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Direct Investment Division

DIRECT INVESTMENT DIVISION

Multi-asset class investments, in private and publicly traded companies.

ASSET MANAGEMENT

Independently performing our investments through our managed funds.

GALA VENTURES

Providing equity to digital technology early-stage startups.

 

DIRECT INVESTMENT DIVISION

Direct Investment and special situations activity is performed through Gala Capital Direct Investment Division (DID).

DID is a multi-asset class business, focusing in principal investing in all levels of capital structures on a risk-adjusted return basis.

DID is Gala Capital’s primary center for direct investment activity in private and publicly traded companies.

Our direct investing and financing strategies include the following:

Private Capital Investing

We use our own financial resources to provide structured equity and other capital solutions to mid-sized privately-owned businesses for growth, acquisitions, internationalization and recapitalizations,  across Europe and South America.

SUMMARY


We seek to invest in growing private companies and serve as a partner to management.

Initially, we are able to commit resources in a single transaction ranging in size from 20 million euros to 200 million euros.  Subsequently, we also have the ability to support the growth of our portfolio companies with supplemental capital.

We have significant flexibility in the kinds of investments we make. On one hand, we focus on understanding the underlying intrinsic value of private businesses, therefore enabling us to invest creatively and in a broad spectrum of opportunities. In addition, DID’s immediate access to Gala’s balance sheet allows us to develop one-stop financing solutions in a simple capital structure that eliminates syndication risk, favoring fast and reliable closings.

PHILOSOPHY


We are committed to the middle market

Our focus is on middle market companies, delivering flexible, reliable capital while leveraging the firm-wide resources of Gala Capital.

We create custom solutions for each private investment

Our flexibility and independence allows us to develop unique perspectives and design creative solutions that provide the optimal investment structures for each circumstance.

We invest capital with a long-term focus

The lack of pressure from limited partners’ investment cycles allows us to focus our time and effort on accompanying our portfolio companies’ long-term growth plans.

We back talented management teams

We partner with management teams with strong visions and expertise that are looking to continue to grow their companies.

We value relationships and building trust

We create strong, lasting relationships with owners and managers and build the trust of our portfolio companies by honoring commitments, responding to needs and communicating directly.

WHY GALA CAPITAL


Gala Capital DID’s division provides middle-market companies with flexible and custom-made capital solutions while acting as a value-adding partner towards management and other stakeholders. Our capabilities present prospective and existing clients with clear advantages.

Our long history as an investment management firm allows us to focus our partnership on the underlying financial assets and understanding our client’s needs.

Flexibility and Creativity

Our professional direct investment teams have the ability to think outside traditional private equity parameters as we have no external investor constituency. We can structure creative securities as a lead, minority, or co-investor, and can provide both debt and equity financing.

Custom-Tailored Solutions

Each company we work with is unique and requires a carefully constructed investment solution. We give each of the companies we invest in the opportunity to help create the structure that works best for them.

Value Enhancement

Our team assists management of companies identifying and executing value enhancement initiatives. We limit our involvement to initiatives expected to cause clear value creation and we measure success accordingly.

Extended Resources

We add measurable value to management and other stakeholders of our portfolio companies by providing them with access to our industry experts. We provide introductions to vendors and customers, add-on acquisition targets and opportunities for exits.

Deep Industry Knowledge

We work closely with experts across Gala Capital’s consolidated relationship network to gain deep insight and expertise across industry sectors and generate competitive dynamics. Our team’s strong experience investing in the industries in which we participate serves as an advantage to management teams.

Speed and Certainty

Working with a single capital provider allows for the ability to move quickly to complete transactions.

INVESTMENT PROFILE


We pursue investments in private companies with the following characteristics:

TRANSACTION TYPE

  • Growth equity
  • Acquisition capital
  • Recapitalizations
  • Pre-IPO financings
  • Selective restructurings

INVESTMENT CRITERIA

  • Investment Size: $20-200 million
  • Minimum Revenue: $40 million
  • Minimum EBITDA: $10 million
  • Strong management team
  • Recurring revenue business model with defendable barriers to entry

INVESTMENT ROLE

  • Lead investor
  • Minority stakes
  • Co-investments

Investment in Listed Companies

This division deploys our own resources towards participating in  stable publicly quoted companies in Spain with the aim of increasing value for all existing shareholders through a collaborative approach with management.

SUMMARY


We look to invest in undervalued public companies, serving as a partner to management with a long term view.

Our focus is to apply a “hands-on approach” to each investment and unlock the intrinsic value of the business. In order to do that, we use a proprietary approach to sourcing with a rigorous extensive due diligence. After we invest, we try to leverage our industry analysis and analytical capabilities in order to identify and source investment proposals, improve corporate governance, bringing new ideas, and develop a close relationship with management and the members of the Board.

Ideally, we like to commit between 30 million euros and 300 million euros in a single transaction, representing between 5% and 20% of the market value of the listed company.

We enjoy significant flexibility in the sectors in which we invest, excluding only companies in those sectors that do not match our ESG criteria, companies with a majority representation from the Public government, and international corporations with a significant presence in countries with a less than average development of human rights. We also favor B2C business models and companies in sectors involved in industry consolidation.

PHILOSOPHY


Our focus is to maximize the returns on cash flows by analyzing the overall corporate balance sheet and if necessary proposing capital developments such as: new investments, acquisitions, special dividends, recapitalizations, going-private transactions, sale repurchases and securitization transactions.

We look for undervalued opportunities

Candidates for investment must be strong businesses that are fundamentally undervalued and trading at a significant discount to intrinsic value. They must benefit from favorable industry dynamics and possess recurring free cash flow business models. We prefer well-managed companies and we actively suggest changes in the corporate organizations when we perceive that the existing management is not optimizing shareholders’ returns.

We develop fundamental analysis

When deciding on a candidate to invest in, we exclusively assess the economic external and internal conditions that determine the stock price, such as size of the market, supply and demand and overall state of the economy.  We also look at the structure of the balance sheet, the financial health of the company and the specific prospects of the industry.  Therefore, we do not take into consideration technical analysis, analyze the past price action or derive a predictive model for the future.

WHY GALA CAPITAL


We design and execute strategic corporate initiatives

Our past expertise in successful transactions allows us to be the perfect partner to work with management teams and boards in order to design and execute operational and strategic initiatives designed to drive long-term sustainable earnings for all shareholders. Our strategic contribution might develop a wide variety of corporate solutions including joint ventures, divestitures, spin-offs, acquisitions, asset sales and partnerships.

We unlock hidden value

Our past history as a value-enhancing agent allows us to maximize brand and franchise value, improving sales and revenues while optimizing cost structures.

We align the interests of management and shareholders

We have a long term view and focus on value.  We like to actively involve management, developing enhancements to compensation plans and incentives that stimulate shareholder value creation.

MISSION AND VISION


To deliver strong absolute and risk-adjusted returns to our investors while always maintaining the highest ethical and professional standards.  We like to partner with management teams that we hold in high regard, both personally and professionally, at high value companies.

Governance initiatives

 As a significant shareholder in its participated companies, and through its “hands on approach”, Gala capital not only aims to positively influence the Business Portfolio Strategy, Capital Allocation and Operational Excellence of its portfolio companies in order to create lasting shareholder value; it also suggests meaningful reforms in board structure and executive compensation while often steering away from companies with poor Environmental, Social and Governance standards.

Responsible investments

Gala Capital has a long tradition of investing responsibly, working closely with our portfolio companies to positively influence ESG policy and practices.  We follow a strict and extensive ethical internal manual and, consistent with it, we maintain a rigorous approach to incorporating Environmental, Social as well as Governance considerations into our investment process.  We believe that companies with high ESG standards yield higher returns in the long run and improve shareholder value at our portfolio companies.

Balanced ESG risk – return

All new investments are reviewed in the context of our internal ESG manual, where we deeply analyze ESG risks and opportunities specific to each investment prospect.  As part of our due diligence process, our team of professionals analyzes the key ESG issues relevant to each and every one of our investments.  We analyze not only the full scope of pertinent ESG issues but also the company’s relative capacity to mitigate meaningful risk.  Finally, as a significant minority shareholder, Gala Capital regularly monitors its companies’ ESG profile and expects to play a role in driving change when appropriate.

Social initiatives

We support the use of corporate funds, research and development programs and marketing plans as part of an effort to improve sustainable long-term earnings growth and create jobs at our portfolio companies.  We also support the use of capital to increase awareness and concern, enhance fundraising, participation and volunteer recruitment for social causes.

INVESTMENT PROFILE


We pursue investments with the following characteristics:

TRANSACTION TYPE

  • Capital investments
  • Going-public transactions
  • Debt to equity

INVESTMENT CRITERIA

  • Investment Size: $30-300 million
  • Minimum Revenue: $60 million
  • Minimum EBITDA: no minimum
  • Strong management team
  • Favorable industry dynamics
  • Recurring free cash flow business models

INVESTMENT ROLE

  • Minority ownership
  • Co-investments

Special Situations

Focuses on Event Driven, Stressed, Complex Situations and Distressed Debt credit opportunities.

PHILOSOPHY


We provide capital to financially constrained companies.

We provide financing solutions to companies with limited access to capital, including non-rated, smaller and middle-market companies, businesses with complex business models and entities with a high level of intrinsic value relative to hard assets or cash flow.

We access significant opportunities by avoiding cookie-cutter investment approaches

We believe in the power of custom-made solutions in order to maximize our investors’ returns.

Our Special Situations Division offers financing to operationally sound, financially distressed companies in need of capital to grow or repair their businesses.

We provide constructive answers for a wealth of different situations a company may be experiencing, from spinoffs, tender offers, mergers and acquisitions, distress, litigation, restructurings, capital structure dislocations, or simply a level of complexity the market does not understand.

WHY GALA CAPITAL


Over 30 Years Consistently Obtaining High Returns Through Special Situations Investments

Our creative and flexible approach allows us to provide clients with a variety of structures tailored to the specific needs of unique situations. In addition, our capacity to act quickly and creatively when faced with event-driven investment opportunities across a diverse range of industries allows us to tap into opportunities with a unique positioning within the market.

Finally, the deep and broad expertise of our team provides us with the necessary tools to execute our investment strategy successfully. With this experience, Gala can enter into industries for above-average returns on investments that many other firms are unable to predict.

This has led us to develop an unparalleled track record when dealing with mid-market Special Situations within Spain.

An Investment Path for a Broad Range of Industries Across All Market Conditions

Special Situations Investing does not require a distressed macro environment to be successful, relying instead on “situational” distress that can be uncovered in any industry, sector or individual company at any point in the economic cycle. We believe in the power of such operations regardless of external market conditions and are thus able to offer our investors high-return opportunities even in difficult market situations.

INVESTMENT PROFILE


We pursue investments with the following characteristics:

TRANSACTION TYPE:

  • Spinoffs
  • Tender offers
  • M&As
  • Arbitrage
  • Distressed situations
  • Capital structure dislocations
  • Activism
  • Complex situations
  • Other event-driven

INVESTMENT CRITERIA

  • Investment Size: $20-150 million
  • Minimum Revenue: $40 million

INVESTMENT ROLE

  • Lead investor
  • Minority ownership
  • Co-investments

Technology, Media & Telecom

This division concentrates on looking for investment opportunities in the technology, media, telecom (TMT) and telecom infrastructure sectors in Spain within a wide spectrum of situations and financing structures.

PHILOSOPHY


Our investment philosophy within the TMT sector is based on 3 pillars:

Responsiveness and Creativity

We are able to craft the optimal financing solution to deliver the greatest value for all involved parties. We can utilize a combination of growth equity, loans, bonds, derivatives, private or public capital to deliver thoughtful and tailor-made solutions.

Risk-Adjusted Return Investing

Our deep knowledge of this industry in Spain allows us to assess and price risk without relying on market conventions, including TMT subsectors that are generally not well understood. This enables us to offer tailored financing solutions that other traditional investment houses are unable to provide.

One Stop, Complete Solution

We take positions across the entire capital structure and aim to provide a complete set of solutions for our portfolio companies. We are flexible, tax-efficient and creative in our financing structures, combining a variety of products best suited to address the specific needs of our partners and co-investors.

WHY GALA CAPITAL


 

We have played a leadership role in investments within the TMT industry in Spain during the last few years.  This experience represents a competitive advantage to our portfolio companies as we can provide management teams with access to our relationships and strategic network.

Our current expertise is derived from over 20 equity investments in minority and majority participations performed in the TMT sector during the last years, ranging from broadband communications to television and software. In these transactions we have deployed a wide range of financial products, including private equity, equity debt, bridge loans and recapitalization financing.

Some of our investments within the TMT sector in the last few years include:

  • Capital development of Neutra Networks, the leading Spanish infrastructure operator in wireless communications, 4G-LTE base stations and the 3,5 Ghz radio band spectrum.
  • Commercial managing of Iberdrola’s fiber optic network in Spain through Iberfibra
  • Consolidation of Masmovil as Spain’s fourth telecom operator. We still hold a stable long-term equity position in this company.
  • Acquisition of a minority stake in the TV network La Sexta
  • Acquisition of Neosky telecom operator
  • Minority and majority participations in several companies within, among others, the M2M, wireless sensors, healthcare automation and mobile payments sectors
  • We are currently extending our scope within the technology sector in the industries of Big Data, 5G networking, FinTech and Artificial Intelligence. In some of these sectors, we coordinate our investment path with the Private Equity division as well as the Ventures division of the Gala Capital group.

INVESTMENT PROFILE


TRANSACTION TYPE

Preferably equity, but also debt, across the capital structure, in both privately held and publicly listed companies including the following:

  • Growth equity
  • Corporate debt
  • HoldCo financing
  • Mezzanine financing
  • Derivatives

FOCUS AREAS

  • Telecom Operators
  • Telecom Infrastructure
  • Media
  • Technology

INVESTMENT CRITERIA

  • Investment Size: $20-200 million
  • Strong management team
  • Recurring revenue business model with defensible barriers to entry

INVESTMENT ROLE

  • Lead investor
  • Minority ownership
  • Co-investments

Financial Sector

This division focuses on acquiring minority (but significant) investments in the financial sector, with a long-term view and a collaborative approach with existing management.

Our interest in the financial sector stems from two circumstances, representing ample opportunities for our investors:

  • We consider the financial sector to be extremely sensitive to the economic cycle, and susceptible to fluctuations in price and valuations.
  • We believe that the impact of technology, globalization and cross-border deregulation is changing the financial industry in a very significant way.

We have recently acquired a 30% participation in Beka Finance, an independent Spanish regulated company that offers investment banking services with local expertise and international reach. Its main activity divisions are Equities, Fixed Income, Corporate Finance and Research.

Our participation in Beka also represents an opportunity to provide our shareholders and co-investors with a consistent long-term exposure to differentiated asset classes in the bond and equity markets, provide advisory services to our portfolio companies, and add an extra layer of supervision and regulation to Gala’s investment activities.

We have also recently processed and executed a formal application for a payment institution in Lithuania. Licensed institutions in Lithuania provide a perfect solution for FinTech companies processing payments and money transfers of private individuals. Payment Institution licensing in one of the member states within the EEC offers the opportunity to act and provide services in all other EEC countries, enjoy the benefits of the Common market without restrictions, and benefit from the Single Euro Payments Area (SEPA).

PHILOSOPHY


Best-in-class management teams

We invest in financial companies that are led by management teams that inspire our trust, and in which we can add value through our investment experience, client base and extended portfolio.

Tech – based financial institutions

 We believe that the biggest financial institutions in the world in the near future will be technology companies, and that banks that have grown through branch acquisitions and physical bank presence will have a structural problem to address.

WHY GALA CAPITAL


Long-Standing Investment Experience

 As one of Spain’s oldest investment firms, we are uniquely positioned to capitalize on our experience, industry expertise, relationships and reputation to create value, bring new ideas, extend the customer base and develop unique synergies between financial institutions and the corporate divisions of our portfolio companies.

INVESTMENT PROFILE


TRANSACTION TYPE

  • Equity Investments

INVESTMENT CRITERIA

  • Investment Size: up to 300 million €
  • Strong desire for growth
  • Small branch network
  • Reduced staff structure
  • Strong management team
  • High tech content

INVESTMENT ROLE

  • Lead investor
  • Minority ownership
  • Co-investor

Tourism & Leisure

Dedicated to providing debt and equity capital to companies across the globe, with a special focus in Spain, Western Europe and Latin America.

We invest primarily through equity, but also along other parts of the capital structure, including senior mortgages and mezzanine debt across different types of assets, from single hotel properties to large industry portfolios.

We offer creative, clear and quick solutions coupled with certainty of execution in each and every investment opportunity we participate in.

OUR VIEW ON THE INDUSTRY


Tourism has been showing steady growth during this century, aided by two main key factors: 1) an accelerated growth of the middle class across the globe (in some cases, like China, in an extremely rapid fashion), 2) New generations increasingly spend their income on experiences rather than products.

These tendencies have led the industry to triple in size in relatively few years. Driven by new industry developments such as the continued influx of low cost airlines, initiatives such as the extension of e-Tourist Visas to 180 countries, railway development focus to increase tourism in developing countries (e.g. India) and increased public investment into tourism infrastructures lead us to believe that the hotel and leisure sector will continue to be very attractive for investors in the medium and long term, especially in Spain.

As an experienced investor in other sectors, we seek to hold sizeable positions and play a leadership role in our investments, leveraging our existing investors’ base and execution capability while maintaining deep relationships with industry partners worldwide.

PHILOSOPHY


International Investments, with a Focus on Spain

The industry is growing worldwide, and our dedicated team scouts for deals across Western Europe and Latin America. However, we believe that Spain has strong potential to grow in the coming years due to a series of factors:

  • Spain has always ranked in the top 5 for tourist revenue and international arrivals and is growing in importance in certain key areas (e.g. Madrid, Ibiza).
  • The recovering Spanish economy is boosting the sector and will probably continue to do so in the coming years.
  • The country is appealing to new international tourists (notably from China).
  • The Spanish hotel sector is living its golden years, yet relatively low Average Daily Rates (DR) and Revenue Available per Room (RevPAR) leaves room for improvement.

Active Management and Close Client Relationships

People are crucial for any investor, yet this is especially crucial within the Tourism & Leisure sectors. We want to be aligned with the entrepreneurs and become a strategic partner for growing their business. We actively manage our companies correctly anticipating market changes and adjusting investments accordingly in order to beat the market.

Strong Social Impact behind Touristic Development

We believe in the sector’s capacity to boost competitiveness, expand economic opportunity, provide opportunities for economic diversification and skills upgrading, sustainably protect environmental and cultural assets and provide a pathway to prosperity in client countries. We make sure that our investments within this sector take full advantage of this power of social transformation.

WHY GALA CAPITAL


 Responsiveness and Creativity

We deliver a clear, quick and thoughtful response. We are a full service provider offering experienced investment and asset management teams with the ability to think outside traditional investment parameters to structure customized solutions when needed.  This leads to agile decision-making and quick execution delivery, allowing us to react quickly to changing conditions and drive value through immersion in the market, detailed understanding of vendor and acquirer requirements, efficiency and professional relationships.

Fully Underwritten Transactions

We are able to fully underwrite our transactions without syndication risks as well as to partner with co-investors, as appropriate.

Relationship with Gala Capital

Our portfolio companies not only have access to equity but to all of Gala Capital’s strategic relationships. We intend to hold significant, meaningful investments that allow us to assume a leadership role from a strategic and risk-mitigation perspective.

Experienced Team of Investors

We have a highly skilled team of investment professionals with expertise across various asset classes and experience through multiple credit cycles.

Through our involvement in a variety of projects over several decades, we have amassed extensive, in-depth knowledge and understanding of the needs of our portfolio companies. This provides us with a competitive advantage when expanding businesses or adding value, implementing creative solutions to complex problems, and providing fast access to capital, enabling us to take advantage of opportunities that others cannot.

INVESTMENT PROFILE 


TRANSACTION TYPE

We invest primarily in equity, but also in debt, across the capital structure, in both privately held and publicly listed companies. Our DID division uses one or a combination of products to structure the optimal solution to create value for all parties.

  • Growth equity
  • Corporate debt
  • Equity Acquisition
  • Mezzanine and bridge financing
  • Consolidation and deconsolidation
  • Derivatives
  • Asset-backed finance
  • Other forms of structured finance

 FOCUS AREAS

We are involved in a variety of areas within the Tourism & Leisure industry, investing across multiple product types, starting at a size of $50 million. We pursue strategies across the risk spectrum, deploying capital in core-plus, value-added or more opportunistic situations.

Areas of business: Hotel planning & development, hotel asset management, operational advisory, transactional & financial restructuring.

INVESTMENT CRITERIA

  • Minimum Revenue: $40 million
  • Minimum EBITDA: $10 million
  • Long term
  • Strong management team
  • Recurring revenue business model with defensible barriers to entry
  • Geographical diversification a plus

 INVESTMENT ROLE

  • Lead investor
  • Minority ownership
  • Co-investor