The London-based firm that HSBC alumni Matteo Canonaco and James Simpson founded structured private equity mega-transactions for which it also raised resources in clubs and co-invested 500 million Euros. Canson is now going to carry on direct mid-market investments
London’s M&A advisory boutique Canson Capital closed deals worth 80 billion US Dollars since HSBC alumni Matteo Canonaco and James Simpson founded it in 2017. The firm reserved the right of co-investing in such transactions in which it poured 500 million euros while raising capitals from private investors. Canson advised for Blackstone’s acquisition of Refinitiv, the Financial and Risk unit of Thomson Reuters that London Stock Exchange later acquired; Bain Capital purchase of Kantar, the data, research and analysis division of WPP; Ardian Infrastructure investment in INWIT, an Italian broadcasting towers operatore; BC Partners and Bain Capital’s buy of special papers and high-end Italian packaging company Fedrigoni, and Exponent acquisition of Chanelle Pharma, an Irish leader in the veterinary sector.
Matteo Canonaco
Canson Capital’s team is going to carry on direct investments in SMEs. Canonaco shared with BeBeez the firm’s perspectives.
Question. CapVest acquisition of Germany’s pharma company Stada from Bain Capital and Cinven that will reinvest for a minority is just the las deal Canson closed since it started to operate. How can a boutique deliver such great results?
Answer. Networking and relationships have a pivotal role in this business, and I can say that I know most of the managing partners and founders of the big international private equity funds, because I have been working in this sector since the early 1990s and those I have dated since then are now at the top of the big players in the market. In 1993, I joined Lazard investment banking in London and then moved to New York. I came back to London in 1996 to work for Investcorp, then one of the few private equity players in Europe that was able to close billion-dollar deals. In 1998, I rejoined Lazard for its private equity desk, a world I had come to know very well by then. And then in 2004 I moved to HSBC, where I built the global sponsor coverage practice from scratch on both the investment banking and leveraged finance sides: when I left the bank in 2015 the business was bringing in over a billion dollars a year. It was during those years that I met and worked with all those who later became the top management of the leading global private equity players in the following years.
Canson Track Recors
Q. Why did you leave a well-paid job to start your own firm?
A. Investment banks used to often co-invest with their buy-side clients but later started carry on less of this type of deals for regulatory and conflict of interest issues. I also realised that also generalist private equity investors are keener on specializing in certain sectors in which have built up an experience that leads them to perform better and consolidate their credibility with the M&A community. For such reasons I decided that it was a good idea to tailor opportunities to those who I believe are the best investors for each sector and support them in structuring the whole deal, with the added possibility of co-investing by organising club deals.
Q. How much time do you spend on a deal?
A. Sometimes it took us even four to five years. That’s why we close a deal every one or two years. Sometimes we invest a lot of time on originating a transaction that does not close. For example last year we were helping Advent International on the acquisition of Opella from Sanofi but then the deal fell through ( Clayton Dubilier & Rice acquired Opella). However, we were able to deepen beyond our knowledge of the market as we worked with Alan Main, the former head of Sanofi Consumer Health who became a Canson operating partner. He helped us to monitor the healthcare sector and later handle the dossier Stada. Grace to my contacts with Bain Capital and Cinven we managed to originate the transaction and submit it to CapVest that recently closed the deal (see here a previous post by BeBeez).
Q. Stada is a 10 billion euros deal, rumours say that Canson could buy a minority of the asset as it did for other transaction. Can you tell us more?
A. All I can say is that in all the previous transactions we have originated, we set up ad hoc funds in which we raised capital from international private investors, particularly from the US, Scandinavia, France and the Middle East.
Q. How much did you invest with the various club deals in previous transactions?
A. About 500 million US Dollars through individual merchant banking funds that we raised for each deal. For Refinitiv we attracted 100 million and we also sold the asset: those who were part of the club deal got an above 3X return on the invested capital. For Kantar we raised 40 million and the first distributions should take place next year. For Inwit we received 110 million, almost all of it from a Luxembourg fund of Azimut, and we have already returned all the capital with a gross IRR of 11%, to which we could add a further distribution. For Fedrigoni, the club deal was worth 30 million, and it will take some more time for the distribution as the transaction is recent.
Q. Are you already working on the next deal?
A. In February we had 3-4 options on the table, but then we were very busy with Stada. We just started to look around again. In the meantime, however, we have done something new, albeit much smaller
Q. Can You elaborate on this?
A. My partners and I decided to invest 5 million euros of our own resources to acquire a major stake in an Italian family business that is growing very well, so much so that it needs to build a new production site to be able to meet all demand. With such injection of capital the company will build the factory and thus be able to keep growing.
Q. Will you carry on further investments of this kind?
A. I would say so. They are small deals, but I think they are also very interesting and exciting. We will invest our own money, without necessarily involving other partners.
