Maitland Private Equity Monitor – 21 April 2017

21st April 2017

Worth a read


Private equity’s software playboys

Private equity’s fascination with enterprise software companies has kept bankers smiling for the past couple of years. “It’s like the Golden State Warriors,” says Anthony Armstrong, the head of technology mergers at Morgan Stanley who has helped sell a number of companies to the young private equity groups. “Smaller players, moving quickly, making three-pointers.” Financial Times, 18 April 2017

What the UK snap election means for private equity investors

Ben Carroll, a policy and political risk analyst at WA Investor Services, discussed the snap election and how it will impact investors. He believes the general election increases the prospect of a transitional deal being put in place following the completion of Brexit talks in March 2019. The Fixed Term Parliaments Act dictates five years between general elections, meaning the following election from this one is likely to take place in 2022. If such timetables were to align, this would provide greater clarity for investors on the type of Brexit we are heading for, while allowing extra time for any contingency measures to be put in place. Real Deals, 19 April 2017

Blackstone's Message to Rivals: Try Harder

Blackstone Group LP has set a high bar for the industry. The New York financial giant kicked off first-quarter earnings for alternative asset managers on Thursday, earning applause from investors by more than doubling its profit from the same period a year earlier. Most strikingly, it reaped almost $17bn during the quarter by selling various holdings including a large stake in Hilton Worldwide Holdings Inc., or almost quadruple its average haul over the past 19 quarters.  In an interview earlier this week, Group CEO Steve Shwarzman said the prospect of government action on infrastructure is a “super big deal” amounting to a multi-trillion-dollar investment opportunity. Bloomberg Gadfly, 20 April 2017

Graphite Capital plays down role of Europe in its portfolio

Graphite Capital, the British private equity house that once owned London celebrity haunt The Groucho Club, is playing down the importance of Europe to its portfolio as it prepares its pitch for an upcoming fundraising. Rod Richards, Graphite’s managing partner, said it had recently analysed its record and found it had very little benefit from the UK’s relationship with the EU. “Over the years we’ve made virtually no money out of that relationship,” said Mr Richards. Financial Times, 17 April 2017

Calpers Is Sick of Paying Too Much for Private Equity

The largest public pension fund in the U.S. is studying dramatic changes in how it invests in private equity that would slash payments to Wall Street managers. Its private-equity returns were 12.3% over 20 years, but they would have been 19.3% without fees and costs. Among the options being considered are: buying a private-equity firm or creating a separate company outside Calpers that would make private-equity wagers. Calpers could also choose to act as the sole investor in more customised accounts with outside managers. Private Equity News, 18 April 2017


Wall of money


Silver Lake reaffirms position at top of tech pile

Silver Lake has cemented its position as the largest technology-focused private equity firm in the world with the $15 bn final close of its latest flagship fund, Silver Lake Partners V. The fund had a $12.5 bn target and the firm ultimately attracted LP commitments totalling $14.5 bn. The firm itself has made a $500 m general partner commitment, equivalent to around 3.3 percent of the total. Private Equity International, 18 April 2017

CDR closes 10th fund on $9.35bn hard-cap

Clayton, Dubilier & Rice has closed its 10th flagship fund, Clayton, Dubilier & Rice X, on its $9.35bn hard-cap. The fund had limited partner demand of more than double that amount, at over $20bn and had a target of $8.5bn when it launched in October. Private Equity International, 18 April 2017

Japan's Integral Group closes third fund on $670m hard-cap

Tokyo-based private equity firm Integral Group has closed its third Japan mid-market buyout fund on its ¥73bn ($670m; €626m) hard-cap. The fundraise was oversubscribed and received substantial commitments from existing and new investors including domestic and international pension funds, endowments, foundations, insurance companies, financial institutions and funds of funds. Private Equity International, 20 April 2017

KKR raises nearly $600m for healthcare growth fund

KKR has raised nearly $600 m for its debut healthcare growth fund, according to a filing with the Securities and Exchange Commission. The filing indicates that KKR Health Care Strategic Growth Fund has secured $334 m from third-party commitments and that total commitments – including from capital from KKR parallel vehicles, from the GP and from its affiliates – amount to $598.5 m. Private Equity International, 13 April 2017


Deal chart


Acquisition TargetBuyerSellerValueDate AnnouncedRegionSector
AutoplusVIG Partners-$100m21/04/2017South KoreaAutomotive
Somany Ceramics-Creador$50m21/04/2017IndiaRetail
AdveqSchroders-Undisclosed20/04/2017SwitzerlandFinancial Services
AdveqSchroders-Undisclosed20/04/2017SwitzerlandFinancial Services
Focus Financial PartnersKKR & Stone Point Capital-Majority Stake20/04/2017USFinancial Services
Mubadala Capital (the investment arm of Abu Dhabi sovereign wealth fund)Ardian-Undisclosed20/04/2017Abu DhabiFinancial Services
Addo Food GroupLDCVision CapitalUndisclosed20/04/2017UKConsumer
Green Investment Bank (GIB)Macquarie-led consortiumThe Government£2.3bn20/04/2017UKFinancial Services
FS101Lonsdale’s P2 Consulting-Undisclosed20/04/2017UKFinancial Services
WeetabixPost HoldingsBaring Private Equity Asia and Bright Foods£1.4bn19/04/2017UKConsumer
Eurazeo-Sofina (3.5m shares sold)c. €203m19/04/2017FranceFinancial Services
Cala Group and Retirement Bridge GroupPatron Capital PartnersEpiris£94m19/04/2017UKFinancial Services
UtiligroupEnergy Services GroupNorthEdge CapitalUndisclosed, 5.7x return19/04/2017UKEnergy
Key Retirement GroupPartners GroupPhoenix Equity Partners£208m18/04/2017UKFinancial Services
FatboyVendis Capital-Undisclosed18/04/2017NetherlandsRetail
Hill BiscuitsLDC-Undisclosed, MBO18/04/2017UKConsumer
Reutter and ITIB GroupSteadfast Capital-Undisclosed18/04/2017EuropeIndustrials

Movers and Shakers


UK & Europe

Phoenix Equity Partners has appointed LDC Investment Director Chris Neale as a partner, bringing the number of partners up to nine. Link

Alex Hay, who spent 10 years at UK mid-market firm RJD Partners, has moved to rival firm Sovereign Capital. Hay started his new role as partner this week. Link

HQ Capital has hired Heiko Dimmerling as its chief operating officer less than a year after replacing its chief executive. He joins the firm from Triton, where he was a partner and managing director. Link

IK Investment Partners will add three investment professionals to its newly opened Amsterdam office, a spokeswoman said. The firm has established its seventh European office and is in hiring mode. Link

Keensight Capital has promoted Magdalena Svensson to partner three years after joining as an investment director in 2014. She becomes the growth investor’s sixth partner. Link

Other

The Military Mutual Aid Association (MMAA), South Korea’s $8bn savings fund, has appointed Jae Dong Kim, the fund’s former head of securities, to serve as its chief investment officer. Link


From the horse’s mouth...

“I don’t think [the election] will have a significant impact to be honest. We always take the long view. The reality is governments come and go but at the end of the day a lot of what you do is micro stuff about companies. Those businesses hopefully will work well in any environment.” ­– Graeme Gunn, Head of investment monitoring at private-equity firm SL Capital, discusses his views on the news of a General Election in June

“Many invest today assuming the low interest rate world will persist forever and the next buyer will pay the same high multiples. We don’t do that.” – Joe Baratta, Blackstone’s Global head of private equity, discusses how the private equity industry cannot rely on rising purchase multiples for returns in the way it has in recent years, in a recent interview with PEI

“Politicians were mostly people who’d had too little morals and ethics to stay lawyers.” – George R.R. Martin, American Novelist