The TMT sector is evolving, and so are its investors!

Technological revolutions and changes in the way people and companies operate are regularly shaking up the telecommunications sector. Thomas de Villeneuve, a partner at Apax Partners, talks about the fund’s current focus on the services part of the sector and explains how he intends to help Expereo’s management develop their company.

Targeting and supporting tomorrow’s leaders

 “Apax Partners is constantly looking to identify high potential TMT subsectors to invest in,” Thomas says. These sectors must combine prospects for organic or consolidation-driven growth with cash flow generating business models that have strong operating leverage. The companies Apax Partners is looking for must have competitive advantages and lasting leadership positions. The difficulty is in finding these future leaders early enough in an ecosystem that is constantly redefining itself.

Technological changes and the new ways that both consumers and companies transact their business are constantly impacting the relative attractiveness of TMT subsectors. “Digitalisation has opened up new growth prospects and given a significant advantage to business information companies that own differentiating, must-have content and are investing heavily in technology.” This trend prompted Apax Partners to invest in Infopro Digital in 2007. Infopro Digital is now one of Europe’s leaders in business information. As another example, network digitalisation opened up new growth prospects for cable operators by enabling them to sell internet access and fixed-line telephone services as a complement to their historical TV services.

Connectivity is a new, unexplored vein of growth

“Today’s companies are experiencing rapidly-expanding needs for internet connectivity and cloud access, and this is boosting the growth prospects for the suppliers of these services significantly. Especially as current technology enables them to provide the services in over-the-top (OTT) mode, without having to invest heavily in the networks themselves.”

As a result, new companies have emerged with software- or platform-type business models that generate cash flow and have high operating leverage. What’s more, these companies have access to a worldwide market. Their arrival on the scene goes hand-in-hand with investor specialisation in infrastructure or in the related service providers. “Given the transactions we are looking to realise and the size of the companies we are targeting, Apax Partners is now concentrating more specifically on the services part,” Thomas explains. “Expereo, which we had already identified two years ago, dovetails perfectly with this approach.”

Based in Amsterdam, Expereo accelerated in 2016 when it started looking at future connectivity. Expereo proves to be a driving force on this nascent, fragmented market. Its strength is that it was able to evolve from a simple connectivity player to a provider of related services and software defined networks (SD-WAN), thereby positioning itself as an industry pioneer while relying on a wide-scale solution based on its own technology platform. “Expereo has a worldwide presence, and its management has a fantastic operational track record,” Thomas emphasises. “Not to mention a clear vision of its expansion on the market over the next few years.”

Making Expereo a world leader

“Using our sectoral expertise, we can identify companies we want to help, and we can enter into a meaningful dialogue with entrepreneurs about their products and their business,” Thomas says. Apax Partners doesn’t bring business expertise to Expereo, but supports the company’s growth, its organisation and its international development.

“Expereo is a very fast-growing company and is gradually structuring itself in every area: sales organisation, corporate governance, international development methodology, digitalisation and acquisition strategy.” Apax Partners adds value by helping Expereo implement the strategic vision the connectivity company has already developed and that it shares as an investor. All this in a structured, orderly, efficient manner, so as to make the company a world leader in a rapidly expanding sector.

Subscribe

Apax Talks

NEWSLETTER

Apax Talks is a digital magazine aimed at company managers. It presents growth levers for SMEs, with a focus on TMT, consumer, healthcare and services sectors.