Maitland/AMO Private Equity Monitor – 18 October 2019

Worth a read

It's time to shine the light on private equity

Private equity as an industry has long suffered from a poor reputation. Indeed, often likened to “locusts” or “vultures”,  a decade ago, if you worked in private equity, it was whispered in hushed tones.  Today though, the dyspepsia of private equity has been relieved in the political arena – certainly in the UK. However, the Financial Times includes an editorial which advocates for greater transparency in the industry. It notes the increasing political interest in private equity based on its expanded role in the economy. In an echo to Spiderman, the editorial notes that with great spending power ($2.5tn according to recent figures) comes great responsibility – and even greater accountability.

Financial obesity: too much money can actually be a bad thing

Private equity is sitting on a pretty prized plum. So prized in fact that it’s starting to rot. At least that’s according to Private Equity News: private equity’s fundraising bonanza has apparently been “polluting” the market which could be unhealthy for target investors. The problem is that if you have $2.5tn in cash, you can’t always find a quality asset. Several buyout giants have actually specifically set up growth strategies. But Gabriel Caillaux, head of EMEA at General Atlantic argues there’s something of a cultural disconnect: the larger buyout groups may struggle with origination as they’re used to hunting for “big elephants”.

David v Goliath: the sleek of foot always wins

And in a similar vein, The Financial Times reports that private equity firms have been on the lookout for smaller deals this year in order to avoid the pitfalls of larger take-privates. According to the article, private equity firms are using “buy-and-build” strategies which is an “obvious transition for an industry that has so much money to spend but very few places to spend it in”.

Barbarians at the gate? They're on their way out...

Thirty years on from the publication of Barbarians at the Gate, shareholder activism now holds a shaky foothold in the panoply of capitalist ideals for the 21st century. According to Private Equity News, today’s corporate titans seem to want to get rid of it. The article notes that the GFC of 2008 is ultimately the root cause of today’s popular and political backlash against the naked capitalism of shareholder activism. And with a potential socialist government in the UK and the US, alternative economic theories are being given serious credence.

Wall of money

Permira closes its seventh fund at €11bn

Permira has closed its latest buyout fund at €11bn, having started fundraising in January this year. Permira said it already made two new investments from the fund but has declined to disclose further details.

Green Arrow Capital to launch €400m fourth fund

Italian-based Green Arrow Capital will launch a new buyout fund, with a target of €350m and a €400m hard-cap in the first half of 2020. The fund will be larger than the company’s predecessor, and plans to raise capital primarily from Italian and European institutional investors.

DWS raises €350m for its first close

DWS has held the first close of its closed-ended European Direct Lending fund, with commitments of more than €350m coming from investors across Europe and Asia. The fund is looking for a final close of between €500m and €700m by the end of the year.

Idinvest Partners holds final close on its third digital-focused fund

Idinvest Partners has held a final close on its third digital-focused fund, surpassing its initial fundraising target of €300m. The €350m raise is more than twice the size of its predecessor, Digital Fund II, with the fund to be managed by a team of nine investors.

Livingbridge raises £334m for newest fund

Livingbridge has held a final close for its Enterprise 3 fund at £334m following significant support from long standing investors. Enterprise 3 has seen an increase of 50% on its £220m predecessor fund, and its investment strategy will remain primarily focused on UK SMEs.

Deal chart

Movers and Shakers

Europe

Mattia Caprioli and Philipp Freise, based in London, have been promoted to lead Europe’s private equity business. Their promotion comes as part of KKR’s has promotion of six dealmakers to lead its private equity businesses worldwide.

Tom Smith, Andy Harrington and Robyn Smith have all joined Livingbridge to bolster its investment team. Tom Smith joins from Deloitte, Andy Harrington joins from Next Wave Partners while Robyn Smith joins from KPMG.

North America

Pete Stavros and Nate Taylor  will co-lead the firm’s private equity business in the Americas.

Asia

Hirofumi Hirano and Ashish Shastry have been promoted to lead the firm’s private equity team in theAsia Pacific region.

From the horse’s mouth...