Flexstone Partners has completed the divestment of WeYou Group, a business-to-business group specialising in trade fairs. The deal delivered an IRR of approximately gross 90% to Flexstone’s portfolio following its sale in late 2019. WeYou had grown rapidly through its proprietary meeting tools for conferences and trade shows.

Flexstone Partners, the mid-market private equity group, bought into WeYou via a co-investment and divested towards the end of 2019. WeYou, based in France, was originally a subsidiary of the Tarsus Group, an organiser of B2B events. It underwent a management buyout in 2015, led by Romuald Gadrat, the CEO of Tarsus France. It subsequently stepped up the number of events it organised and developed WeYou Matchmaking, a digital meetings app which brings together top decision-makers and exhibitors in bespoke business meetings exhibitions.

By 2017, two years after the carve-out, WeYou had proven its profitability as a standalone entity, but needed funding to drive further growth. Flexstone was invited to be a co-investor in the ensuing leveraged buyout. “We knew the GP well and the partner in charge of the investment, so we were comfortable about the deal,” says Benoit de Kerleau, Managing Partner of Flexstone. “More importantly, it was a sweet spot deal for the GP, the absolute core of what they do, and they had known the company for long.

In addition, the price paid was within the range for the type of deal and leverage was limited. “That was important too,” says de Kerleau. “We seek deals based on growth and value added rather than financial structuring.

By mid-2019, WeYou had outperformed the plan, growing revenues by more than 18% a year since 2014 and significantly improving EBITDA margin. WeYou was ready for another change of financial partner, to a mezzanine fund focused on management-sponsored transactions, allowing Romuald Gadrat to retain majority ownership and continue drive its future strategy. Flexstone sold its stake at a multiple of 3.8x invested capital.

Flexstone, which focuses on small- and mid-cap markets with enterprise values ranging from $50m to $500m, has completed 87 co-investments since 2008, yielding a combined gross IRR1 of over 25%.

Unearthing promising mid-market companies worldwide requires a global team with local expertise in the world’s major regions,” says de Kerleau. Exposure to companies in a larger number of countries, across geographic regions, strengthens diversification, potentially providing protection against underperforming national economies and benefiting from faster-growing countries, he adds.

For further reading:
1 Past performance is not a guarantee of future results. Investing in a fund involves significant risks, including loss of all your investment. Returns includes all co-investments completed by Flexstone Partners Sarl, SAS and LLC since inception. Performance data as of June 30, 2019 pro forma for contributions and distributions through March 31, 2019. Returns are presented on a “gross” basis (i.e. they do not reflect the management fees, carried interest, transaction costs and other expenses that may be paid by investors, which will result in lower returns); and calculated on an average basis. The gross IRR indicated is the combined performance of co-investments taken individually; it does not reflect performance of a Fund that could contain the same investments. Due to fees and costs supported by a Fund, the performance would be lower.

About Flexstone Partners
Flexstone Partners (“Flexstone”),1 an affiliate of Natixis Investment Managers, is a leading investment solutions provider in private assets with a global reach and local footprints in New York, Paris, Geneva, and Singapore. It specializes in the selection of the best private equity, private debt, real estate, and infrastructure fund managers for investment by Flexstone’s clients. Flexstone manages primary and secondary investments as well as co-investments. Flexstone’s expertise is distinguished by a high flexibility in building customized portfolios that are tailored to the unique needs and constraints of each investor whether institutional or private individual.2 Flexstone offers a large range of services, from advising on private assets portfolio construction to the management of fully discretionary separate accounts and funds of funds. Flexstone, with more than 40 professionals, manages $7.6 billion3. It is a majority owned subsidiary of Natixis Investment Managers, one of the largest investment managers worldwide.

Further information: www.flexstonepartners.com

1 Flexstone is the name that collectively identifies Flexstone and its underlying companies.
2 Under certain conditions related to marketing and prospection regulatory requirements specific to each entity.
3 Source: Flexstone Partners at 12/31/2019. Assets under management and advisory made up of commitments for closed-end private placement funds, and sum of Net Asset Value and unfunded commitments otherwise.

Flexstone Partners, SAS – Paris
An affiliate of Natixis Investment Managers
Flexstone Partners Paris is an asset management company regulated by the Autorité des Marchés Financiers under n° GP-07000028. It is a simplified stock corporation under French law with a share capital of 1,000,000 euros.Trade register (RCS Paris) n°494 738 750.
5/7, rue Montessuy, 75007 Paris

Natixis Investment Managers
RCS Paris 453 952 681
Share Capital: €178 251 690
43 avenue Pierre Mendès France
75013 Paris

This communication is for information only and is intended for investment service providers or other Professional Clients. The analyses and opinions referenced herein represent the subjective views of the author as referenced unless stated otherwise and are subject to change. There can be no assurance that developments will transpire as may be forecasted in this material.