Apax Partners

Overview

The Financial & Business Services (‘FABS’) sector represents a substantial portion of the global economy, with approximately 25% of the market capitalisation of the MSCI Global Index in the sector. The sector itself encompasses a diverse range of businesses, ranging from diversified global financial institutions such as Citigroup and HSBC, to international business services companies like MMC or Accenture, through to countless regional, national, and local players.

Worldwide, the FABS team is made up of 16 investment professionals located across Apax Partners’ office network. The team has a broad range of expertise spanning industry, consulting, and investment banking that enables Apax Partners both to identify opportunities and to work deeply with portfolio companies across the sector.

Apax Funds have invested €1.4bn in the sector over the past 15 years.  

Marketplace trends and drivers

The long-term trends impacting the financial services sector include the continued impact of global liquidity, industry globalisation and consolidation, deregulation and rapid financial innovation. These trends have provided a strong tail wind to drive growth and profitability across the industry over the past five years.

However, during 2006/07 a dislocation, which began in the US sub-prime mortgage sector, began to spread to the wider global money markets. Although many parts of the industry – for example, insurance – have been relatively unaffected by this, tightening liquidity has placed smaller businesses that rely on the wholesale financial markets under pressure.

In business services, the main drivers continue to be the implications of outsourcing and globalisation. Companies are looking to outsource more of their non-core functions, and are increasingly seeking partners that are able to fulfil these functions across their entire office network. This has led to strong organic growth within the sector, as well as consolidation as business services firms strive to meet their clients’ needs around the world.  

Strategy

The team pursues different strategies for financial services and business services, reflecting the unique dynamics of each sector.

In the financial services arena, we aim to target businesses with strong brands and existing customer bases and expand the number of products that we offer these customers. In business services, we believe that as the market tends to be characterised by relative fragmentation there exists a substantial opportunity to build and develop businesses of scale through organic growth and acquisition. Our goal is therefore to acquire strong platforms that can be used to drive growth both within their own markets and overseas.  

Outlook

The trends underlying both the financial services and business services industries mean that they are likely to continue to deliver good growth into the future, and present attractive investment opportunities for the Apax Funds. Within financial services, continued industry consolidation is likely to present a flow of opportunities as large groups seek to exit non-core businesses and geographies. Continued turbulence in the capital markets may also create opportunities as firms seek strategic partners to help them through the downturn. In business services, globalisation and consolidation will continue to present opportunities for investment in the sector.

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