Category: Uncategorized
Creating investment products that beat the market
In a world of low interest rates, you are desperate to identify new sources of income, but naturally, you are wary of taking on too much risk. At OMNIA, we have observed the change in the alternative finance market over recent years, such as P2P, crowdfunding and the corporate bond market, and we fully understand why some of the more attractive headline offers have been greeted with such cool reaction.
Often, too much risk is taken with investors’ capital, and in the world of corporate bonds, the security offered to investors has been inadequate. It led us to ask ourselves whether investors really can have their cake and eat it, and we believe they can.
At the same time, high net worth investors tend to have much of their capital tied up in passion investments – may that be art, classic cars, diamonds or wine– and whilst many of these investments have been made for reasons of passion, investors are hoping for some capital appreciation over time. And they have been right; over the last ten years, classic cars have yielded 487% and fine art has yielded 252%.
The issue with such investments is that they do not pay an income – or rather they did not until now.
Performance of passion investments
Sources: Art Market, Research – Furniture, Chinese Ceramics, Jewellery, Watches, Art. Stanley Gibbons – Stamps, coins. HAGI – Classic cars. Wine Owners – Wine. Fancy Color Research Foundation – Diamonds.
“Over the last ten years, classic cars have yielded 487% and fine art has yielded 252%.”
Fine art as the best performing asset class
As this chart shows, a USD 100,000 investment in a theoretical portfolio of the top 500 artists in January 2004 would have yielded USD 413,000 by December 2013. The best-performing asset class, the S&P 500, would return only USD 197,500 on USD 100,000 invested during that same period. Real estate continues to be the weakest of all asset classes with an average return of just 2% per year.
Generating cash flow against your high value assets
At OMNIA, we have been raising capital secured against these high value assets to generate a regular income stream for a number of years. We raise an agreed proportion of the asset’s value – never in excess of 50%, and we then use the finance raised to fund the investments we are making through OMNIA Private Equity AG, paying the owner of the asset an interest of 3% per annum for underpinning our bonds.
The model is not something we have come across before, so it is something that we are very excited about, and which we believe to be the best way to structure capital for our private equity investments while satisfying the market. We have been keen to use the alternative finance market to fund our investment activities for some time, and that got us thinking – whether we could deploy our proven model in launching a retail corporate bond.
Plenty of liquidity in the market
When creating investment offerings that have focus on the investor’s needs, you end up creating a different product than what the market is currently offering. Today, investors are focused on security, which is why, I assume, they accept zero and less than zero yield of those USD 12.6 trillion that currently are invested in zero or sub-zero fixed-income.
“With USD 12.6 trillion of government and corporate bonds currently trading worldwide with nominal yields below zero, we think it is safe to say that there is a huge market for secured and asset-backed high yielding bonds.” – Daniel Hansen, Founder and CEO, OMNIA Global
Usually, when investors look for security, they turn to real estate – even though it has had the lowest yield over the last ten years compared to any other asset class. In Denmark, you can obtain a mortgage loan (F5) with a negative interest of -0.17%, while the real estate market has only yielded a total of 2.3% over the last five years. A Danish mortgage loan carries a leverage of 80% of the market value.
For OMNIA to supply the market with a bond of security and yield, we must secure our investors’ capital with those asset classes that have yielded the most. Compared to real estate, fine art (top 500 artists) have yielded 61% in just five years, and growth and buyout-based private equity is currently the best performing ordinary asset class on the market.
“With our investments in the highest yielding asset classes, we are able to offer 7,25% coupon on our bonds while it is being secured by the highest yielding collateral. We believe that is what the investors want.“ – Daniel Hansen, Founder and CEO, OMNIA Global
Private equity beats every benchmark
In other words, we are issuing bonds secured against fine art and other high value assets. We then use the funds raised to invest in buyouts within the micro-cap market of growing, healthy businesses through our private equity company.
According to data compiled by Cambridge Associates, an investment consulting firm, nearly every major category of private equity matched or exceeded the strong double-digit one-year gains racked up in 2013.
“In the Asia-Pacific region, the combined returns for buyout and growth funds surpassed public market gains over all investment periods.” – Forbes
With our private equity model, we have now created an opportunity for investors to enjoy a highly competitive and fixed rate of return. Our five-year asset-backed OMNIA Bond will pay 7,25% gross interest per annum over five years, paid semi-annualy, with a minimum investment of USD 100,000 and the investors’ capital returned in full on maturity. The bond is listed Frankfurt Stock Exchange and freely transferrable.
Our investment approach
At OMNIA Private Equity AG, we identify companies with the right culture and business model – one that will benefit from our unique approach to value creation. We primarily invest in companies in the SME sector – companies generating EUR 1-10 millions in earnings before interest and tax, that can demonstrate annual growth in excess of 20%, and which we believe we can scale rapidly through increased funding and marketing. We only invest in businesses where the management team has a proven track record and has focus on fast-moving sectors such as technology, entertainment and fashion.
Being successful in private equity, especially within the SME market, requires a different approach than to the middle market. SMEs are almost always founder or entrepreneur-driven, which means the decision-making process is different from larger corporations being run by sophisticated management teams. The entrepreneurs focus on creating something to be proud of, and they are generally looking for partners with a similar mind-set who can help them create that. Therefore, adding value and being a partner rather than being an investor is the key to succeed in the SME market.
Our way of adding value is two-sided. On one side, we offer the companies access to a massive marketing platform as well as endorsements, content marketing and product placements in the entertainment industry. This is usually the greatest expense for a growing company. On the other side, we offer a way of capitalising on their success without selling their business by taking the company public. As we are not an investment fund with a set exit date, we can keep being invested in the companies as long as we like, and our strategy is to buy-build-and-hold.
We strive to build a portfolio of companies with great synergic effect among them. The bigger the portfolio, the greater the toolbox for our portfolio companies; a portfolio of best of breed entrepreneurs and minds roaming the entrepreneurial space.
“The bigger the portfolio, the greater the toolbox for our portfolio companies; a portfolio of best of breed entrepreneurs and minds roaming the entrepreneurial space.”
Have your cake and eat it too
The OMNIA Bond creates an opportunity for investors to follow the journey of successful, fast-moving companies without participating in the risk of their future. We are excited about expanding our business and having found a way of satisfying the needs of our high net worth private clients and prospective bondholders in a way that we believe is truly unique.
It really is possible for asset owners to earn a residual cash flow off the value of their assets without having to sell them – and for investors to access an investment with an attractive rate of income and security.
To find out more about our bonds, send an e-mail to info@omniabondsii.com.
By Daniel Hansen, Founder and CEO, OMNIA Private Equity AG
Sources:
http://www.bain.com/bainweb/publications/global_private_equity_report.asp
100m USD partnership with Datang Entertainment
Datang International Entertainment Co., Ltd., OMNIA Private Equity AG and OMNIA Entertainment LLC met for the first time at the Oscars earlier this year, and they are now pleased to announce their long term partnership where Datang International Entertainment will join in on investments in the OMNIA Private Equity AG portfolio.
As part of the partnership, OMNIA Entertainment LLC will help Datang International Entertainment launching their artists in the United States as well as drive high-end branding, product placement and celebrity endorsements.
Datang International Entertainment Co., Ltd. is a Taiwan-based company principally engaged in the production of feature films. In addition to producing and distributing movies and TV dramas, Datang also provides artist management services.
Director Alice Wang, the Chairman of Datang, finished six feature films in 2015, which are in post-production and will be released in 2016. Currently, the company has focused on facilitating international collaboration between entertainment and media companies in Taiwan, Japan and the United States.
Strong growing entertainment business
Datang International Entertainment has presented a strong and healthy growth over the last years, and it is planned that Taiwan Concord Capital Securities (HK) Ltd. will present Datang International Entertainment on the stock market next year.
Top left: Ian Feng – Planning Director at Datang International Entertainment Co., Ltd. Top middle: Alice Wang – Director and chairman at Datang International Entertainment Co., Ltd. Top right: David Cheng – Vice Chairman of Concord Securities Co. Down left: Candy Wang – Actress, singer and song writer. Down middle: Mette Hansen – COO of OMNIA. Down right: Daniel Hansen – CEO of OMNIA.
Excited collaboration partners
“Beside a serious financial investment in the portfolio companies of OMNIA Private Equity AG, we see a huge potential of various synergy effects and additional added value to both parties when actively linking knowhow, skills and products of Datang International Entertainment with our celebrity endorsement services through OMNIA Entertainment LLC, alternative financial solutions in the entertainment business, as well as high-end branding and marketing” says the Daniel Hansen, CEO of OMNIA Global.
Alice Wang is also very excited about the collaboration and state that:
“We see OMNIA as a strong actor on the American and European market, which can help us grow beyond our own expectations and at a much faster scale while combining it with a strong entrepreneurial mindset”.
The partnership between Datang International Entertainment and OMNIA will bring together the East and the West while letting artists, film producers as well as innovative financial solutions for the entertainment business come together. “Many Chinese investors are looking for attractive American entertainment projects to invest in. The partnership with OMNIA will now make it possible to facilitate this demand” – says Alice Wang.
OMNIA expands portfolio with Gravity Global
OMNIA Private Equity AG is investing in Gravity Global, further expanding our portfolio and providing our other clients with access to world-class brand building and public relations services. Gravity harnesses the strength of an established global network with new technology to deliver branding and communications solutions that support a company’s growth and drives commercial success.
WHO IS GRAVITY GLOBAL?
Gravity Global was formed in 2009 and is one of the world’s leading global branding agency groups with access to over 500 marketing professionals around the world. Gravity Global focuses on serving Business-to-Business (B2B) clients on a global scale while securing brand value for clients by accelerating business growth through smart business strategy, reputation management and lead generation. Gravity is award-winning and has demonstrated true commercial success for its clients including the most commercially successful campaign award for CFM International, the world leader in aero engine manufacture.
Gravity Global delivered an impressive pitch win performance in 2015 of 80% and is showing significant growth potential.
The agency has a down-to-earth attitude, taking its time to fully understand who its clients are, what they stand for and where and how they would like to grow. Gravity has proven experience within a wide variety of business sectors and working for a broad range of blue-chip clients past and present including London Stock Exchange, Airbus, NetJets, CFM International, HSBC, Aviva Investors, Henderson Global Investors, Investec, Bosch, Mazda, Lotus, the St Lucia Tourist Board, Carlson Wagonlit Travel to name but a few.
You can find more information about Gravity Global here.
The founders of Gravity
SYNERGY BETWEEN BRANDING AND BUSINESS DEVELOPMENT
The joint forces between OMNIA and Gravity Global are not only based on traditional investment, but will accelerate activities within business development and branding in-house and for new clients and at the same time offering an expanded B2B and business investment network, initial public offering and business lifestyle management.
There is a unique synergy between OMNIA and Gravity Global. Together we combine customer-oriented business development and world-class branding and communications. We have the same mindset and mission: to make business fun, innovative, successful and best-in-class, worldwide.
WHY BRANDING IS SO IMPORTANT
Branding is the process of creating distinctive and durable perceptions in the minds of customers. A brand is a unique business identity that embodies positive associations of personality, quality, style, reliability, desirability and more.
It is commonly said that if you show a person two identical products, only one of which is branded, the person will almost always believe that the branded item is of higher quality and value. Of course, branding alone cannot replace good quality, but a strong brand supports true business growth, and is recognized worldwide and among your most valued stakeholders. Gravity Global creates, maintains and empowers brands worldwide.
Bringing innovation to private jet chartering
Operators are bombarded with charter requests receiving literally hundreds of requests via email each day, which requires increased staffing to cope with the speculative demand. In addition, most flights are not used to their optimal efficiency due to lack of scale with operators and owners constantly looking to reduce flight management costs. In order to transform this traditional and manually intensive approach and ineffective flight usage, VoyagAir Green will build a technology platform to deliver a structure, which will provide instant charter quotes whilst identifying the most environmentally efficient aircraft and operators to fly with.
DELIVERING A GLOBAL CHARTER SOLUTION
VoyagAir Green’s unique web portal will not only be used by consumers, but also brokers and operators and the like. The multiuser portal will therefore not only aim for the consumer, but also deliver outsourced services and support directly to the operators to help them reducing costs and increase revenue. VoyagAir Green is designed to maximise charter sales revenue through innovative solutions and ease of access to the market.
With 75% of business aircraft charter sales conducted through brokers, VoyagAir Green will deliver instant access for consumers and brokers alike through its instant flight web portal.
PROVIDING MUCH MORE THAN JUST AN ONLINE BOOKING PLATFORM
Although this investment is in its earlier stages, it is based on the extensive experience of Graeme Deary, the founder of VoyagAir Green and co-founder of the most successful private jet charter company NetJets, his network and successful track record. Graeme brings years of experience and a huge network within the private jet charter industry, and he has a successful track record of building businesses.
TIME IS MONEY
The investment in VoyagAir Green is just another example of OMNIA’s mind-set, whilst not only investing in raw cash-flow and business expansion, we want to disrupt the entire private jet charter industry in order to help it become more customer-friendly, cost-efficient and environmentally sustainable. Time is money, and we experience a high demand for travelling in exclusive comfort, whenever you want, with ease and as fast as possible. Therefore, we will be able to offer our existing and future clients exclusive access to private charter jets, so that they can easily organise luxury transportation here and now.
Graeme Deary says about VoyagAir Green’s partnership with OMNIA: “We are delighted to be working in collaboration with OMNIA and the team who will bring a great deal of strength, drive and innovation to VoyagAir Green. The development of the businesses will be greatly enhanced through their professionalism and refreshing approach to the industry. As a partner, we feel that collectively there are significant opportunities ahead and through challenging traditional business methods we believe that our fresh, new and technology driven applications will help to transform the market into a cleaner and more efficient place”.
Asia is the world’s largest art marked place
THE NUMBER OF TRANSACTIONS ARE RISING
Artprice report, for example, states that low supply of masterpieces reduces Western auctioneers’ turnover, though the number of transactions is rising. Sotheby’s President and CEO Tad Smith also paid attention to this tendency on 8 August saying that though the “collectors were still buying top quality works, consignors are showing a bit of reluctance to sell their works at the same time”.
8th of August 2016, Sotheby’s announced its second quarter results with “$89.0 million net income and diluted earnings per share of $1.52 compared to $67.6 million and $0.96, respectively, a year ago”. This increase in earnings was likely due to the timing of the company’s London contemporary art sales, which were held in the second quarter this year, but third quarter last year. And though the auction house’s sales have made the low estimates, there was a 31% drop in overall sales volume compared with the same period in 2015.
However, the general mood on Sotheby’s performance seems to be optimistic, and last month a Chinese life insurance company run by the grandson-in-law of Chairman Mao Zedong disclosed it bought a 13.5% stake in Sotheby’s. Taikag Life Insurance Co. became the largest shareholder in Sotheby’s. The company confirmed its “positive view” of Sotheby’s performance and also potential interest in a board seat.
Thierry Ehrmann, Artprice’s founder and CEO, said that “China’s return to the global leader position with a turnover up by more than $570 million is a major surprise.” Another surprise on the global art market, according to Ehrmann, is “the generally low unsold rate and the dynamic pace of transaction growth, both clearly demonstrating the art market’s capacity for adjustment and safe-haven attractiveness compared with financial markets and standard investment returns”. The full artprice report can be read here.
It is due to this healthy and stable art market that OMNIA sees increased potential for our asset-backed wealth management. Not only are we securing investments and investors, but we are also fostering the willingness of selling art and therefore we are also acting as a maindriver of the increase of transactions which leads to a higher turnover.
* Artprice, is one of the leading platforms in Art Market information since 1987, it has systematically analyzed over 3500 auction sales to produce a detailed half-year report covering public auctions of Fine Art (painting, sculpture, drawing, photography, printmaking and installations).
Putting people and planet over profits
Kessel Solar is a young company, which aims to make sure everybody has affordable access to clean technology solutions en route to a more sustainable society, and the company puts an effort into the development of residential autonomous energy solutions for local implementation. Their first product is the Kessel – a solar powered water heater, and to begin with, the product is being launched in Mexico.
At OMNIA Global, we are proud sponsors of 25 Kessels for 25 dog shelters in Mexico. The water heaters are cheap and easy for the shelters to have, and not only does the warm water provide comfortable baths for homeless dogs, but it is also soothing for dogs with arthritis to get warm baths. Therefore, the water heaters are able to make a huge difference at the shelters and for the dogs.
Kessel Solar is a unique company driven by entrepreneurial people, and therefore, the company is the perfect match for OMNIA. We were curious to learn more about the driving forces for Kessel CEO, Rasmus Nutzhorn, and not the least about how he sees the balance between running a company and doing the right thing for the environment.
WHAT IS THE STORY ABOUT KESSEL SOLAR?
Kessel Solar was established in 2014 by Samuel Neuenschwander and Christoph Karlo, as a vehicle to drive social change. Today, we are a team of motivated and experienced, international entrepreneurs who get up in the morning because we seriously want to change the world for the better.
“We want to change the world by producing and implementing affordable, renewable technology for the lower-middle class population in emerging markets.”
WHAT MAKES KESSEL SOLAR A UNIQUE COMPANY?
Our first product, the Kessel, is the most innovative and cost-efficient residential water heating system in the world. It is easy to install, highly durable and does not require any maintenance. Most importantly, the Kessel reduces energy costs for residential water heating by up to 80%.
We are focused on sales through digital channels. Our customer groups have high mobile and social media adoption rates, which lead to strong customer relationships and superior operating margins. This makes the product absolutely awesome.
Furthermore, we are a group of people driven by the purpose of building an amazing company that will deliver great financial results. But we are not just a company – we are a movement, all driven by leaving a better planet for the next generations.
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WHAT SPARKED THE IDEA FOR KESSEL SOLAR?
We are so privileged to be living in Switzerland, but that is not the entire world. The world is in big trouble, and transformation is needed – and we need to act today. That is our duty as people with a privileged life. We need to treat the planet better, and we need to treat each other better – the consequences are simply too big if we do not start doing something today.
At Kessel Solar, most of us have a background in technology, so we have looked at how technology could be simplified, and still be competitive in a fierce market. Solar water heating has been around for years, but we simplified it so much that you can produce and buy the materials locally – and still scale.
People have asked me if we are moving “back to basics”? I answer: “We do not believe in backwards, we are moving forward to simplicity”.
WHY IS KESSEL SOLAR RUN AS A COMPANY AND NOT A CHARITY ORGANISATION OR FOUNDATION?
I believe that true sustainability only exists if a company is financially and culturally sustainable – that means that I do not want subsidies, and I do not want government grants. Instead, I want to deliver a fine return for my investors.
To me, this just makes sense – it is pure logic that companies should function like this: In symbiotic relationships with people and planet. Through that, we will deliver great results.
“I will prove that I can deliver amazing financial returns, while still doing the right thing for the planet.”
HOW WILL YOU DESCRIBE YOUR ROLE AS CEO AT KESSEL SOLAR?
I am incredibly fortunate to have brilliant people around me, and without them, the company would not get off the ground. My role is to put the overall strategy together with the people around me, to connect the dots, and to show a clear path for our employees. When you have amazing people around you, you just have to get out of their way. Make sure they are safe, inspired and motivated, but get out of their way.
WHAT ARE THE MOST IMPORTANT FACTORS IN RUNNING A COMPANY LIKE KESSEL SOLAR?
We live in a world where things are changing so fast. No one on the planet has the “perfect answer” to anything anymore. In order to be able to create a company that is able to react fast enough to these changes, you need to have a culture that promotes the ability to change. Culture eats strategy every day. I am focusing and invetsing a lot in culture and development of our employees.
On a personal level my focus is on staying healthy, calm, clear-minded and to be the best father and husband that I can be. Business is personal, and we bring the entirety of our lives to the table when we go to work. A work/life balance does not really exist in my book.
“I am just trying to be the best I can be at every single task in front of me and to lead by example.”
IN YOUR WORDS, WHAT MAKES SOLAR ENERGY AND ”ACCESS TO CLEAN ENERGY FOR ALL” SUCH AN IMPORTANT ISSUE?
Access to energy means access to a better life. We might not notice it every day, but energy creates access to everything: Food, water, education, information and relationships. Energy consumption will increase massively, and we cannot serve this demand by using the methods that we have been using for the last 100 years.
Access to energy must be access to clean energy. Access to clean energy, which by the way should be free, is a human right, and not something that should be controlled by a few large industries. In that sense, Kessel Solar is creating autonomy and giving people an opportunity to be self-sufficient.
DO YOU HAVE A SPECIFIC INTEREST IN THE ENVIRONMENT AND CLEAN ENERGY, ETC.?
I have a big interest in making lives better for people. Energy for me is a place to start. Heating water using the sun is just a place to start today – it is a way to solve a major problem. I have zero background in the energy field, but I see that as a very big plus, as I then see the industry differently. I see it with fresh eyes, and wow – there is a lot you can differently!
AS THE CEO, WHAT ARE YOUR THOUGHTS ON THE BALANCE BETWEEN MAKING MONEY FOR THE COMPANY AND ”DOING THE RIGHT THING”?
There is nothing showing me that I cannot do both at the same time. Making money is just one metric to measure success. It is extremely old-school to measure “doing business” through a single metric. Luckily, that is changing fast. More and more companies are measuring impact in different ways, and profits are now just one of their metrics.
At Kessel Solar, we are proud of the jobs we are creating, of the CO2 we are reducing, of the money we are spending locally – and it is as important to do that, as it is to make money.
“We say people and planet over profits. That does not mean that profits are not important – it just means that people and planet are more important.”
WHAT IS NEXT IN LINE AT KESSEL SOLAR?
The Kessel is our first product, and we are very proud of it, but we are constantly innovating and creating more products. Kessel Solar is NOT a solar water heating company – we are in the business of improving quality of life for a billion people.
WHAT DO YOU HOPE TO ACHIEVE WITH KESSEL SOLAR?
We want to improve the lives of a billion people. The Kessel is the first product, and Mexico is our first market, but at Kessel Solar, we are all committed to building a global organism that literally makes the world a better place.
You can read more about Kessel Solar here.
OMNIA expands with new funding model
The purpose of this expansion is to scale our private equity investment activities while also providing a new cash flow offering to OMNIA MFO clients owning fine art. OMNIA Bonds plc will be issuing asset-backed bonds with fine art as the underlying asset. Both the bondholders and the art owners receive a quarterly cash flow coupon. OMNIA Bonds plc will use the proceeds to fund the investments of OMNIA Private Equity.
Never before has an art owner had the opportunity to earn a residual cash flow off the value of his or hers fine art without having to sell it. This is of course something that we are very excited about offering to our multi-family office clients. For years we have offered financing against fine art, but now it is possible to keep your art and start making cash flow off its value.
The model is not something we have come across before elsewhere in the world, but for us it is the best way to structure capital to our private equity investments as well. This model makes it possible for OMNIA to invest in companies in a lean, fast and flexible way, which is very different from conservative private equity funds.
The target area of OMNIA is companies in Europe, Asia, and the US within the SME market making EUR 1-10m in earnings. These companies are usually founder-owned, entrepreneurially and passionately run and focused on growth with the right partners rather than with the ones with the biggest cash offers. By having our funding model based only on bonds vs. equity, we can continue to be as flexible and non-interfered by our investors, and thereby, we end up being a lot more interesting to the owners of the best companies on the market.
Our experience tells us with crystal clear clarity that OMNIA is way ahead in relation to closing deals compared to the overall private equity fund market. With our scalable funding model, we are now able to handle more cases and work with more great companies than ever before, and by having more companies in our portfolio we can utilise the synergies between the companies and spread our risk even more.
OMNIA Bonds plc will be issuing bonds on a continuous basis in a speed that fits our deployment frequency and grow with our increasing resources of deployment. We are very excited about expanding our business in this direction and satisfying two different types of clients in a way that we believe is truly unique.
Deals are not offered, they are created
Having recently returned from the Iberian Private Equity Conference in Madrid, I cannot help thinking that private equity investment managers are lazy people. The market in Spain, and in Europe in general, is wide open and everyone knows there is virtually no competition in private equity investments below USD 100m in deal size. The only excuse is that there is too much work in doing four deals worth USD 100m than one USD 400m deal. Well, then there was also the excuse that there is no M&A firms offering their services to the market below USD 100m.
It is not that there is no competition in the market, and with the news that Saudi Arabia is coming out with the world’s largest sovereign wealth fund with a target of USD 2t in assets, it is not like liquidity is going to be tight. The fund is large enough to buy all of Apple, Google, Microsoft and Berkshire Hathaway – the world’s four largest public companies! Getting access to the good deals for the big players is going to be a fierce battle.
THE BEST DEALS ARE IN SME
However, the fact is that about 97% of European deals are below USD 100m. The solution would be simple to most people: Build your own M&A team and hire some staff to handle the workload of more cases. So why do they not do that, you might ask? One reason could be pure laziness, but other reasons, which are probably more likely, are that the smaller the deal size, the more founder-driven the companies are. That means that the investor needs to be able to connect with the founder of the company to be on the same page – in other words: To actually be more likeable. That is something investment managers are usually very bad at. They simply do not connect with the entrepreneur. The entrepreneur is interested in his clients, the market, creating a difference and running a company that is his baby, while the investor is interested in EBITDA, Lean management, mergers, financing, controlling, price/earnings, KPI’s, earn outs and big Excel spread sheets. Bigger deals usually have a bigger management team that are not founder-run, which make them speak the same language, and they are all interested in building and exiting, like a long one-night stand.
This scenario is a shame, as the smaller deals make a much higher percentage yield, since optimising the business is easier by implementing normal optimisations and adaptations to running the business and grow. Sometimes it is just a matter of logistics, marketing, network or staffing. Try doubling the profits of Nike, and see if that is just as easy as doubling the profits of the new brand down the block with a USD 2m EBITDA.
In other words, doing five deals instead of one creates a much bigger yield, and it also spreads the portfolio risk. All it takes is willingness to do the work. And well – being able to do it.
SPAIN IS OPEN FOR BUSINESS
Looking at the Spanish market, we are seeing some of the biggest opportunities in Europe. It is not more than a year or two ago that Spain was the laughing stock of their fellow friends in the EU, when telling the world how great opportunities lie in front of the willing investor if he focus on Spain. Remember that some of the greatest companies were created during a recession – just look at Disney, General Motors, Microsoft, Revlon Cosmetics, CNN and FedEx.
The fact is that Spain is responsible for 15% of the European GDP, and the country has higher leveraged deals, cheaper financing, lower acquisition multiple and very low competition in the SME private equity market, as there has hardly been any private equity funds raised for the last five years. Furthermore, Spain is in front in regards to the legal framework when restructuring is needed to turn the country’s companies around.
PRIVATE EQUITY IS STILL THE HIGHEST YIELDING INVESTMENT AREA
Except from not choosing the right market size, the investors seem to be smart in relation to where they seek the highest yield among traditional investment areas. A recent survey of 142 professionals conducted by ACG New York, the largest association of middle market deal making professionals in New York, found that 83% of the professionals expect private equity investments to outperform the S&P 500 in 2016.
Our experience in the private equity investment area is that as an investor, especially in the SME segment, you need to provide more than just financing to balance the interference in daily operations and controlling. Today, the market offers many different ways of offering financing like peer-to-peer, crowd funding thanks to the SEC’s Title III adjustments and project funding like Kickstarter.com. So simply providing financing is no longer enough.
BRINGING MORE THAN JUST FINANCING
At OMNIA, we have focused on being “the co-founder who showed up late to the party” – being on the same side as the entrepreneur, and focusing on what the company and the entrepreneur need to succeed and less on trying to be smarter than the founders. Furthermore, with our OMNIA Entertainment Endorsement and Product Placement Platform as well as content marketing, we help consumer-based companies grow much faster than what they were able to on their own. By taking the companies public at an early stage, we are able to hedge our risk earlier than traditional private equity funds. When hedging our risk earlier, we do not need to be so possessive and controlling, something that the entrepreneurs usually are not too happy about. Just look at what happened to Tinder, when the founder and investor do not get along too well. Being transparent and open towards the entrepreneurs and not being tied to the normal rules of a private equity fund, we seem to be closing over 80% of all OMNIA approved transactions.
It seems that our approach to providing more than just financing is something that the market have discovered as well.
In an interview with Forbes, David Hellier, Board Member at ACG New York and Partner at Bertram Capital, said that “Middle market private equity firms are increasingly focused on value creation strategies to improve business performance in their investments, as opposed to the more traditional leveraged buyout approach. In spite of a frothy M&A market and significant dry powder, this transition is allowing private equity firms to build more meaningful businesses sought after by both strategic and financial buyers. The shift from financial engineering to value creation is enabling private equity to continue to deliver superior returns to the S&P 500”.
At the same time, 62% of those surveyed believe that family offices will have a greater impact on transaction activity in 2016. Family offices have been very effective middle-market investors and are keenly interested in private equity.
“In the current market environment, the supply of capital continues to exceed the supply of quality deals. Therefore, funds and families are now finding that they need to market themselves more aggressively and look at companies that may need operational, financial, marketing, and channel development,” Martin Okner, Chairman of ACG New York and Managing Director of the Merchant Banking and Advisory firm SHM Corporate Navigators, said to Forbes.
DEALS ARE NO LONGER OFFERED, THEY ARE CREATED
Traditionally, “a deal” is presented by an M&A house when the company has decided to look for investors and partners for whatever reason. The sales process is usually long with more than enough chefs pitching their 50 cents worth. The smarter ones create the deals themselves by operationally being in the market offering something that the companies actually want and not only need. Building relationships and developing business by synergy create a natural fit of partnerships – one that does not require an army of lawyers and consultants, mainly because it is no longer “a deal”, but a future partnership between two passionate creative minds who see that together something amazing can be created, not merely a higher EBITDA.
Do investments with passion, people. Deals are not offered, they are created.
Daniel Hansen, Founder & CEO, OMNIA Global
Creating smiles through passion for motor sport
At OMNIA Global, we have been proud sponsors of Motorsport for LIFE (MfL) since 2014. MfL is a charity organisation, which with the help from Danish motor sport and other helpful and voluntary people organise car events, primarily at Danish hospitals, in order to give chronically ill children and their families a break in an otherwise challenging daily life.
By being a sponsor, we are able to assist MfL with events for the children, and thereby helping them forget their situation of illness and hospitals for just a little while. This includes being the main sponsor of a bus, which is being completely redesigned on the inside to fit the needs of chronically ill children. With the bus, MfL will be able to organise more events, and thereby, to bring more children to the racetracks.
The main motivator behind the organisation is Dan Crohn, who is also the Chairman of the Board of MfL. He is a true, fiery soul whose voluntary work and commitment to chronically ill children have our outmost respect and admiration, and therefore, we are interested in hearing what his motivation for dedicating so much of his time to MfL is.
We are very proud of being sponsors of MfL – an organisation built by voluntary people with their hearts in the right place.
HOW WILL YOU DESCRIBE YOUR ROLE IN MFL?
Due to my role as Chairman of the Board, I am often the public face in relation to the media, sponsors and our presence on Facebook. I am the initiator and motivator, and I make all ends meet to ensure that all we do follows the DNA of MfL.
HOW MUCH TIME DO YOUR REGULARLY SPEND ON MFL PER WEEK?
Depending on the time of the season, and how much time my life allows, I spend somewhere between seven and 18 hours.
WHAT IS YOUR APPROACH TO MFL?
The way I see it, the approach to ill children is very biased. There is an enormous focus on cancer and children with cancer. I have experienced this bias at the hospitals between the different sections, and the resources and donations that the different sections receive – depending on whether it is a children section related to cancer or a section with other kinds of illnesses.
Our motto is that all children have the right to have fun – no matter what diagnosis they have.
DO YOU HAVE A PASSION FOR MOTOR SPORT?
Very much so – I love speed under control, and I love the different approach to creating a free space and experiences for the children that we have at MfL through motor sport. Both at the racetracks and the hospitals, it is very moving to see the relations created between drivers, mechanics and the children.
A lot of people consider motor sport to be a tough and impersonal world, which could not be further from the truth.
WHAT IS IT THAT MOTOR SPORT CAN DO, WHICH IS SO REWARDING FOR THE CHILDREN?
Motor sport is a combination of many things: Noise, action, speed and excitement. But it is also contemplation, preparation and months and months of training, which make racing teams so unique. What they can is, even if they just crashed their car in a heat, to meet the children where they are and to be present in that exact moment. We have experienced teams running around to get a car ready, while a calm driver took time to be present and open to the children who were visiting. This is something very unique and moving.
And by the way, who would not enjoy getting the chance to sit in a Ferrari or a DTC car (Danish Thundersport Championship)??
WHAT IS YOUR MOTIVATION FOR SPENDING SO MUCH OF YOUR TIME ON MFL?
The children! To see the difference we make to them. To receive stories afterwards from parents, personnel and doctors, who all tell about the positive effect our visit at the hospital had. Not the least, to see the children, who are fighting SO hard, just for a moment forgetting their illness with laughter, experiences and friendships.
WHY IS IT MFL, AND NOT ANY OTHER CHARITY ORGANSIATION, WHICH HAVE WON YOU OVER?
That is because MfL is down to earth and driven by the hearts and souls of the voluntary people, who are the backbone of this organisation. We are proud to do things our way without considering political attitudes or what other people believe is right or wrong.
DO YOU HAVE A FUTURE WISH FOR MFL?
Our nearest wish is to have our bus ready for the new season – a wish made possible with the big help of Omnia Foundation. The bus will play a central part in our future activities.
We do not have a final goal for MfL, but we want to be present were there is a need for us, and where it makes sense.
The ultimate wish is that we will not be needed, but unfortunately, that is not very realistic.
WHAT DO YOU BELIEVE IS THE NEXT STEP FOR MFL?
Previously, we have had some openings where we tried starting up something in Sweden and Germany, and we would definitely find it exciting to have other countries become part of MfL. The need is there, so why not?
DO YOU DREAM OF HAVING MFL AS YOUR FULL-TIME JOB?
Both yes and no. It has always been very important to us not to be commercial. We are driven by the love for the children and the experiences that we create. But of course, who would not want to make a living out of what they love doing the most, and the whole concept of charity and humanity is something that is very important to me. To be able to call your hobby your job must give you tremendous joy and pleasure. At the Board, we have often talked about how rewarding it would feel to have MfL as our full-time job. Who knows what the future will bring?
Follow Motorsport for LIFE on Facebook for more information and updates on events.
You can also read more about Omnia Foundation and our charity work on omniafoundation.ch
Investing in global consumer protection
FINALLY YOU CAN SHOP SAFELY ONLINE
Biggrey Trust offers to certify retailers on a global scale using an IT-platform for case handling, which integrates a number of services such as return requests and warranty claims, for example. Together with certified stores, Biggrey Trust offers purchase protection of up to USD 5,000 – regardless of where in the world customers have performed their purchase. This is a unique service and protection not offered anywhere else.
By bringing stores and customers closer together, Biggrey Trust makes it easier and cheaper to attain new and more loyal customers, which ultimately enhances the opportunity to increase revenue. All information on the customers’ purchases and cases is stored using the integrated systems. In the future, this will allow Biggrey Trust to offer tailor-made marketing to certified stores based on information about shopper history.
For a short video presentation of Biggrey Trust, please click here
THE ROLE OF OMNIA PRIVATE EQUITY
Through OMNIA Entertainment LLC and our content marketing partners, we will deliver a marketing platform as well as endorsement and product placement deals. It is our hope that this will speed up process towards 5000 shops signed for the certification provided by Biggrey Trust. With 5000 shops, Biggrey Trust will be ready to be taken public.
Creating synergy between our clients and partners is a unique part of OMNIA’s philosophy, and not the least a significant part of what separates us from traditional investors.
OMNIA Private Equity AG is an investment firm established by entrepreneurs for entrepreneurs and is investing in privately held companies, which are looking to skip the endless funding rounds towards success. Furthermore, our entrepreneurial clients are looking for an investor who contributes without disturbing, and who lets the entrepreneur focus on the actual business of his or her company.
BY ENTREPRENEURS FOR ENTREPRENEURS
We focus on entrepreneurs, who are seeking a unique investor with an entrepreneurial mindset like themselves. We are confident that is exactly what Biggrey Trust and Torben Albrekt found in OMNIA Private Equity AG. Torben Albrekt is a true entrepreneur himself – already as a 12-year-old, he started selling his toys on his own, and in school he rented out gloves for his classmates. At 18, he established his first company after dropping out of high school – by 23, that business had made him a millionaire.
Torben Albrekt says about OMNIA “The main reason for me to partner up with OMNIA is their straight forward and down to earth approach to investing. I can keep my DNA in the company and simultaneously grow faster through OMNIA’s database of endorsers and marketing platforms, not to mention the constant access to liquidity to build the company. I believe it is going to be quite an exciting venture”.
You can read more about Biggrey Trust on biggrey.com
HUGE POTENTIAL BY GOING GLOBAL
In 2015, Torben Albrekt moved to Miami, Florida to launch Biggrey Trust in the U.S. Right now, Biggrey Trust is focusing on Europe and the U.S., and Torben Albrekt expects to use the raised capital on expanding Biggrey Trust further on a global scale. The goal is to have certified 2.5m stores within the next five years. We admire Torben’s ability to think big, starting out in the U.S., and not being afraid of focusing his business outside of the Danish border.
We want to take advantage of the first-mover effect and being part of Biggrey Trust’s journey. It is a very unique opportunity, as no company offers the same solution, and because of the ability to make Biggrey Trust scalable on a global scale, there are no limits to the development of this company. All it takes is to create attention, which is what OMNIA Entertainment LLC can provide.
At OMNIA Private Equity AG, we share the enthusiasm and see a huge potential in Biggrey Trust, and we are therefore very excited about the future of this venture.