Maitland/AMO Private Equity Monitor – 22 May 2020

22nd May 2020

Worth a read


A tricky debut

Private Equity News wrote that the coronavirus is making it even more difficult to raise debut funds as investors are increasingly turning to trusted names with a proven track record. According to data from Preqin, first-time funds were already at a record low as a percentage of the funds raised globally and it is predicted that the figure is unlikely to get better, as the travel restrictions and lockdowns make it impossible to get into a room with new LPs.

No support from the state

Private equity-owned companies in the UK and Europe are missing out on the wave of state-backed Covid-19 loans because of the way the industry has relied on financial engineering that has cut company tax bills but has saddled them with debt, reported the Financial Times. EU state-aid rules say companies deemed to be in financial distress, whose accumulated losses exceed 50 per cent of their share capital, should not be able to access the support.

Chinese deal drought

The Financial Times featured a detailed analysis of the Chinese M&A market and the fact that, despite the number of distressed companies and situations in the country as a result of the coronavirus, there has as yet only been a “trickle” of deals rather than a flood. According to Refinitiv data, private equity investments in China dropped from $77.3bn in 2018 to $49.7bn in 2019, with only $6.9bn invested so far this year.

I need a doctor

Looking across the pond, Bloomberg contained an in-depth piece on how private equity is “ruining American health care”. The article takes a critical view of private equity firms which “saw the explosive growth of health-care spending and have been buying up physician staffing companies, surgery centers and everything else in sight”. Noting that there is nothing “inherently wrong with this”, the article opined that some doctors say that the private equity playbook doesn’t really gel with medicine when “you’re dealing with people’s health and their lives”.

Private equity piles into Jio

KKR has become the latest private equity firm to invest in Mukesh Ambani’s Jio Platforms, the digital services arm of Reliance Industries, following the lead of General Atlantic, Vista Equity, Silver Lake and tech giant Facebook. The Financial Times reported that KKR will buy a $1.5bn in the business, with Abu Dhabi’s sovereign wealth fund Mubadala also rumoured to be considering a $1.2bn stake as the business looks to shore up its finances in the face of the coronavirus.


Wall of money


Ares in fighting talk as it targets $9bn for latest fund

Ares Management Corp is targeting its largest commingled fund in the company’s history with a hefty $9bn target for its latest European debt fund.

Chief executive Michael Arougheti suggested that the firm’s capital deployment is likely to pick up across various credit and distressed investing strategies in light of the ongoing market turmoil caused by Covid-19.

Dyal Capital ups the ante in a $2bn target

Dyal Capital is looking to raise $2bn to dribble all the way through the US National Basketball Association. sources say that Dyal intends to hold a first close over the summer.

Lateset credit raise for Apollo collects $1.75bn

Apollo Global Management has raised its latest credit fund to capitalise on distress caused by Covid-19. The fund was fully raised in roughly eight weeks and closed at $1.75bn.


Deal chart


Acquisition TargetBuyerSellerValueDate AnnouncedRegionSector
Jio PlatformsKKR-$1.5bn22/05/2020IndiaTMT
GHL BankFirst National Bank GhanaActisUndisclosed21/05/2020GhanaFinancial Services
ConnexasAddSecureHorizon CapitalUndisclosed21/05/2020UKTransport
Vantage Education-InvisionUndisclosed21/05/2020SwitzerlandEducation
Klikpojisteni.czTA AssociatesBenson OakUndisclosed20/05/2020AmericaFinancial Services
ABC MoriniMandarin Capital Partners-Undisclosed20/05/2020ItalyFashion
BiofuturOmnes-€60m20/05/2020FranceBiotech
CarTrawlerTowerBrook Capital Partners->€100m19/05/2020IrelandTransport
ActiGraphArchiMed-Undisclosed, 75% stake18/05/2020USMedtech
Jio PlatformsGeneral Atlantic-$870m18/05/2020IndiaTMT
Lamina TechnologiesTriton-€448m15/05/2020SwitzerlandManufacturing

Movers and Shakers


Europe

Palatine Private Equity has hired Tristan Craddock as a partner in its impact team from Rutland Partners, where he spent 12 years.

Miura Private Equity has strengthened its management team with the promotion of Jordi Alegre to managing partner and Fernando Clúa to partner.

Charterhouse Capital Partners has hired Helena Malchione as an investment manager from Lion Capital, also bringing on board Betty AndersonSimon Puybouffat and Guillaume Corlay van der Schaal as investment associates and Victoria Proctor as head of talent.

Investment bank GCA Altium has announced the hire of David Riemenschneider as a senior advisor for automotive technology and mobility in France. Riemenschneider was previously CEO of Clifford Thomas and worked for Ford‘s Aftersales business.

North America

Citigroup has announced the launch of a new unit within its investment banking division focused on sustainability. The unit will be led by Keith Tuffley and Bridget Fawcett.

Asia

Ravi Thakran, managing partner for L Catterton in Asia, is said to be leaving the firm.


From the horse’s mouth...

Some of the companies coming out in financial distress now were already struggling before Covid-19 sparked closures and the downturn, but this sure accelerated things” – Aaron Cheris, head of the Americas retail team at Bain & Co analysing how portfolio companies are faring 

“History is filled with examples where rulers have, in moments of crisis, resorted to debasing the coinage.” – Hedge fund manager Crispin Odey on the potential for governments to ban private ownership of gold

“I take a simple view of life: keep your eyes open and get on with it.” – Laurence Olivier, British actor born on this day in 1907