Helen Villiers, Investment Director

Thought leadership

When Private Equity is a force for good

When the media talk about private equity, the focus is often on the bigger deals; Morrisons and Asda of late, or those that did not go well such as Debenhams.   There is less said about the smaller transactions which create value in SMEs by driving growth and expansion, creating new jobs, implementing structure and governance and providing management with an opportunity to achieve their ambitions, as well as supporting business through the tough times – never has this been more relevant than the past couple of years.

The BVCA estimate that over 900,000 people are employed by UK SMEs backed by private equity and venture capital. And in Q2 2020 alone (when the Covid-19 pandemic first hit), nearly £2bn was invested by PE/VC firms into businesses across the UK, demonstrating the ability for private equity to extend support to businesses when it’s most needed and continue the focus on growth.

One example of when private equity can be a force for good and have far reaching consequences is that of the investment in ACC Aviation.

We have been invested in ACC Aviation, a global aviation consultancy business, since 2014.  We backed the management team to buy out the founder who wanted to retire. Our investment was solely equity with no bank debt, so as not to over-leverage the business and enable a focus on long-term growth beyond what would have been possible without investment.

Since the management buyout, we have supported the business to significantly accelerate its global footprint, opening three offices in New York, Ethiopia and Kuala Lumpa, making an acquisition in Dubai and diversifying ACC’s service offerings; with the business all in all growing profits over 5x within the first six years.

When the Covid pandemic closed aviation markets globally, there was no market and effectively no longer any profits.  However, the cash left on the balance sheet, rather than being “stripped” by PE/bank debt over the preceding years, enabled ACC to continue to focus on longer term growth, with further investment especially in the US and Dubai, as well as recruiting new teams to provide technical services and financial advisory to the existing customer base.

All of this meant ACC was uniquely placed, given its global footprint and range of services, to assist in the evacuation of civilians from Afghanistan in August this year.  As the world watched the situation unfold, the ACC team across all of its global offices was in the middle of it all, working with the various stakeholders to mobilise a fleet of aircrafts from around the world to lead the evacuation out of Afghanistan and the next step of the journey to take people to safety.  During an extreme two-week period, ACC led the repatriation of 10,700 people out of Afghanistan –including a heavily pregnant mother who gave birth on one of the flights.

It was the ACC team, with its experience, tenacity and expertise that made the evacuation happen, and it was the management team’s strategy that meant they had all the tools in the right place at the right time to do it.   We think it is our job to make sure that the management teams with which we partner have the right resources and structure to enable them to grow their business following our investment.  The investment in ACC will generate a significant return for our investors, but this story also demonstrates that we should take a minute to remind ourselves that private equity can often be a force for good, helping businesses grow and delivering great things above and beyond profits.

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