Sam Breuning talks to Rachel Bridge at Drax about the challenge and excitment of his new role at AGIC Capital
If you want to start getting excited about the opportunities for growth in Asia, particularly in China, Sam Breuning is just the man to talk to.
After spending 11 years at private equity firm Equistone focusing solely on UK investments, in 2018 Sam decided to turn his gaze outwards, both personally and professionally. First he took his wife and young family on a year long trip around the world, taking in Africa, Japan and Australia.
Then on his return he joined AGIC Capital, the Asian-backed private equity house which focuses on industrial and medical technology investments in Europe, to start the London office.
The PE firm differentiates itself from the pack by offering a gateway for European businesses to take advantage of Asian markets and its first fund raised US$1 billion.
Sam says: “As a firm we are looking to really help businesses grow more quickly by helping them unlock the market opportunity in Asia, and in particular to accelerate their growth in China.”
The key focus, Sam says, is on finding businesses which have a differentiated offering which address the mega trends in the region. Rising incomes, ageing populations and demands for better healthcare outcomes are creating huge markets in healthcare, comparable in scale to Europe and the US. Within industrials, a shrinking workforce and rising economic output means significant year-on-year productivity gains are required.
He says: “Asian markets are already well developed and sophisticated but the rules of the game can be quite different, making it difficult for Western businesses to break in to. We are typically looking at businesses that have some great technology, products or know-how; something that gives them a sustainable competitive advantage. But even then, you have to know how to approach the market and it’s a question of focusing with limited resources. As a local firm, we work closely with our investee companies to focus on the right parts of the market to accelerate top-line growth.”
Because of its heritage, the PE house is uniquely well placed to be able to identify potential opportunities from both sides of the equation. Sam explains: “We have a great team in China which works closely with corporates and industry experts to really understand where some of the interesting opportunities are. We can use that insight to guide our sourcing strategy, so we proactively look for businesses in those sectors where we know there will be open doors.”
AGIC has so far done six deals in Europe since it launched in 2015 in Munich. The latest deal, made in summer 2019, was an investment in Farsound, a tech-enabled business which supplies components for aircraft engine overhaul. The deal was led by Sam in conjunction with Ben Mitchell and Benoit Boisseuil from the London office.
The PE house aims to make one or two investments a year, with an equity cheque of between US$50 and $200 million and has a preference for taking majority stakes.
Despite the increasing competition in the market, Sam is confident that his team will be able to make the investments it wants, saying: “If we need to pay the market price plus a dollar to win something, we can do that because we can see additional value from Asian growth that other investors may not see or might struggle to deliver. So we can win the things we want to and still deliver above market returns. And of course in many cases, it’s not just about price. We find most shareholders and CEOs are keen to discuss how they can better address one of the world’s largest markets.”
He is clearly excited about the potential of being able to offer businesses and investors something a bit different. He says: “We don’t see other people doing the same things that we are at the moment. Several PE firms here talk about the opportunities in Asia, but funds going West to East typically don’t have the Asian DNA at their heart when it comes to understanding the opportunity or getting things done locally. Coming the other way, there are very few Asian private equity funds that have opened offices in Europe staffed with experienced Europeans, so we feel like we are pretty well positioned.”
He doesn’t underestimate the challenge, but that is also part of the appeal. He says: “If this was easy more people would be doing it - but the opportunities are there because it is not always straightforward.”
Drax sector lead: William Fage
Tel: 020 3949 9580