"Growing from a turnover of 10 million to 150 million is not for the weak"


Rob Thielen started his own private equity company and made it into a great success. The secret: choosing themes that 'change society', approaching companies themselves, not waiting for things to go wrong. "With every step in life you become a little more cynical."

Luck is not enough to become one of the world's most successful private equity entrepreneurs, with a (by Dutch Business Magazine Quote ) estimated net worth of nearly 400 million euros and billions of euros from investors under management. But a little luck with a first investment is a huge help, Rob Thielen (58) knows, founder and big man behind investment company Waterland.

It was the end of the nineties. Thielen, a descendant of a textile family from Brabant, had with difficulty raised 60 million guilders for his first investment fund. Of the roughly 250 pension funds, insurers and wealthy families that Thielen had approached, only six participated. The market is 'saturated', Thielen kept hearing. Moreover, he had no experience in private equity.

But as a banker and consultant, he had made countless acquisitions, restructured companies and provided strategic advice. Thielen said he had "seen everything". Also what can go wrong. That "emotions" will dominate decision making. How you as a company can be 'wrong in the cycle '. That companies can be 'too bold'. Moreover, he was convinced of his strategy.

Thielen intended to build a portfolio of investments with Waterland on themes that will change society in the long term. That was aging population at the time. More old people meant more work for funeral directors, home care, rest homes, you name it, he reasoned. A simple theory? Thielen: "Now everyone is talking about it, then it was revolutionary."

The first investment was a crematorium in Kennemerland (The Netherlands). Without any warm introduction, Thielen sent a letter to the American owners, asking if they might want to sell it. The Americans just happened to be in financial trouble, they really needed the money. Deal. Half a year later funeral organization Yarden wanted to take over the crematorium again from Waterland. "We received eleven times the amount we paid for it," says Thielen. "Pure luck. From that moment on, fundraising became a lot easier. "

Media shy
Thielen tells his story at the office of Waterland, a villa in a quiet street in Bussum. It is rare that he speaks to the press. In the twenty years that Thielen led Waterland, he tried to stay in the shadow as much as possible. The website explicitly states that the company likes to operate ' low profile '. "It is my nature to be media shy," says the born Dutchman, who now lives in London.

It is a nature that is common in private equity, Thielen admits: “The media often tend to be confronting, looking for news with an edge . Many people in private equity are afraid of that. "
Thielen now makes an exception for his farewell. Five years ago, Thielen already relinquished daily management, now he is also giving up his role as shareholder of Waterland. The other eight partners bought him out. Why? It has been very hard work, says Thielen. "There were weeks in which I did two flights a day. I have to be honest: I am starting to get too old for this work. "

A great moment then for looking back. In addition, Thielen’s attitude towards the media has "evolved," he says. He now sees that private equity financers, who manage billions and directly and indirectly employ hundreds of thousands of people, also bear social responsibility. They have to explain what they do.

That certainly applies to a major player such as Waterland. The more than forty companies in the portfolio together have a turnover of around 9 billion euros and nearly 40,000 employees. Thielen: "I don't want to sound pretentious, but in essence the difference between Unilever and what we are is not very big."

It depends on how you look at it. When it comes to profitability, Waterland easily beats the consumer goods company. The Dutch investors have been in the top 5 of most successful private equity firms in the world for years. This is compiled on the basis of returns that pension funds, insurers and other investors make on the money they have entrusted private equity. In other words: adjusted for the fat fees charged by parties such as Waterland themselves - usually 2 percent on assets under management and another 20 percent on profits above a certain level.

What is Waterland's secret? The strategy is still unchanged after twenty years: investing in themes that change society. Aging therefore, but also leisure, outsourcing and, more recently, sustainability and nutrition. Why? "Our society has a large percentage of older people with a lot of purchasing power and spare time," says Thielen. "And companies prefer to do only what they are good at, they outsource the rest." Sustainability speaks for itself. And with regard to food: "In London, one in ten residents is already vegan ," says Thielen. "What that causes is incredible."

Identifying 'mega trends' - faster than the competition does, 'otherwise you can't make any more money' - is just the beginning. Then it comes down to choosing the right sectors. That means: fragmented sectors, with many small players. Waterland then looks for the company in that sector that is best suited to grow quickly by making acquisitions. The market leader of tomorrow. That demands a lot from an entrepreneur, says Thielen. "Growing from a turnover of 10 million to 150 million is not for the weakhearted ones."

For example, Waterland has purchased 110 companies over the past twenty years, making another 450 follow-on acquisitions. Buy and build , they call it in Bussum, to sell it all again after a good five to seven years. Catering, golf courses, river cruises, home care, mobility aids, medical laboratories, employment agencies, gyms, childcare, casinos - it's just a selection of the investments that Waterland has made.

In addition, Waterland makes sure that it does not pay too much, says Thielen. Then you do not have to borrow so much and you prevent a company from collapsing under its debt (leverage) in difficult times - something that private equity has become notorious for in the aftermath of the financial crisis. Consider the debacles around waste processing company Van Gansewinkel (CVC) and childcare company Estro (Providence). " Leverage is healthy as a lever to increase returns," says Thielen. "But only in moderate amounts."

How do you compete with PE firms who are willing to pay top prices? Taking the initiative yourself, says Thielen. If you wait for an entrepreneur to sell his company, you are usually too late. Thielen prefers to turn to entrepreneurs himself and convince them to work with him. Waterland therefore only takes part in auctions in exceptional cases, whereby companies are sold by auction.

Waste incinerator Attero (2014) was such an exceptional case. The deal led to a publicity storm when one year after the takeover it appeared that Waterland had more than recouped the purchase price in the form of a 'super dividend' of 183 million euros. Had the sellers, local authorities, been caught sleeping? Or was Waterland so smart? A public investigation came. In short, this showed that Attero had been sold at the low point of the market. Moreover, Waterland was the only bidder to see that Attero held larger reserves than was necessary for the maintenance of landfills. That gave room for the dividend.

Always more cynical
So this was a clever thing. But things sometimes go wrong, says Thielen. For example, Waterland invested in its first years in a company that had developed a portable device to measure heart function. Cardiovascular diseases were the number 1 cause of death, smartphones did not yet exist and some patients had to go to the hospital every day for a check-up. "Conceptually it was fantastic," says Thielen.

"However - and we are still confronted with this in health care - everyone thinks it is fantastic what is being developed. But who will reimburse it? ”The company did not go further than one trial contract with an insurer, after which the director started to invent revenue to polish up the figures. Thus fraud. When Waterland found out, the company could no longer be saved. Thereafter, Waterland decided to do more due diligence, also "on the person." "With every step in life you become a little more cynical," says Thielen.

There were more misses. Waterland had interests in home care when the cabinet decided not to reimburse domestic help, Thielen says. "That pulled the foundation from under our business in one go." Waterland experienced something similar with investments in mental health care and renewable energy. What happens then? Thielen “Then we put Waterland people on the board and have to part with some of the staff. That is difficult and drastic. But waiting for something to improve automatically is not the solution. "

The failures do not match successful investments, according to the consistently high returns from Waterland. The success has made Rob Thielen one of the richest people in the Netherlands. He dismisses criticism of capitalism as a system that fuels inequality in the world. It has brought prosperity, he says. You just have to provide a safety net for people who "can't get along well," Thielen says. He talks about "capitalism with a human face" and calls himself a "big fan" of the EU. "An acquaintance from Russia recently said to me: you Europeans are Marx's dream."

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