Maitland Private Equity Monitor – 10 August 2018

10th August 2018

Worth a read

Musk looks to take Tesla private

What’s one of the most influential pieces of writing you’ve read recently? A little Aristotle perhaps? Some Daniel Kahneman? Robert Frost? Milton Friedman? Well, the prize this week has to go to Elon Musk. Is just nine characters, the mercurial Mr Musk sent Wall Street into a frenzy: “Am considering taking Tesla private at $420. Funding secured.” But whose funding has Mr Musk secured? Tesla’s market cap is roughly $60bn. At $420 a buyout would cost roughly $72bn, which would have the right to claim crown for largest leveraged buyout. Ever. Private Equity News, 8 August 2018

Private equity groups fear US clampdown on Chinese investors

So much for modernisation. Key provisions in America’s Foreign Investment Risk Review Modernization Act could dampen the plans of US based private equity groups who use overseas capital to finance domestic deals. Essentially the trade war between the US and China could poison the private equity well: according to one private equity player, “This is an extension of the trade war into financial protectionism . They are blocking everything Chinese”.  A cautionary tale for start-ups seeking funding in the US, as well as those firms which have foreign investors – particularly Chinese. Financial Times, 5 August 2018

More private equity firms turn to financial engineering to unlock cash

Sometimes even the private equity world needs a little spare change. Increasingly, firms are cashing in on investments by pushing for deals that eschew your traditional exit route. These transactions can be “backdoor” transactions which can help managers unlock cash from older funds if no preferred exit routes are available. The longer firms sit on a golden egg of an investment, the more frequently such transactions will ratchet up. Private Equity News, 9 August 2018

Private equity fees and returns face scrutiny

To the dreaming spires, where scholars at the Said Business School have caused something of a stir: if you want to see a decent return, you’re better off putting your money in a tracker fund than swallowing the honeyed offerings of private equity returns. Naturally the industry has harrumphed its objections, with private equity lobbying group, the American Investment Council, citing “multiple analyses” which confirm the private equity’s market beating returns. But then the contrasting arguments highlight the opacity of private equity’s fees and costs.  Financial Times, 6 August 2018

Private equity feels the heat in Turkey

Amidst the looming spectre of an economic crisis, and under pressure to raise interest rates, two of Turkey’s largest private equity giants are intending to dip their toe into the country’s troubled waters. Actera Group is looking to raise $1.3bn, while Turkven hasn’t quite decided how much to raise. But amidst the acceleration of a declining lira, both companies should watch out – they raise dollar denominated funds – since a further plunge in value could do real damage to their investments. Caution may yet win the day.  Private Equity News, 6 August 2018

Wall of money

Quantum Energy collects $5.6 billion for its latest fund

Quantum Energy Partners is increasingly pouring money into the oil patch. It has raised nearly $5.6bn for its new fund, surpassing the $5.4bn hard cap. The seventh fund will focus on finding acquisition targets in the noncore assets that public oil and gas companies are selling. Private Equity News, 7 August 2018

Jack Ma’s private-equity firm collects $2.5 billion for latest fund

Yunfeng Capital has raised $2.5bn for its latest investment pool, although there is no information on whether the fund held a final close. The firm closed its previous doll-denominated fund on $1.1bn in 2014. Private Equity News, 7 August 2018

Chinese truck-hailing app on course for $10 billion valuation

Manbang Group. a Chinese truck-hailing platform in which both SoftBank and Alphabet have invested, is seeking $1bn in new funding. The company plans to use the funds to expand its business in China and support domestic acquisitions. The new financing will value the startup at $10bn, an increase from $6bn in April. Private Equity News, 8 August 2018

Healthcare-focused Quadria seeks $500m for fourth fund

Quadria Capital is targeting $500m for its fourth vehicle, which is expected to hold a first close by the fourth quarter of 2018. The fund will invest in South Asia and Southeast Asia across healthcare delivery, life sciences, medical technology and consumable, and retail healthcare. Private Equity International, 7 August 2018

Deal chart

Acquisition TargetBuyerSellerValueDate AnnouncedRegionSector
Dun & Bradstreet Corp.Investor group led by CC Capital & Cannae Holdings-$5.4bn10/08/2018USFinancial Services
tZeroGSR Capital-$270m10/08/2018USTechnology
VetPartnersBC PartnersAugust Equity & Ares£700m09/08/2018UKHealthcare
The Shade StoreLeonard Green & PartnersGreat Hill Partners$325m09/08/2018USFurniture
TaskUsBlackstone Group-$250m09/08/2018USTechnology
United Talent AgencyInvestcorp and PSP Investments-Undisclosed08/08/2018USEntertainment
Unifeeder GroupDP WorldNordic Capital€660m07/08/2018DenmarkIndustrials
Golub CapitalDyal Capital Partners-Undisclosed06/08/2018USAsset Management
DesigualThomas MeyerEurazeo€141.9m03/08/2018SpainClothing

Movers and Shakers

UK & Europe

Riverside Co. has recruited two European Operating Partners, Filip Van de Vliet and Philip Rowland, from Globachem NV and OC&C Strategy Consultants respectively. Rafael Alvarez-Novoa, who works in the Madrid office, has also been promoted from Principal to Partner. Link

Abénex Capital has promoted Antoine Houel and Jérôme Vandermarcq to Partner. They have been with the firm since 2011 and 2017 respectively. Link

Duet Private Equity has added three executives to its Africa-focused deal team. Fred Chima joins as Managing Director from Temasek Holdings, Diamatho Doumbia as a Vice President from LATC Group and former Abraaj employee Kwinten van Nes joins as an Associate. Link

From the horse’s mouth...

“We’ll take our time to talk and think.” James Anderson, whose fund holds $4bn in Tesla

“It’s testament to [Turkish firms’] capacity to add real value — to roll up their sleeves and do the real private equity work, rather than sitting there and waiting for multiple expansion.” – Anne Fossemalle, director of equity funds at the European Bank for Reconstruction and Development

“All men are equal before fish.” – Herbert Hoover, former US President born on this day in 1874