Maitland/AMO Private Equity Monitor – 18 September 2020

18th September 2020

Worth a read


A cold snap awaits restaurants this winter

Private Equity News painted a chilly picture of the future for UK restaurants, clobbered by the government’s new “rule of six” and fears of winter heralding a rise in infections and a paucity of outdoor seating. The article looks at whether private equity, which has been the darling of restaurant investors, can now ride to restaurants’ rescue. Ultimately, the article notes that PE is playing hard to get – or at least, somewhat coy. Although between 2014-2019 PE firms spent £10.4bn on over 100 deals in the UK’s restaurant and bar scene, liquidity issues and high rent costs have bitten investors making them twice shy. There is some light though: experts consider that in about a year or so there will be opportunity for PE to back “new, innovative restaurateurs” and that only “low prices and sensible rents” will make private equity giants consider riding to the rescue of failing chains.

I'll see you in Court!

Specialist employment law firm Fox & Partners writes in Private Equity News that disputes in private equity are more likely in a post Covid-19 world, particularly in relation to carried interest in private equity structures. Whether a leaver is “good” or “bad” will usually determine the level of vesting of the carried interest -and to muddy the waters, PE firms are becoming wonderfully creative regarding leaver status tailored to specific departure situations. Rich pickings for the legal fraternity…

ESG and private equity: isn't it obvious?

An opinion piece by Andy Pitts-Tucker, head of ESG Ratings and Advisory at Apex Group, in Private Equity News, noted that private equity and ESG are strange bedfellows for some, but for others, they go together like a horse and carriage. Noting that there is increasing demand for an independent, end-to-end, high class offering, the piece notes that ESG has metamorphosed from a “nice to do” to an essential part of due diligence. The author anticipates that soon GPs will be required to pass an ESG screening as part of their vetting process as LPs demand increasing transparency into all things ESG.

Clearlake philanthropy

Philanthropy has been oozing out of the doors of Clearlake Capital according to Private Equity News: the private equity firm’s co-founder, Jose Feliciano and his wife, Kwanza Jones, have made a $20m donation to Princeton University. The resulting buildings will be the first buildings at the Ivy League university named after black and Latino benefactors.

Don't mind if I do - private equity owners help themselves to dividends

The Financial Times reported that certain private equity groups are taking advantage of “blockbuster demand” for corporate debt by saddling up companies they own with fresh loans – and using the cash to award themselves a bumper payday. But there are concerns about this house of cards: so-called dividend recapitalisations have begun to ring alarm bells as they come on top of leverage that is already high and weak investor protections – against the backdrop of major economic uncertainty.

Private equity for retirees?

Bloomberg Opinion queried whether or not American workers’ retirement plans can include investing in private equity firms. Naturally that has generated debate: some consumer groups regard private equity firms as inappropriate for unsophisticated investors but others are keen due to the fact that as an asset class it can provide better earnings than stocks and bonds.


Wall of money


CDR nears $12bn

Clayton Dubilier & Rice has raised almost $12bn for its eleventh buyout fund, according to a regulatory filing, meaning it is already the largest pool of capital the firm has ever raised. It is unknown at this point whether this amount represents a final closing.

KKR closes fourth Asia fund

KKR has raised over $11bn at the first close of its fourth Asia-focused fund, according to Beijing-based managing director Chris Sun. KKR started to market the fund towards the end of last year before the Covid-19 pandemic and will target China, India, Japan and Southeast Asia.

Ardian closes small cap fund in six months

Paris-headquartered Ardian has closed its fifth small-cap private equity fund on €2bn after just six months of fundraising. The fund is double the size of the 2016 vintage and will aim to invest in high-growth mid-sized businesses across Europe.

Warburg Pincus backs software investments

Warburg Pincus has said that it will support future investments by MLM II, a new platform founded by former executives at MLM Information Services, with $1bn in funding. Mason Slaine, Jay Nadler and Karl Jaeger “have a long history of technology and software investing”, including at MLM Information Services, backed by Warburg Pincus.


Deal chart


Acquisition TargetBuyerSellerValueDate AnnouncedRegionSector
KiBlackstone, Fairfax Financial Holdings-$500m18/09/2020UKFinancial Services
BrightstarBrightstar Capital PartnersSoftBank GroupUndisclosed18/09/2020USTMT
Casa.itEQTOakley CapitalUndisclosed17/09/2020ItalyReal Estate
Halo FoodsPeak Rock Capital-Undisclosed17/09/2020UKFood & Drink
ZwiftKKR-led funding round-$450m16/09/2020USSports
Klarna HoldingSilver Lake-led consortium-$650m15/09/2020SwedenFintech
RoboyoMML Capital-Undisclosed15/09/2020GermanyRobotics
MACHMain Capital-Undisclosed15/09/2020GermanySoftware
CVEICG Infra-€100m14/09/2020FranceEnergy
Enel XArdian InfrastructureEnel GroupUndisclosed14/09/2020CanadaEnergy
WattbikePiper-£11.5m14/09/2020UKSports

Movers and Shakers


Europe

PAI Partners  has hired Ralph Heuwing as partner and head of DACH. Previously, Huewing was a CFO at Knorr-Bremse.

Goldman Sachs has promoted two long-serving dealmakers to head up its investment banking unit in Europe including Anthony Gutman and Gonzalo Garcia as co-heads of its investment banking division in EMEA.

Czech private equity house, Jet Investment, has appointed Alexander Kosovský as a director for investment projects.

North America 

Apollo Global Management has named Marc Becker and Joanna Reiss as co-heads of a new impact investing platform called Apollo Impact. Becker has been with Apollo for 24 years while Reiss joins from Cornell Capital which she co-founded.


From the horse’s mouth...

The current situation is artificial. At the end of the month, many restaurants will face the hangover of six months historic rent due, three months future rent to pay and the safety net of furlough support removed. Fallout is inevitable.” – Martin Williams, CEO of the Gaucho and M Restaurant on next steps for restaurants, a favoured sector for the PE industry

From the lender’s perspective they are looking for deals, so if sponsors and their companies can refinance and get a dividend up to their owners they will try it.” – Jessica Reiss, head of US leveraged loan research at Covenant Review gives her take why investors have been accepting so-called dividend recapitalisations 

“Few things are impossible to diligence and skill. Great works are performed not by strength, but perseverance.”Samuel Johnson, English scholar born on this day in 1709