Morning all, Craig McGlashan here with the Europe Wire from the London newsroom.
There have been fewer bright spots for private equity investment over the last few years than the pet care sector, as people treat their furry friends more like members of the family and the switch to remote working allows more people to keep animals at home.
But a review by the UK’s Competition and Markets Authority on the pet care industry had made some nervous about investment opportunities in the country. This morning, we take an in-depth look at the review and what it means for private equity investing, with comments from Matt Lee of Lincoln International, Tom Hartwright and Ingrid Hodgskiss of Travers Smith and Gilles Vanhouwe of Verlinvest.
Next, Battery Ventures’ fleet management platform Shiftmove has added to its European footprint with an add-on. We take a look at the deal and revisit our interview with Battery partner Zak Ewen where he outlined the firm’s plans for the business.
We finish, aptly, with an exit. Main Capital Partners has sold WeFact to Visma.
‘Not fit for purpose’
Private equity investors in the UK pet care sector held their breath as they awaited the outcome of a Competition and Markets Authority review into the industry, writes PE Hub’s Sophie Rose. But while the watchdog was damning in some areas – including that the regulatory system was “not fit for purpose” – experts told Sophie that GPs had breathed a collective sigh of relief that the worst-case scenario had not materialized.
Sophie caught up with Matt Lee, managing director and head of UK and co-head of healthcare, Europe, at Lincoln International; Tom Hartwright and Ingrid Hodgskiss, partners at Travers Smith; and Gilles Vanhouwe, director at Verlinvest, to discuss the review and the future of regulation in the country.
The CMA has been looking into the veterinary services market since September 2023, and it has now published its provisional decision on the sector.
The watchdog said that there are: competition problems in the market, primarily because of pet owners not being given adequate and timely information; barriers to pet owners making appropriate choices; and an out-of-date regulatory framework.
Potential changes could include requirements to provide a price list for specific services and treatments and certain other information on websites and in practices; provide itemized bills for treatments and services; provide a written estimate for treatments that could reasonably be expected to cost more than £500 ($654; €567); and inform pet owners that they can get written prescriptions and that medicines may be cheaper online. Check out all the changes in the CMA’s provisional review.
“There was nervousness in the space that the CMA could have come out and said you need to divest some of the assets you’ve acquired, or you can’t make any more acquisitions without some form of additional scrutiny, but that hasn’t happened,” said Hodgskiss, who works at London-based law firm Travers Smith.
Travers Smith’s Hartwright added that regulation is an area of potential risk for PE investors. Pet medication is regulated in the same way as human medication, but vets have greater freedom to make decisions themselves, he noted.
Lincoln’s Lee said the review has caused a pause in dealmaking in the UK vet space, as the market thinks through what the impact could be.
Like Hodgskiss, he noted that “the worst-case scenario hasn’t transpired,” with no forced disposals. It seems that the CMA is following the “lighter touch route.”
Last year, PE Hub caught up with Verlinvest’s Vanhouwe, who at the time said “the headlines are always a little scary.”
He was more optimistic this year, saying the remedies are best seen “as a transparency reset rather than a threat to the investment case.”
“For PE-backed platforms, this means an operational and administrative burden, but it doesn’t fundamentally undermine the ability to create value. Clarity around a stable regulatory framework should reduce regulatory overhang and make it easier to accelerate the professionalization of the sector.”
Verlinvest’s pet and vet investments are primarily in Benelux, DACH, India and the US. The firm’s only UK-based portfolio company is tailored cat food company KatKin, which is handled via Verlinvest’s venture arm V3.
For more on the pet care sector, check out the full article, which covers areas like how UK regulation might evolve from here as well as investing in the wider European industry.
Fleet growth
Battery Ventures’ plan to turn its fleet management platform Shiftmove into a “pan-European champion” – as outlined by partner Zak Ewen to PE Hub – has taken a step forward with the acquisition of Ocean, the fleet management division of Orange Business in France.
Founded in 2003, Ocean manages 8,000 corporate customers with more than 180,000 vehicles in France.
Shiftmove is a European fleet management platform, formed in 2023 from the merger of Avrios and Vimcar. Battery made a combined €200 million investment at the time, PE Hub understands.
Shiftmove’s headquarters are in Berlin. Ewen told PE Hub shortly after the acquisition of Avrios and Vimcar that the companies’ largest footprint was in the DACH region, with some business in the UK and Italy. But the firm wanted to create a “pan-European champion.”
The addition of Ocean makes Shiftmove a major European fleet tech powerhouse, a statement read, supporting 27,000 corporate customers and 730,000 vehicles across the continent with a staff of over 500.
Shiftmove’s AI-powered fleet management platform connects real-time vehicle data with intelligent software, transforming how companies procure vehicles, manage costs, and run operations at scale, according to the statement. The cloud-based services are used by companies across construction, healthcare, field services, manufacturing, logistics, and the public sector, supporting fleets ranging from one to over 10,000 vehicles.
Further add-ons could be used to add functionality, Ewen told PE Hub after buying Avrios and Vimcar.
“There are areas they don’t cover today that are natural pain points for fleet managers,” said Ewen. “And the data they have is super compelling, managing over a quarter of million of vehicles, so they have data on all these companies. They know mileage, usage, they can track repairs, damages, fines etc. We think that data ecosystem is a natural starting point to bring in new technology that we can also sell back to our customers in terms of benchmarking best-in-class use cases on how to manage fleets, fleet costs, who are the right suppliers to work with, leasing providers and insurance providers, etc.”
Dutch exit
Main Capital Partners has sold WeFact to Visma, an accounting, payroll, invoicing, and HR business software company.
WeFact is a Dutch SaaS provider of pre-accounting software for entrepreneurs and SMEs. The Eersel-based company enables users to streamline invoicing and administrative workflows through an intuitive, scalable cloud platform. It has over 45,000 customers in the Benelux and a strong network of over 1,000 accounting partners.
Visma is a provider of mission-critical business software, headquartered in Oslo.
That’s everything from me today. Obey Martin Manayiti will write to you from New York later today and I’ll be in the Europe chair again tomorrow.
Cheers,
Craig
