Flexstone Completes Deals in Asia, US and Europe

Flexstone Partners, the global co-investment specialist and affiliate of Natixis IM, has acquired private equity stakes in companies based in Asia, the US and Europe.

Flexstone has bought into an Asian construction services firm, a US marina ownership and management company, and a European health and wellness specialist.

It invested $12m in Stack, a Japanese one-stop provider of scaffolding solutions, which leases, installs and removes scaffolds used at construction sites. Stack focuses on residential construction, with a particular emphasis on renovation projects. “Residential is a very stable segment in Japan,” said Kit Jong Tan, head of Asian investments at Flexstone. “Stack managed to grow its book of business even during the pandemic.”

Flexstone invested alongside Orchestra Private Equity, a private equity firm which has operated for 8 years in the Asian mid-market sector. “Orchestra has plenty of experience in the smaller end of the mid-market, so this deal is right in its sweet spot,” said Tan.

With a 1%-2% market share and operating in a highly-fragmented market, Stack has opportunities to growth both organically and through M&A. “The sponsor has a great track record in growing smaller companies and, there is scope for substantially adding value to Stack,” Tan added.

In the US, Flexstone co-invested $12m alongside Access Holdings, the lead sponsor, in Monument Marina Group and Oasis Marinas, which operate under a joint umbrella. Monument Marina Group (MMG) acquires and improves marinas by upgrading facilities to boaters. Meanwhile, Oasis Marinas operates marinas under contract on behalf of owners.

Anatoli Gavrilov, a New York-based director of Flexstone, said: “Marina ownership and management is a great sector. It is already large and, with new boat ownership growing fast, has a huge impending supply-demand imbalance.”

Revenues in the marina sector are estimated at over $6bn a year and are growing at around 4% a year, faster than most other sectors. Furthermore, these revenues have been resilient in volatile economic environments. During the great financial crisis, for instance, coastal marina revenues declined by just 3%-4%, and marinas with dry slips by just 2%.

The marina industry is highly-fragmented with more than 10,000 marinas in the US alone, of which 90-95% are independently owned. “This is real scope for Oasis to build up its management portfolio,” says Gavrilov. “Marina operators tend to be older and while they don’t want to sell up, they do want to outsource the management to avoid the stresses and strains of upgrading and servicing their operations.”

MMG, the ownership arm, aims to buy undervalued second-tier marinas, and invest in them to introduce and upgrade services such as restaurants, gyms and refuelling stations. The exit route for the investment is likely to come via an institutional investor – possibly a general REIT, a specialised marina-focused REIT or an infrastructure private equity sponsor.

The marina company has already made progress in terms of its organisational build-out, hiring a new chief executive responsible for both parts of the company, new finance and HR personnel, as well as IT and operational staff.

Gavrilov notes a coming supply-demand imbalance in the marina industry which should drive both revenues and the value of marinas. “Given the regulation in the sector, there are a limited number of marinas in the US. You can’t just build a marina where and when you want, it takes resources, permits and time.” Assuming supply stays flat, demand for marina storage will surpass supply (available slips) by 2026, according to industry projections.

In Europe, Flexstone co-invested €17.5m alongside Latour Capital, the lead sponsor, in Hygie31, which operates France’s well-known Pharmacie Lafayette network. Hygie31 is the French leading retail pharmacy and parapharmacy network and has c. 850 pharmacies affiliated in its network, including c. 150 in Spain, and total sales volumes of over €2bn.

The affiliated pharmacies benefit from the platform’s group purchasing organization and marketing services, which help raise revenues and generate higher margin at each pharmacy through scale and synergies. With Latour Capital’s support, Hygie31 will further consolidate its leadership in the French market, complete its service offering through online and in-store digitalised customer experiences, and grow outside of France by leveraging on the successful and differentiated Pharmacie Lafayette model.

These services are also aimed to plug gaps in France’s healthcare system, which are prevalent outside of the big urban centres, where proximity healthcare services are often missing. In these areas, the pharmacy is progressively becoming the local healthcare hub, dispensing not only medicines but expert advice, teleconsultations, and vaccinations services.

“The French government wants healthcare to be affordable and accessible and that is exactly Pharmacie Lafayette’s mission,” said Rudy Chappe, a Paris-based Director of Flexstone. “We are delighted to be joining Hygie31 at such an important time in the company’s already impressive growth journey and help improve patients’ lives in France and abroad ”.

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