Maitland/AMO Private Equity Monitor – 16 July 2021

16th July 2021

Worth a read


The future's cheap, the future's the UK

Much has been written about the “boom” of private equity deals in the UK and the need for the buyout industry to deploy some of its $1.7tn of firepower in England’s green and pleasant land. But why? Well, according to practitioners, one reason is thanks to quantitative easing, which has distorted markets and contributed to a long-term shift from public equity to private equity which naturally uses leverage to try and generated higher returns. Another factor is that the UK has a pro-business environment (good) with a relatively liberal attitude towards takeovers, GPs offering higher pay and less public scrutiny. But another reason is of course, the relative cheapness of equities compared with other markets (bad). Since the Brexit referendum in 2016, investors have pulled more than £29bn from UK equity incomes funds according to Morningstar. The US and Europe in consequence are looking a bit pricey. Of course there’s also the number of boards of public companies who happily take the share price pop that accompanies a bid – which has received criticism due to listed companies’ short-term approach and could mean the difference between a good quarter and a bad quarter.  But for the private equity firms and their advisers, the industry represents a neat and lasting solution to the excessive short-termism of the UK corporate sector.

Save our FTSE!

Fulminating from the pages of the Daily Mail, City Editor Alex Brummer makes full use of Roget’s Thesaurus, in order to caricature private equity. Variously referred to as “vultures”  “barons” and “sharks”, according to Mr Brummer, the FTSE 350 quails under the avaricious gaze of  private equity suitors. Mr Brummer makes the point he has been making for some weeks, namely, that there is an “alarming” list of large FTSE outfits which could be “fodder” for private equity suitors. He bemoans any possibility of even a “small sample” of these companies to fall into private equity’s hands, regarding it as nothing less than an “act of self-harm for post-Brexit Britain”. Mr Brummer calls upon the Government to take a stand, whether that is Kwasi Kwarteng ensuring that powers under the National Security & Investment Act are exercised to the full, or Rishi Sunak removing the tax breaks for carried interest, or Oliver Dowden ensuring that tech and creative talent is not lost to an almost quaint description of buyout firms, “financially driven owners.” According to Mr Brummer, the pendulum has swung too far in favour of  “untrammelled asset strippers.”

The lord's gambit

But perhaps the chairman and controlling shareholder of the Daily Mail has other ideas. Earlier this week it was reported that Lord Rothermere made a bid to take the media group private.  Simon Duke, Technology Business Editor at The Times, writes that the reason for Lord Rothermere choosing now as the time to take the company private is in part thanks to the official response to Covid-19: by flooding economies with money, central bankers have “lit a fire” under the global stock market and heralded a charge of private equity backed takeovers. However he cautions that Lord Rothermere’s gambit could hit a snag noting there is a mismatch between his offer and DMGT’s underlying value, warning that he may have to up his offer to seal the deal.

But not everyone thinks that private equity takeovers are so bad

The Financial Times reports that managers at Morrison, the Northern supermarket staple, which is about to be taken private, are breathing a sigh of relief. Managers believe that the proposed takeover will respect the “fundamental character” of the supermarket – but few believe that Fortress Investment Group will not make sweeping changes. The piece notes that while Morrisons is regarded as a well run ship, there may still be opportunities to cut costs.

Bye bye banks

According to the Financial Times, large debt financed takeovers by the private equity world are moving away from blue chip household banks like JP Morgan Chase, Goldman Sachs and Bank of America. Last week was a case in point: Thoma Bravo acquired Stamps.com for $6.6bn – with no bank financing the leveraged buyout. Instead the group turned to four private lenders including Ares, Blackstone and PSP Investments. The piece notes that such private loans have been getting larger and more common over the past few years, with traditional banks fighting for their moment in the sun.

A dystopian Robin Hood - how Arif Naqvi stole from the rich - and didn't give to the poor at all

Thanks to Orson Welles, we’ve all heard of the Third Man. But now, a new book (non fiction) written by Simon Clark and Will Louch looks at the “Key Man”, or rather how Arif Naqvi, the former CEO of Abraaj attracted billionaires and governments to his funds – and duped them all.  The reality, at least according to US prosecutors, was that behind the facade of operating a highly successful investment company, Naqvi was actually masterminding a global criminal conspiracy.


Wall of money


H&F closes one of largest PE funds ever

Hellman & Friedman has announced a final close of $24bn on its tenth flagship buyout fund, which makes it one of the largest pools of private equity capital raised in history. The U.S. buyout firm pledged $1.8 billion of its own capital to Hellman & Friedman Capital Partners X, which was “significantly” oversubscribed. The closing of the fund brings its total assets under management to more than $80 billion.

VC firm to list on AIM

Tech-focused venture capital firm Forward Partners will list on London’s AIM market later this month with a market capitalisation of £134.6m. The firm said that its listing was oversubscribed, and would raise proceeds of £36.5m, which it will use to fund future investments.


Deal chart


Acquisition TargetBuyerSellerValueDate AnnouncedRegionSector
Covanta HoldingEQT-$5.3bn15/07/2021USWaste Management
Caviar House & PrunierOlma Luxury Holdings-Undisclosed15/07/2021FranceFood & Drink
ValtechBC Partners-Undisclosed14/07/2021UKSoftware
AOCLone StarCVC Capital Partners$2.4bn13/07/2021USChemicals
InsightsoftwareHg-c. $1bn13/07/2021USSoftware
QuantexaWarburg Pincus-led funding round-$153m13/07/2021UKFintech
Tate & Lyle sweetener productsKLS Capital PartnersTate & Lyle$1.3bn12/07/2021AmericasFood & Drink
Aleph HoldingCVC Capital Partners-$470m12/07/2021USTMT
AnyVision Interactive TechnologiesSoftBank Group-led consortium-$235m12/07/2021IsraelTMT

Movers and Shakers


UK & Europe 

Balderton has appointed Adrian Rainey as its new operating partner. Prior to the joining the firm, Rainey was a partner at Goodwin.

LGT Capital Partners has appointed Mark Miller as head of LGT, succeeding current CEO, Mark White. Previously, Miller had been head of UK business development at LGT.

Bridges Fund Management has appointed Christophe Evain as its non executive chair. Previously, Evain was CEO of ICG Capital.

Phoenix Equity Partners has promoted four team members including James Squires, who has been made partner and James Chiang, Richard Hill and Victoria Wain all of whom have been promoted to investment director.


From the horse’s mouth...

Private equity is rampant… they are the dominant force now. We seem to be moving away  from the pandemic and everyone is feeling more ballsy.” – Sir Martin Sorrell, founder and chair of listed advertising group S4 Capital 

When a big premium is offered for a company whose shares have gone nowhere for a few years, it’s very tempting to take that rather than give the current management the benefit of the doubt” – James Macpherson, former deputy chief investment officer of fundamental equities at BlackRock

I know Wikipedia is very cool. A lot of people do not think so, but of course they are wrong“- Larry Sanger, co-founder of Wikipedia, born on this day in 1968