The Netherlands, and Eindhoven in particular, have a lot of things to worry about including housing shortages and winning the war for talent. Los Angeles-based Oaktree Capital buying High Tech Campus Eindhoven last month isn’t one of them.
Oaktree acquiring High Tech Campus Eindhoven is a real estate deal. It’s dirt. It will have little or no tangible impact on the companies located there, on the Dutch tech industry, or on Eindhoven’s startup ecosystem. All that was obscured by the hand-wringing of local politicians, who somehow conflated Oaktree buying the physical park with Americans now owning the Netherlands’ most valuable companies based at HTCE – including Philips and NXP. If these politicians – they know who they are – had bothered to do actual research, it’s apparent that a Dutch or Belgian developer such as Kadans Science Partner likely will end up with the property.
Oaktree co-founder Howard Marks is not a buy-and-hold guy.
Marks is a smart guy and all signs point to Oaktree reinventing and expanding HTCE. Those improvements will likely make it easier for tenants to keep the talent here in Eindhoven that Amsterdam, London, and Berlin covet … and so badly need. Marks is one of the most visible and accessible investors in the world, issuing his famous memos and granting interviews to pretty much any journalist who asks.
“Oaktree’s acquisition of HTCE is an endorsement of Brabant as the Netherlands’ most innovative tech center and its fastest-growing economic engine.”
In aggregate, his funds have managed to return about 10 percent each and every year to his investors. Which is a phenomenal performance. The way he does it is pretty simple – if Marks sees something he thinks is undervalued, he buys it. He sells it once he thinks Oaktree has positioned that asset at or near its optimal value. I agree with HTCE’s Jan-Willem Neggers – Oaktree’s acquisition of HTCE is an endorsement of Brabant as the Netherlands’ most innovative tech center and its fastest-growing economic engine.
The reporting on this transaction was laughable, with several Dutch outlets stating that Singapore’s CIG sovereign wealth fund bought the campus “through Oaktree.” Yes, CIG, is an investor in Oaktree along with every other big pension fund and sovereign fund in the world. But that’s not how private equity works. Oaktree raises funds with the complete autonomy to acquire whatever assets Marks & Co. believes will produce a huge return. In this case, an R&D research park in the fastest-growing region in the Netherlands.
Will Oaktree reposition HTCE? Most likely. People in the know I’ve talked with seem to think Oaktree will try to attract more biotech companies and pharma research labs. Change is inevitable, but a lot of people would rather resist change than embrace it.
Karl Marx, that greatest observer of capitalism, wrote that capitalism “remakes the world after its own image.” The truth is, Americans could end up acquiring both of Eindhoven’s dominant tech companies – NXP and ASML – because Americans have a lot of capital, and both companies are publicly traded. Eindhoven and the Netherlands as a whole are vulnerable right now simply because it’s faster and easier to acquire crucial technology than it is to develop it from scratch.
“The Dutch are the greatest innovators in the world. Now, they need to think about how they can be more competitive and strategic.”
The 10 American companies with the most cash on hand, including Microsoft, Amazon, and Alphabet, have about $700 billion in aggregate burning a hole in their pockets. If they need to pick up a Dutch semiconductor company, they have almost infinite resources to do it. NXP was nearly acquired by San Diego-based Qualcomm back in 2018. With the semiconductor industry in turmoil, someone will make a run at NXP again. Should government officials interfere? As a private-sector guy, I vote no. Reality is reality and no politician can change that.
Dutch are the greatest innovators in the world. Now, they need to think about how they can be more competitive and strategic… and how they can turn the tables on the Americans and start buying their assets.
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