Maitland/AMO Private Equity Monitor – 11 September 2020

11th September 2020

Worth a read


Carry on... or lose dealmakers

A private document circulated last month to members of the UK’s private equity trade body the BVCA suggested that UK government plans to raise taxes on carried interest, under review by the independent Office for Tax Simplification, could negatively impact the industry and force dealmakers out of the country. The Financial Times reported that, according to the BVCA, it is “important that any tax changes do not undermine the government’s clearly stated policy of developing the UK as an attractive location for the asset management industry”.

Is the carnival over?

Neon Pagamentos (Brazil’s answer to Revolut, according to Private Equity News) and its $300m funding round announced last week is a bright spot in an otherwise gloomy backdrop for Brazilian companies and investment houses looking to back them. Data from Deologic showed that private equity deal activity in Brazil has dropped by 65% so far this year, with many investors fleeing the country due to a “triple whammy” of a deep recession, the coronavirus crisis and severe political upheaval.

Back to work!

Financial News reported this week that some of the world’s largest private equity firms are encouraging employees to return to the office, but with certain caveats to avoid unnecessary risks being taken. Blackstone Group has told staff worldwide to avoid public transportation and is offering to pay for taxi fares to enable them to attend vital meetings, while Advent International has a new “commute policy” which bans the use of public transport, with both firms introducing strict testing policies for office attendance.

PE taps up leveraged loan market

Private equity firms are “rushing to the leveraged loan market, according to Bloomberg, in an attempt to fund shareholder dividends and provide sound investments for lenders. The article suggested that five deals are underway to fund shareholder dividends, accounting for half of this week’s volume, at a time when there’s not much else to buy and secondary loan prices are rallying despite weeks of outflows.


Wall of money


Bridgepoint closes 50% above target

Bridgepoint Development Capital has reached its £1.5bn hard cap on its fourth fund, 50% above the original target and more than double the size of its predecessor which closed in 2016. The new fund will focus on lower-mid market investments in Europe, targeting companies typically with enterprise values of between £30m and £150m.

Deutsche Private Equity raises €1bn for its fourth fund

Deutsche Private Equity has held its first and final close of its fourth buyout fund at its hard cap of €1bn. The vehicle launched only three months ago. According to a statement from the firm, the fund will target medium sized companies across Germany, Austria and Switzerland in sectors with “strong fundamentals”.

Sequoia Capital launches Chinese hedge fund

Venture capitalist Neil Shen’s Sequoia Capital China is said to be setting up a hedge fund “to leverage its record of choosing winners in Chinese technology”, according to filings with the SEC. The firm launched the dollar-denominated


Deal chart


Acquisition TargetBuyerSellerValueDate AnnouncedRegionSector
IdinvestEurazeo-Undisclosed10/09/2020FrancePrivate Capital
IdealistaEQTApax Partners€1.3bn, 5x return10/09/2020SpainReal Estate
DufryAdvent International-Undisclosed10/09/2020SwitzerlandRetail
STMNexxus Iberia, Kartesia-Undisclosed09/09/2020SpainReal Estate
Reliance IndustriesSilver Lake-$1.02bn09/09/2020IndiaRetail
SprinklrHellman & Friedman-$200m09/09/2020USSoftware
Mehler Vario SystemDeutsche Private EquityArmiraUndisclosed09/09/2020GermanyDefence
Yorkshire Wildlife ParkBGF-£15m08/09/2020UKTravel & Leisure
SiteimproveNordic Capital-€500m04/09/2020DenmarkSoftware

Movers and Shakers


Europe

Sustainability-focused Ambienta has hired Gwenaelle Le Ho Daguzan from Bridgepoint as its first female partner to head the operations of its new Paris office. Hans Haderer has also joined as a partner in Germany and was previously a senior partner at BC Partners.

H.I.G. Capital has expanded its European Middle Market LBO team with the addition of Rohin Jain as a managing director and Nishant Nayyar as a principal. They join from Triton Partners and Apax respectively.

Inflexion has promoted Catherine Richards and Phil Edmans  to senior partner, Tom Pemberton and Chris Wright to partner and James Wigglesworth to investment director as it continues its push into the UK regions. Alex Mathers has also been made digital director and Edward Taylor portfolio director.

17Capital has appointed Myriam Elst to its supervisory board to advise on ESG issues. She is currently chief engagement officer for global non-profit organisation Epic.

Other

Neuberger Berman has appointed Kaveh Samie as executive chair and head of Middle East and North Africa. He was formerly head of Middle East, North Africa and new markets for KKR.


From the horse’s mouth...

Private equity is the only part of the UK’s financial industry that gets access to these lower tax rates for individuals, so it would make sense for a government committed to supporting everyone in the financial sector to tax it at the same rate as income”- Arun Advani, an academic at Warwick University advocates for taxing carried interest at the same rate as income tax

The Covid pandemic and related global economic shock is creating long-term, durable changes to business, consumers, society, and government”- Luiz Ribeiro, principal at General Atlantic gives a sober take on the pandemic’s impact on the private equity industry in Brazil

“Life is ours to be spent, not to be saved.”D.H. Lawrence, English writer and poet born on this day in 1885