Morning all, Craig McGlashan on Europe Wire duty from the London newsroom.
There’s plenty of US private equity interest in European assets for a variety of reasons, but dealmaking in Europe also presents challenges. That’s one of the topics this morning as TowerBrook managing director Joseph Knoll fields questions in the latest of our Q&A series with PE thought leaders.
One potential transatlantic deal looks to be moving ahead, after Energy Capital Partners and KKR agreed to acquire Ireland’s DCC Energy.
Next, Cinven and La Caisse have agreed to jointly acquire Optio Group, a specialty insurance managing general agent from Preservation Capital Partners.
To finish, Mutares has agreed to acquire Stellantis’ entire stake in Free2move’s car-sharing business.
Gravity intensifying
TowerBrook is “extremely bullish” on opportunities in the foreseeable future despite elevated leverage and AI-driven disruption weighing on wider industry returns, Joseph Knoll, managing director, told PE Hub’s Nina Lindholm.
Knoll, who also leads the firm’s financial services sector team and co-leads the business services sector team in Europe, spoke to PE Hub about the firm’s strategy in Europe and North America, the main challenges and highlights of H1 and his outlook for exits.
TowerBrook’s recent deals include the acquisition of French sports platform ID Unlimited, as well as the acquisition of MSA Mizar from Columna Capital.
Here’s some highlights:
What is your outlook for H2 and how does your strategy differ between Europe and North America?
We are extremely bullish on the opportunities available for H2 and the foreseeable future. If a firm possesses healthy past fund vintages, deep sector expertise and has the ecosystem to transform businesses, H2 should be a fantastic opportunity to invest.
In the current climate, gravity in the private equity industry is intensifying. Elevated leverage, sector re-rating, AI-driven disruption and software exposure are all weighing on wider industry returns. Rather than changing our strategy, we are doubling down on modern value investing: underwriting alpha at entry through disciplined pricing, thesis-driven sourcing, deep sector expertise and operational transformation.
Today’s investment opportunities span both sides of the Atlantic.
At TowerBrook, we invest where the alpha is, whether in Europe or North America. We have global sector teams that constantly evaluate which region has more alpha and apply the same playbook across two different opportunity sets.
Europe offers lower average multiples, but that said, the ability to buy and grow a business organically or with M&A has more risk. Regulatory and political environments across Europe are certainly more challenging. As a result, we invest where risk-adjusted alpha is greatest, favoring fragmented mid-market, founder and family-owned businesses where relationships matter. Price is not always the sole determinant of winning transactions.
Which subsectors stand out to you in terms of opportunities?
Rather than beginning with sectors, we start with a business model test that is driven by our sector teams. Specifically, we ask whether AI strengthens a company’s economics or risks commoditizing them. We invest in the former, avoiding the latter.
The strongest opportunities continue to be in business, financial and healthcare services where AI meaningfully improves productivity and customer outcomes, alongside our consumer vertical where AI has a great cost-to-serve opportunity.
If a company is not engaging in “a little help” from AI today, the opportunity to do so may be gone tomorrow.
What is your outlook for the exit market?
The exit environment has tightened: the lane still wide open is “must-have” mid-cap assets; “nice-to-have” mid-caps face a slightly tougher time; and large-cap “must-haves” are fragile with IPO uncertainty. That’s precisely why we underwrite the most likely exit path, usually a strategic buyer, before entry.
Expect a market characterized by selective clearing rather than a broad-based recovery. Macroeconomic and geopolitical uncertainty is likely to continue weighing on confidence, financing markets and exit timing through the balance of 2026.
Looking ahead, operational execution, not market beta, will determine exits and returns over the next several years. That means transforming businesses faster than ever before.
Read the full interview to learn TowerBrook’s main highlights and challenges during the first half of the year.
Editor’s note: This story is part of PE Hub’s ongoing series of Q&As with PE thought leaders.
Reaching agreement
Energy Capital Partners and KKR have agreed to acquire DCC Energy, in a deal valuing the Irish energy distribution group at approximately £5.75 billion ($7.7 billion; €6.7 billion).
The acquisition represents a 24 percent premium to DCC Energy’s undisturbed closing price and a 33 percent premium to its three-month volume-weighted average price. DCC had rejected a £4.95 billion offer from the pair in April.
DCC is a multi-energy sales and distribution business serving commercial, industrial and domestic customers across Europe and the US, delivering primarily off-grid energy including liquid gas alongside service station and fleet services. The company generated revenue of £15.4 billion and adjusted operating profit of £634 million in the financial year ended March 31.
Editor’s note: ECP is the infrastructure investment platform of Bridgepoint, which owns PEI Group, the publisher of PE Hub.
Teaming up
Cinven and La Caisse have agreed to jointly acquire Optio Group, a specialty insurance managing general agent headquartered in the UK, from Preservation Capital Partners.
Optio originates, underwrites and manages specialty risk on behalf of more than 60 third-party capacity providers across six business lines, spanning more than 30 products. The company has an established European core alongside an international footprint of 18 offices across 15 countries spanning the UK, Europe, the US, the Middle East and Asia. Cinven and La Caisse have been tracking Optio for more than two years, with Cinven’s team building a relationship with the company’s management over that period.
Mobility platform
Mutares has agreed to acquire Stellantis’ entire stake in Free2move’s car-sharing business, establishing a new platform in the mobility sector.
Free2move offers short- and long-term free-floating car-sharing, bookable through a proprietary mobile application. It operates one of the most geographically diversified car-sharing platforms, with fleets across 14 cities in Europe and the US, according to a press statement.
Mutares’ plans for the business include revamped management of its international fleet, continued transition to battery-electric vehicles, and renewed attention to customer experience and the urban mobility needs of municipalities.
That’s all from me today. I’m taking a few days off so Nina Lindholm will write the Europe Wire for the rest of the week. Obey Martin Manayiti will be on US Wire duty later today as normal.
Cheers,
Craig
