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Tioopo Capital bets on European SMEs

Launched in 2021 by Lebanese nationals Cyril Aboujaoude and Shahan Sarkissian, as well as French national Grégoire Louisy, this private equity firm is investing in companies with “real know-how” in growing markets. 

Tioopo Capital bets on European SMEs

From left to right: Grégoire Louisy, Cyril Aboujaoude and Shahan Sarkissian. (Editing by Philippe Hage Boutros)

Cyril Aboujaoude, Grégoire Louisy and Shahan Sarkissian, you launched Tioopo Capital in early 2021 in France and expanded to the UK in 2022. What makes you different from the other private equity firms?

Above all, it has to do with our approach and choice of targets. We’re interested in a market that is relatively neglected, at least in Europe, by public or private equity firms, which mainly focus on start-ups or large companies.

For our part, we focus on family-run small and medium enterprises (SMEs) positioned in niche markets with real know-how. These enterprises must already be profitable but need counseling to guide and speed up their development. These companies are often up for sale due to succession problems — where children generally don’t want to take over.

In short, it’s about enabling them to scale up successfully, to acquire more market share. It’s neither about restructuring companies that are doing badly to prevent them from bankruptcy, nor about changing the company’s DNA.

Tioopo’s other particularity is more anecdotal. We are among the youngest founders of this type of firm in Europe.

What’s your modus operandi?

Once we identify the right profile, we buy the company’s shares and take over its management until we achieve the objectives we set ourselves. We become shareholders and members of the board of directors to support our managers.

Investments are made via a Leverage Buy-Out (LBO), which means that we borrow money (around 40 percent of the company’s value) to be able to make the purchase.

The former CEO, who sold his shares back to us, can choose to stay on board for six months to a year, then hand over the reins. After a period of up to five or seven years, we sell the company with a capital gain to an interested buyer.

In how many firms has Tioopo Capital invested to date?

We currently have four, for a total investment of €41 million.

Our first acquisition was finalized in the summer of 2021. It was Cuir du Vaudreuil, a French company specializing in leather goods. In two years, the company tripled in size— now employing 180 people instead of the 60 it had when we arrived.

The other three acquisitions were made later, so it’s too early to make an assessment.

In December 2022, we acquired a French tandem formed by Oury Guyé et Fils and Société marnaise d'applications orthopédiques (SMAO). The first company was founded almost 115 years ago, and designs and manufactures customized pliers and tools for orthopedic surgery, while the second designs and produces surgical knives.

Finally, we acquired shares in Peter Jackson & Sons in the United Kingdom in late 2021. It manufactures textiles for pet accessories by recycling plastic bottles.

What all these companies have in common is that they produce very specific goods to meet very specific needs. Their growth potential is real, and the fact that Europe is currently thinking about reindustrializing offers them the ideal opportunity to make a successful transition.

On what basis do you decide to buy one company over another, and how do you obtain the green light from your shareholders?

We own 20 percent of the firm’s capital, and the remaining 80 percent is held by family offices and private investors, mainly European. These are partners with whom we have a trusting relationship.

The companies in which we invest are selected following a process that begins with feedback from our networks of bankers and business lawyers, who have their fingers on the pulse of the market.

Once we have potential candidates, we carry out the necessary checks. It’s a meticulous job of sifting through the data. For instance, out of every 100 company names we receive, we end up negotiating with about 10 and eventually purchase one or two.

This reduces the risk of unpleasant surprises, such as having misjudged the company’s growth potential or having missed a clear error of assessment regarding the reality of the order book. We also take a very conservative approach to investment. We had developed our financing strategies taking into account the fact that central banks were likely to raise their key interest rates, as they began to do from 2022 onwards, which enabled us to mitigate their impact on our costs.

Are you considering further acquisitions, or do you intend to focus your efforts on those you already acquired?

Both at the same time. We’re developing our firm on three fronts: growing the companies we’ve already acquired, acquiring others and creating new investment strategies.

Lastly, we are currently preparing to raise €100 million to finance acquisitions, by following a similar approach to the one we’ve applied to date.

This article was originally published in French in L'Orient-Le Jour. Translation by Joelle El Khoury.

Cyril Aboujaoude, Grégoire Louisy and Shahan Sarkissian, you launched Tioopo Capital in early 2021 in France and expanded to the UK in 2022. What makes you different from the other private equity firms?Above all, it has to do with our approach and choice of targets. We’re interested in a market that is relatively neglected, at least in Europe, by public or private equity firms, which mainly...