Interview with Rob McCombie of CBPE Capital

Private Equity Perspectives
Interview with Rob McCombie of CBPE Capital
Taylor Wessing Private Equity partner, Ed Waldron, meets with Rob
McCombie, Investment Director at CBPE Capital.
TW: Private equity houses are hungry for
deals in the food and drink sector and this is
demonstrated by your recent acquisition of
Côte restaurants. What attracts you to this
industry as an investor?
TW: There’s been talk about the regulations
limiting banker’s bonuses (which take effect
this year) being extended to private equity. If
that were to happen in Europe, how do you
think the UK industry would respond?
RM: Casual dining has proven to be a strong
growth sector, driven by long term structural
changes to consumer behaviour. Consumers
increasingly shift their expenditure towards
eating out, as individuals have more demands
on their time and see dining as a form of
entertainment.
RM: I think private equity works because it
creates an alignment of interests, both as a
financial product and operating model. Economic
incentivisation for most PE execs principally
comes in the form of carried interest (shared
participation in long term capital gains over a 5-10
year period) rather than significant short term
bonuses.
We were attracted to Côte as its brand appeals
to a broader demographic than many of its
competitors, offering a quality value proposition
that delivers industry leading KPIs across the
UK. The team have a proven track record of
consistent like for like growth, and high ROCE on
new sites. Combined, it presents a great rollout
opportunity and platform to deploy further capital.
TW: The revival of the IPO market has
witnessed an increase in private equity-backed
IPO exits. Is this trend set to continue?
RM: I think the short-medium term economic
outlook remains positive. Continued stabilisation
of the economy and capital markets, supported
by sensible decisions in monetary and fiscal
policy, should increase investor confidence and
create liquidity for successful IPOs. Capital
returns such as that from Vodafone’s recent sale
of its share in Verizon Wireless, should also help
encourage institutional demand.
TW: With £32 billion of LBO debt due to
mature in 2014-15, and £41 billion in 2016-18,
are there a flood of administrations looming
or do you expect the banks to be open to
extending maturity profiles?
RM: A flood of administrations would be very
unexpected. Good businesses that are able
to demonstrate sustained growth with strong
cashflows should always be able to attract follow
on investment. Debt maturity simply creates
a refinancing requirement, if the business is
performing lenders don’t necessarily require (or
want) a complete exit.
It’s unlikely a cap on bonuses would create a
material impact. A greater influence is possibly
the treatment of UK capital gains tax, which
could have more significant implications for the
industry.
TW: You often talk of your personal interest
in the tech sector. Which tech sub-sector
interests you the most in terms of investment
opportunities?
RM: UK tech has had a fantastic period of recent
growth, with a lot of innovation creating great
opportunities for investment. It’s been one of the
best performing sectors over the last 10 years.
We look to invest across a wide range of areas
in tech, but are definitely seeing sector trends.
One of the more interesting movements has
been the shift from closed software architecture
to open platforms, enabled by technological
advances such as the use of APIs. This allows
for more efficient information exchange, and
offers real growth opportunities for companies
providing services such as information platforms
/ data exchanges, online marketplaces, and SaaS
products, all areas we follow closely.
TW: How did you start out in private equity?
RM: I’ve worked in private equity since 2004,
first as an associate at a small advisory firm
(later acquired by Deloitte), and then at BC
Partners, where I focused on large buyouts
across Europe and North America. I joined CBPE
in 2009 when I was offered the opportunity at
the start of a new fund.
TW: What’s your proudest professional
moment?
RM: I’ve been fortunate to be part of a number
of deal completions over the years (and even one
or two exits), which is always a great moment.
It’s the end of an intense but rewarding period of
work, as well as the start of an exciting future.
It’s a very satisfying experience for all involved.
Key Contact
Edward Waldron
Partner, London
+44 (0)20 7300 4968
[email protected]
TW: What’s the most memorable deal you’ve
worked on and why?
RM: Probably my first! We were part of a
consortium attempting one of the largest LBO’s
of a public company at the time, and I had little
to no experience of deal (or even financial)
structuring. It was a very steep learning curve.
TW: Away from the office, what is your
passion?
RM: I love working with young entrepreneurs and
spend my spare time volunteering as a business
mentor at various startup incubators such as
SeedCamp. It’s a very rewarding experience to
be part of something that helps to enable early
stage growth, especially when you’re able to see
the results of those efforts.
Europe > Middle East > Asia
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© Taylor Wessing LLP 2014
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