Maitland/AMO Private Equity Monitor – 21 January 2022
Worth a read
Pitila Clark, associate editor and business columnist at the Financial Times looks at a report from a professor of finance at France’s Insead business school. The report looks beyond the financial performance of private equity backed groups and looks at the industry’s social consequences. And the results, while complex, might even quiet the Daily Mail. According to Professor Lily Fang, after a buyout as higher paid workers headed for the hills, cheaper ones were hired and the average gender pay gap fell by 6.5% and the wage difference between younger and older workers shrank by a whopping 18%. However the reality is clearly nuanced, for one thing, the study only looked at companies in France, and whether or not PE groups were actively setting out to cut wage gaps is debatable – they may have been, as Professor Fang says, “just optimising their labour force”.
Financial News reports that America’s Securities and Exchange Commission has private equity deals firmly in its sights, dampening excitement on the booming private equity market. Apparently Wall Street’s top regulator is mulling a significant increase in the amount of information private companies with 2,000 or more shareholders must disclose about their finances and operations. While most PE funds do not have enough investors to trigger the 2,000 starting gun, deals involving multiple firms could easily pass that threshold and is something for the industry to watch out for.
While the headline of this is taken from Alan Bennett’s History Boys, the principle is reflected in this piece from Private Equity News, which looks at succession in the world of private equity. While Brian Cox (the actor) was unavailable for comment, the piece looks at the disconnect between a relatively mature US market, the issue of succession still looms large in the UK.
The Financial Times looks at private equity’s push into the UK’s holiday park sector. Considered the poor cousin of the foreign holiday sojourn, operators and agents say that it has been basking in the hottest year for deals. The piece notes that private equity groups are piling in as they spotted an opportunity to merge small and sites which were relatively cheap to acquire into larger businesses, adding debt to their balances and sometimes selling off their freeholds in the process. It is so lucrative that independent owners are making “obsessive calculations” about the eye watering amount they might receive for their business by a buyout company.
Wall of money
Blackstone’s largest fund – Blackstone Real Estate Income Trust, has now raised more than $50bn since its inception five years ago. The fund is sold in increments as little as $2,500, and is used to buy rental-apartment buildings, warehouses, office buildings, casinos, and more. It mostly targets individual investors, and pays an annual yield of 4% to 5%.
According to a source, EQT expects to raise at least €20bn for the 10th edition of its main buyout fund, which would be more than 28% larger than its predecessor. The source states that it looks to further expand its US presence, but the size will not change the firm’s strategy to invest across the spectrum from startups to mature companies.
Eurazeo has announced that has raised €5.2bn across its private equity and private debt strategies in 2021, which marked a record year and a 80% increase compared to 2020. €3.1bn was raised for private equity strategies, and within this, €1.1bn was raised for growth and venture strategies. In all, 2021 saw a 125% greater fundraising total compared to the average of its last three years.
ESG-focused Swedish firm Summa Equity has closed its third fund with SEK 23bn, or €2.3bn. It was raised in a virtual process over four months, and will be used to invest in line with the UN SDGs, focusing on resource efficiency, changing demographics, and technology-enabled transformation.
|Acquisition Target||Buyer||Seller||Value||Date Announced||Region||Sector|
|Kedrion, BPL||Permira||-||Undisclosed||20/01/2022||Italy, UK||Pharmaceuticals|
|REPA||PT Holdings||Riverside||Undisclosed||20/01/2022||UK||Food Services|
|FCG Group||IK Partners||Bridgepoint||Undisclosed||19/01/2022||Sweden||Financial Services|
|Direct Commercial Limited||CBPE||-||Undisclosed||19/01/2022||UK||Financial Services|
|Carraig Insurance Company||CBPE||-||Undisclosed||19/01/2022||UK||Financial Services|
|Waste Services Group||Livingbridge||-||Undisclosed||18/01/2022||Australia||Waste Management|
|Biofarma||Ardian||White Bridge||Undisclosed||17/01/2022||Italy||Healthcare & Cosmetics|
|Flint Global||Growth Capital Partners||-||Undisclosed||17/10/2022||UK||Professional Services|
Movers and Shakers
UK & Europe
LDC has promoted Chris Handy and David Bains, to replace Richard Whitwell who retires in March
Adams Street Partners has promoted Benjamin Wallwork to partner and Yohan Hill to principal
Actis has appointed Neda Vakilian as managing director of global relationships within its investor development group. Previously Vakilian was co-head of IR for Amber Infrastructure.
Livingbridge has promoted Susie Stanford, Simon Peet and Simon Hollingsworth to the partnership
Euan Phillips and Ewan Mackenzie Smith have been appointed to Aurelius Group’s private equity team. Previously Phillips was at Hilco Capital, while Mackenzie Smith was a strategy and transactions manager at EY
From the horse’s mouth...
“Private equity is capitalism on steroids” – Ludovic Phalippou, Oxford University
“In any industry, inherent in a founder-led culture is the challenge of letting go.” – Jonathan Harvey, fund solutions, Investec gives his view on succession planning
“Don’t buy much but make sure that what you buy is good” – Christian Dior, Fashion designer, born on this day in 1905