Pitch Best Small Cap Deal 2021: NIBC Investment Partners - Hemink Groep

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Involved firms and advisors   

Involved firms and advisors buy side:  
BDO (Financial Due Diligence), Orange Clover (Legal Advisory Corporate M&A), Tax: Amstone (Tax Advisory), Spring Associates (Commercial & Operational Due Diligence), MJ Hudson (ESG Due Diligence)  

Involved firms and advisors target:  
n/a  

Involved firms and advisors sell side:  
ING (M&A Advisory), deBreij (Legal Advisory Corporate M&A), JSA (Tax Advisory) 

 Pitch  

Brief description deal / Deal outline 
The shareholders of Hemink mandated ING to find a suitable partner to accelerate the Company’s growth and assist in Hemink’s ambitions to become the leading real estate sustainability partner in the Netherlands. The housing market, and in particular the sustainable renovations of houses, has attracted significant interest from both investors and policymakers as nearly 6.5 million existing homes in the Netherlands will have to be made energy neutral in the coming years. Hemink is optimally positioned to serve the demand for sustainable housing and remains committed to make the (social) housing stock in the Netherlands as cost-efficient as possible. NIBC Investment Partners' focus on minority investments and its real estate sector expertise is in line with the wishes and ambitions of the management.  

Why should this deal win the Award for Best Deal 2021?  
Sustainability is becoming a core principle within the construction industry, relying on the use of renewable energy sources and reuse of valuable resources. Hemink is the preferred partner for sustainable renovations in the Dutch housing market, with its dedicated Energy Team. This team collaborates with specialised suppliers to ensure the delivery of all practical sustainable solutions for every property type. In this market is the communication with residents especially important in the overall project evaluation. Hemink has a dedicated team that takes care of all communication between project stakeholders. ING CFMM organised during COVID times a well-structured (online) auction for both trade and financial buyers, who had the opportunity to meet management digitally. ING CFMM emphasized the importance of sustainability in the equity story, combined with the recent M&A activity in the market for renovation companies which lead to substantial offers and premium valuations.  

 Deal rationale: 
The positive market outlook for residential and commercial construction endorses the growth opportunities of Hemink. The shareholders of Hemink were looking for a partner that could support the Company into the next growth phase, while retaining most of the outstanding shares. NIBC Investment Partners was chosen as the desired partner through its (i) click with management, (ii) the premium valuation for a minority stake and (iii) the ability for CFO and future second layer management to become shareholder.  

 What is the impact of this deal for the company? 
NIBC Investment Partners is already active in the real estate market with Vadeko (active with prefab timber constructions) and can support Hemink in the next growth phase with (i) expansion strategies, (ii) potential add-on acquisitions and (iii) organising the second layer management to ensure future business continuity.  

What is the impact of this deal for the direct stakeholders?  
The shareholder base is expanded with the current CFO. This CFO commitment is necessary, as the financial aspects of larger projects are becoming increasingly important. The current and new shareholders maintain the majority of the outstanding shares after the transaction, which in turn shows their commitment and confidence in Hemink’s future. Moreover, this deal guarantees the continuity of the Company and strengthens Hemink as one-stop shop for every real estate related project. Clients are mainly social housing associations that are centralising their activities and are therefore looking for companies that take over the full spectrum of any sustainable renovation. Hemink is perfectly positioned for this trend and with the financial strength of NIBC they are ready for the future.  

What is the impact of this deal on society?  
As part of the commitment in the European Green Deal, the European commission is preparing a Renovation Wave for public and private building to at least double the annual renovation rate of existing building stock. As part of the ‘Energieakkoord’, all buildings should operate at net zero carbon emissions by 2050. Hemink specialises in performing energy efficient renovations and is characterised by its resident-friendly, pragmatic and down-to-earth approach and its short lead times. Hemink could therefore make a difference in the energy transition in the Dutch housing market.  
 
What was most complex about this deal?  
The carve out of the business-related real estate and associated tax implications was the most complex part of the deal. The real estate was initially part of the sales object and interwoven with the operating companies in the legal structure. With the help of a tax advisor, we have been able to minimize the costs of settling the real estate  

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