The ins and outs of
Gilde Investment
Management
18
organization
What'S NewS Issue 11 December 1997
Last year's acquisition of Gilde Investment Management - one of the
pioneers in the Dutch venture capital market - was seen as both a coming-
of-age for the company as well as an important new phase in Rabobank's
strategie commitment to Gilde's high-yield investment strategy. What's
NewS reports on what has been achieved since the deal was unveiled.
Former
Rabobanker
Bert Steketee
Leendert van
Driel, founder
of Gilde and
one of its five
partners.
Gilde - now capitalized at NLG 1.6 billion
- has been steadily intensifying its
involvement both in the restructuring of
high performance medium-sized European
enterprises as well as in niche sectors of the
global information technology (IT) business.
Through a widening networlc of
correspondents (and investors), its
geographical reach has also been spreading
from the Netherlands and Europe to the
United States, the Middle East, and Asia.
Gilde is presently comprised of a
management company - which provides an
essential core of expertise and contacts -
and four individually-capitalized funds. The
company's continuing ambitions will be
highlighted later this month with the
expected announcement about the
formation of a new investment vehicle,
Gilde Food Fund BV, to be capitalized at
roughly NLG 150 million.
TOTAL PACKAGE
Of the four existing funds, the first, with
capital of NLG 800 million, focuses on
equity-type financings for management buy-
out (MBO) and buy-in (MBI) investments
involving mid-sized and occasionally larger
companies in Europe. Known as the Gilde
Buy Out Fund, it can offer a total package of
financing services that include equity,
mezzanine or subordinated debt (via R1
Corporate Finance), and senior debt (via
Corporate Banking). This fund's close links
with Rabobank are reflected in the fact that
it has generated a loan volume of roughly
NLG 100 million, as well general cross-
fertilization that has led to Rabobank's
involvement in several recent IPO's. Outside
investors in the Buy Out Fund include AXA,
a French institutional investor, the Dutch
metal industry pension funds, and Interpolis.
This investor base makes it possible for the
Buy Out Fund to commit as much as NLG
150 million equity to a single deal - and has
provided the muscle to power Gilde's thrust
towards larger and more geographically
diversified deals.
STABLE CANDIDATES
The fund's ideal buy-in/buy-out candidates
are European-based companies with stable
market positions, annual earnings of over
NLG 5 million, strong historical and
projected cash flows, and an ability to
remain on the crest of the technological
wave in their given business sectors. In
1996, for instance, Gilde structured, led and
arranged the NLG 46 million management
buy-out of Vendor, the Dutch paper-based
hygiene systems company. It has also been
instrumental in financially supporting the
company's plan to expand through a policy
of pan-European acquisitions.
PARTNERS IN SOFTWARE
Gilde's IT Fund boasts a capital of NLG
200 million and is oriented towards fast-
growing high-tech innovators. Its aim is to
help entrepreneurs move beyond their
initial home markets in the Netherlands or
elsewhere in Europe and develop a true
global base: it can invest as much as USD
10 million in the latter phase of a young
companies' growth. 'Some people think
that IT is too narrow a focus,' laughs
Leendert van Driel, a Gilde founder and
one of its five general partners. 'In fact, it
is an immense field in which it is
dangerous to spread yourself too thin.
One has to concentrate on a few
specialities; ours include advanced
software, wireless technology and
lnternet-enabling applications.' The
companies that Gilde IT has supported to
date - which include Baan, Insignia
Solutions and Uniface - have helped to
put Europe on the world software map.
Indeed, Gilde IT Fund investments have
helped unleash a growing flow of listings
by non-US technology companies on the
NASDAQ exchange.
MEETING SHORTFALLS
A third fund, Gilde Participaties, was
explicitly designed to expand in the all-
important middle market sector. This fund,
of particular importance from our
perspective at Rabobank, is capitalized at
NLG 300 million. However, 'there was an
expectation that Gilde could be counted
upon to meet any shortfall in risk capital
for smaller clients to which Rabobank
wished to extend a loan,' says van Driel.
'We have been obliged to clarify the fact
From seed to erop -
Gilde too provides all
elements for growing
investments.