Hedge funds and Private Equity - PES
Hedge funds and Private Equity - PES
Hedge funds and Private Equity - PES
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
ISS Denmark<br />
1. Company description<br />
The ISS-group is an international service group, which provides different services, primarily<br />
cleaning.<br />
The group operate in many countries, <strong>and</strong> have 370.000 employees, mostly unskilled <strong>and</strong> often<br />
people of foreign origin.<br />
The turn over was 7 bn € <strong>and</strong> the profit nearly 6% of turnover before the LBO.<br />
The group have an important <strong>and</strong> comprehensive internal education program (The International<br />
Cleaning academy) <strong>and</strong> have little turnover of employees compared with other service groups.<br />
The ISS group is known for its important social responsibility for the employees <strong>and</strong> their families.<br />
The ISS was listed at the Copenhagen Stock Exchange up to the take-over.<br />
2. Economic <strong>and</strong> social effects<br />
2.1 <strong>Private</strong> equity fund description<br />
It was bought in 2005 by the 2 private equity <strong>funds</strong>: EQT (55%) <strong>and</strong> Goldman Sachs Capital<br />
Partners (45%). Price: 5 bn. €.<br />
The acquisition was made through 2 holdings companies (S.a.r.l.) in Luxembourg <strong>and</strong> 2 Danish<br />
holding companies: FS <strong>Equity</strong> A/S <strong>and</strong> FS Funding A/S.<br />
The ISS <strong>and</strong> the two Danish holding companies have obtained 4 bn. € in different sort of loans<br />
<strong>and</strong> bridge financing, so the investment of the private equity groups is only 1 bn €.<br />
The management team of ISS supported the take over by the equity <strong>funds</strong> <strong>and</strong> was granted big<br />
bonus <strong>and</strong> had a big profit of the shares in the listened ISS <strong>and</strong> the warrant <strong>and</strong> options program<br />
in the listened ISS.<br />
But in September 2006 the management team has left ISS because of disagreement with the<br />
new board of ISS (the representatives of the equity groups).<br />
Many of the core employees in Denmark had shares in the company from general employee<br />
share program, <strong>and</strong> because of the share price in the LBO, they supported this because of the<br />
– often tax free – gain on the shares by the LBO.<br />
2.2 Social impact<br />
Because of joint taxation of the two Danish holding companies <strong>and</strong> the ISS Danish group<br />
companies, the interest of the loans are now deducted in the taxable income of ISS, <strong>and</strong> it is expected,<br />
that the ISS will from 2006 <strong>and</strong> forward not pay company tax in Denmark.<br />
It is not possible now to see the exact impact of the LBO.<br />
It is expected, the growth strategy by buying other smaller service companies will be slower,<br />
because of the lower liquidity in the company.<br />
Annex – 21 Case studies<br />
211
Change language