrop. Challenging headwinds can create strategic acquisition opportunities, so now is an opportune time for well capitalised firms to expand geographically, acquire complementary offerings or consolidate through acquiring greater market share. THCP’s portfolio has successfully pursued this growth strategy during 2022, with highlights including:

Global strategic communications group SEC Newgate (“SEC”) has used M&A to unlock transformational geographic expansion. Since investing in March 2022, SEC acquired a significant stake in US leader Global Strategy Group, and more recently purchased a majority stake in Mexico-headquartered agency Another, which reinforces SEC’s presence across Latin America. These acquisitions are expected to more than double group EBTIDA, with further add-ons in process.

Dedalus, the European leader of the Digital Health sector, has pursued a systematic buy-and-build strategy over the past two years since THCP invested, to not only increase its market share in various European countries, but to also further develop its in-house technological expertise. Since 2020, Dedalus has made 11 add-on or strategic acquisitions, with three in 2022 alone.

After experiencing customer demand for more sustainable solutions, Sigma, a leading provider of outsourced retail solutions, has fast tracked its ESG evolution through the acquisition of Gondola Pro, an independent consultant specialising in engineering, energy and project management for the retail and logistics sectors. This is a highly complementary acquisition, bringing synergies in energy, asset management and store refresh programmes, but also providing the opportunity for cross-selling.

Leading UK recycling and waste management business Recycling Lives acquired John R Adam and Sons Ltd (“JRA&S”), a Glasgow-based recycler and exporter of ferrous and non-ferrous metals. This acquisition not only provided further geographic diversification for Recycling Lives, it also improves access to the export market due to JRA&S’s port location, allowing for higher margin bulk shipping. The acquisition is expected to grow revenue and EBITDA levels by over 10%.

Borealis Hotel Group (“Borealis”), a leading hospitality group headquartered in the Netherlands, acquired Bierwirth & Kluth (“B&K”), a hotel operator and manager operating in the DACH region. B&K represents a highly attractive bolt-on for Borealis, owing to the complementary nature of the two portfolios and the attractive market dynamics within the hospitality sector. The acquisition doubles the number of rooms across the Borealis estate, providing a strong platform for revenue growth.