Focusing on the Benelux - Jacco Rolvink (Head of Benelux)
Focusing on Benelux
Colesco’s Head of Benelux, Jacco Rolvink explains why the trio of countries at the heart of Europe is central to the firm’s investment strategy.
Why are the Benelux markets a particular focus for Colesco?
The Colesco team emerged from Rabobank, one of the largest lenders in the Netherlands. The bank has been a significant player in the Benelux region for over 100 years, hence our roots are deep in the Netherlands and its neighbouring countries, Belgium and Luxembourg. The Benelux economies share common characteristics, including resilience, entrepreneurship and an international orientation, and are founded on robust legal systems that have kept pace with changes in the commercial landscape.
The Benelux region is also home to extensive advisory networks that support direct lending and a vibrant mid-market sector, where we are focused. Our investment themes of Sustainable Food, Energy Transition and Inclusive Society cover multiple sectors ripe for investment. With a combined GDP of €1.4 trillion, there’s huge growth potential across this densely populated market of 30 million people. This has not gone unnoticed by private equity investors and an expansion in direct lending has followed.
How receptive are Benelux-based businesses to private debt?
As traditional lenders retrench, there is space and a funding requirement for private debt funds to step in. Momentum is growing and interest in private lending is filtering down from large-cap corporates to more mid-cap businesses and even some smaller enterprises. Increasingly, companies seeking finance are pursuing a dual-track strategy and approaching both banks and private lenders to see who can offer a finance package that fits their needs best. Businesses are looking for financial flexibility – financing that tracks their growth plans – and want to reduce complexity and that’s where we come in.
It is a very competitive space. How do you differentiate yourself as a new private debt platform?
Firstly, we are the only Benelux private debt platform in the market, meaning we are close to our clients. Although we are a new platform, we’re not new to the Benelux market. Colesco’s senior leadership team has almost a century of combined credit experience. Myself, I’m based in Utrecht and have been working in acquisition finance in this area for almost 20 years. Over the past seven years, we’ve partnered with more than 50 private equity sponsors and been involved in more than 200 buyouts. We are embedded in the Benelux market.
Secondly, we have a unique foothold thanks to our Rabobank heritage. Our investment themes mirror the strengths of the bank’s extensive resources and client base. While Colesco is a separate commercial platform offering a distinct direct lending product, we have access to the bank’s deal origination channels and infrastructure, as well as research capabilities encompassing sponsored and non-sponsored transactions. This includes access to the bank’s proprietary environmental, social and governance scoring tool that ranks thousands of businesses across Benelux on their ESG credentials, which is core to our deal selection.
Lastly, our third differentiator is our commitment to responsible investing. This is not an add-on to an existing strategy, but it is our starting point. We have a strong focus on financing businesses that support the transition towards a more sustainable future.
The relationship between Colesco and Rabobank remains strong. How will you avoid competing?
In a nutshell, we offer different debt structures to our clients. Where the bank is not able to meet certain clients’ needs, we can offer an alternative solution. For example, instead of passing on a unitranche transaction, which would otherwise go to a third-party debt provider, the Rabobank team can now introduce Colesco to the client. In that sense the two businesses are complementary. We know the teams at the bank very well as we have worked intensively with them in the past and they are incentivised to work with us.
That said, Colesco’s sourcing model does not rely solely on the bank. As a team we leverage our extensive network of sponsors, corporate management teams, industry experts, financial advisors, M&A advisors, and lawyers. Also, we actively pursue new relationships with the management teams of market-leading businesses. While our investment themes will largely determine where we look for deals, in the Benelux region we can be more flexible about the sectors we consider as we know the market and the businesses so well.
You mentioned ESG. Topics in focus and best practice are constantly evolving. What’s your approach?
Access to Rabobank’s ESG scoring tool enables us to apply a negative and positive screen to potential borrowers and benchmark them against other businesses in their sector. That’s a unique capability among private debt funds. The ESG conversation that begins at this initial stage with a management team will continue over the length of our engagement with a company. This dialogue with a borrower includes, amongst other things, company specific ESG KPI’s, an annual questionnaire against which we monitor progress toward their ESG goals but also the possibility to introduce sector or ESG specialists if we believe the company can benefit from this. Part of the work we do is to help businesses with their ESG approach. At the same time, we are continuously reviewing and updating Colesco’s Responsible Investment framework.
To what extent can you positively influence a business’ ESG performance?
As a private debt platform, we are likely to be the only lender, which is not the case in a traditional club deal. Our relationship with the borrower is direct. Using our wealth of ESG experience coupled with Rabobank’s ESG tools, research and access to market experts, our ability to engage with borrowers on ESG topics is significant.