Investment funds: Financiers attack TRM

investment funds, carriers

Transport, which was considered a loss-making sector for a long time, is again experiencing interest from investment funds. Why are more and more of them included in the capital of carriers? Answer elements.


Siparex at Top Chrono, Tikehau at Sterne, Paris Fonds Vert at coursier.fr, NCI at Leroy Logistics, Nord Capital Investissement at Envoyé Spécial, BNP Paribas Développement at Jardel, Aquasourça at Astr’in, Eurazeo at Flash Europe… investments have entered the capital of many companies to support their development or facilitate their transfer. They are mainly interested in ETI, much less in SMEs»explains Frederick Portera, M&A consultant at Strategeo. The goal of the investment fund is to double its share in 7 years»– remembers Frederick Porter.

But the situation is changing. In recent years, TRM has become of greater interest to financiers, who are reassured by the sustainability of carriers. “Investing in transportation is less random than betting on a digital startup with hopes of exponential growth. Because often for four capital investments, three will die with the company»notes Frederick Porter. “By investing in TRM, there is less chance of losing on arrival», he assures. If the carrier was considering the possibility of securing the services of an investor, it would have no difficulty in finding one. But not everyone wants it.

Accelerators growth

“There are entrepreneurs who don’t want to share their capital, it’s a shame, because they deprive themselves of the opportunity to develop.», says William Begery, road transport expert at Upply. This is evidenced by the example of the Sterne company, which owes its exponential growth to the arrival of investors in its capital. He also reminds that it is thanks to these same funds that Perrenot has become a heavyweight in road transport of goods with a turnover of 900 million euros. Carriers often look to investment funds to be able to make external growth deals to reach critical mass.

William Begery explains why investing in TRM is fun as business in the sector is still undervalued. If companies are valued at 7-8 times their earnings on average, that valuation is no more than 5.2 earnings in TRM.» Therefore, it would be possible to have profitable deals. Especially since the transport expert is counting on improving the profitability of the industry due to the shortage of drivers and high demand. According to Upply surveys, road transport will continue to grow at a steady rate of 4-5% per year for the next few years. This did not go unnoticed by investors.

allies for a change profession

And while employees may be intimidated by the influx of such funds, William Baghery believes their presence at TRM is a good thing from all points of view. Even if they are not philanthropists and their goal remains to make money, they provide the financial resources necessary for the development of companies, the greening of car fleets, the development of artificial intelligence…” But not only. They have stakes in companies from various sectors and function as clubs where non-competing leaders share and enrich their expertise in fields as diverse as management, law, HR, etc.»assures William Begery.

He adds that by helping the companies in which they invest multiply the growth of operations, investment funds help create larger companies that could change the profession’s relationship with shippers. Today, the RFT market is still fragmented. Shippers face companies with an average of 200 people. A significant size, but not enough to be able to negotiate while being in a favorable balance of power for them. If shippers faced larger companies, the shipper/carrier relationship could turn in favor of the latter»predicts William Begery.

Resume

The year 2022 is ambiguous for acquisitions

Due to the uncertainty related to energy prices and inflation, souffle has become slightly cheaper in the acquisition market. Buyers are still there, but they are more observant and sometimes put off by prices, as a carrier looking to do an external growth operation told us. We see a gap between the expectations of sellers and what we are willing to put on the table.» Frédéric Portera, an M&A advisor at Stratégeo, confirms that some sellers have yet to get down to earth with market realities.

Bpifrance’s commitment to transport

“If an investment bank approached a transport company, some funds immediately rejected the file»says Denys Talaron, investment director of Bpifrance.For us, this is a sector that we have historically supported in both funding and capital. Carriers will have to accelerate their green transition and Bpifrance is committed to supporting them in this process»he continues.

We have 2.5billions of euros dedicated to the sector and direct stakes in around twenty transport and logistics companies»continues Alain Tuet, also investment director of Bpifrance. If we expand our holdings to funds that invest in companies in the sector, we should add 150»he adds.

The two men ensure that the funds favor companies operating in niche markets. The quality of the management team is, of course, fundamental. You have to be an excellent manager because the sector has very low returns»– comments Alain Tuet, who adds that if the company deals with logistics in addition to transport, it is better because it allows you to see the contracts.