Maitland/AMO Private Equity Monitor – 24 January 2020

24th January 2020

Worth a read

Financial engineering. What, us?

The Financial Times’ Lex reports that private equity titans have pulled a bit of a fast one. Last year a number of large, listed alternative asset managers formally changed their tax status (voila!) and became full  corporate taxpayers. And yes, they took a bit of a hit to their P&L accounts but if you have a gander at Carlyle and Blackstone, their shares have more than doubled. And their shareholders are smiling because of the larger dividends. But isn’t it all a bit, well, rich?

PE firms look beyond the White Cliffs of Dover for returns

The PE industry in the UK is starting to recognise the slightly slower pace homegrown returns may bring in a post Brexit world. The Times reports that the UK’s private equity industry has stepped up its investments overseas in an attempt to get some sun, al fresco dining and higher returns than in grey, cold, low-return environment post Brexit Britain. Accounting group BDO has reported that the potential economic disruption of Brexit led to more funds to look beyond the White Cliffs of Dover.

One apple too many for New York's favourite grocery store

A pretty damning report from Bloomberg Opinion which lays the blame of every “new retail disaster” squarely at the door of a private equity firm. And if you want to go and buy an apple or two in the… Big Apple, well, your choices are now more limited. New York’s famed, fabled and beloved Fairway Market grocery chain filed for liquidation. This is what piqued our author’s ire. You see this “quintessential” New York staple made the “mistake” of finding Sterling Investment Partners who put in $150m in return for an 80% stake – but most of that was debt. A clash of ambitions between the grandson of the founders and Sterling meant that Sterling won. The result was one of chaos and a sad demise of a New York staple.

Impact investments: talk appears to be cheap

The zeitgeist of our age can be summed up in two words of alliterative assonance: impact investments. Everyone loves a bit of “ii”. It’s been easy to raise money – Private Equity News reports that Pitchbook puts the amount at some £5.4bn. But when it comes to spending, Shirley Bassey wouldn’t really have much to sing about – PE funds aren’t quite such big spenders.  The problem is finding the right targets: finding a decent return as well as having a real impact is proving trickier than thought.

I'll think about it...

Secondary buyers are enjoying the luxury of choice to the extent that they’re almost becoming rather fussy. Private Equity News reports that as the volume of assets flooding the market continues to swell, buyers are becoming more discerning as to what deals they should pursue. Notably though, the rapid pace of investment through the first three quarters of 2019 forced some firms to put the brakes on later in the year.

The domain name, the NGO and the private equity company

So much for Sir Tim Berners Lee, who’s altruistic decision to release the source code of the world wide web for free – and make it an open platform for all. Ethos Capital, a new young upstart which was founded last year has acquired the domain name .org. Cue much harrumphing from a group of influential NGOs. Private Equity News notes that backlash comes amid mounting concerns that the Internet Society’s plans to offload its Public Interest Registry could actually drive up the price of using the .org domain name for many of the globe’s leading not for profit organisations.

Wall of money

Hg targets $4bn for latest fund

UK-headquartered private equity firm Hg (formerly HgCapital), which last year announced its expansion into the US, is said to be raising for its latest Saturn fund, which would be its largest ever. Hg targets investments in software and services businesses and this particular suite of funds looks at companies with an EV larger than £1bn.

TPG nears impact target

TPG Capital’s Rise Fund II is said to be moving closer to its target of $2.5bn, with the fund having raised nearly $1.8bn at the end of last year. Pitchbook data shows that £5.4bn was raised by impact investing funds globally in 2019, highlighting investor demand for sustainable investments.

Asterion raises over €1bn for European infrastructure

Asterion Industrial Partners, based in Spain, has raised €1.1bn for its first fund, beating the initial target of €850m. The firm has already completed four investments, including the take-private of AMP Clean Energy in the United Kingdom.

Bamboo to run SDG500 fund

Bamboo Capital is set to manage a new $500m fund dedicated to achieve the sustainable development goals. The fund will use debt and equity to bridge the financing gap between seed and growth stage for businesses in emerging and frontier markets.

Deal chart

Acquisition TargetBuyerSellerValueDate AnnouncedRegionSector
Intelerad Medical SystemsHgNovacapUndisclosed23/01/2020CanadaHealthcare
GEDHIK Investment Partners-Undisclosed23/01/2020FranceEducation
ExxeliaHLD EuropeIK Investment PartnersUndisclosed22/01/2020FranceManufacturing
Duff & PhelpsStone Point Capital, Further Global Capital ManagementPermira$4.2bn22/01/2020USProfessional Services
KeoghsDaviesLDCUndisclosed21/01/2020UKProfessional Services
Sfoglia TorinoPerrino familyFondo Agroalimentare ItalianoUndisclosed21/01/2020ItalyFood & Drink
Ermitage International School of FrancePlatina Equity, Kartesia-Undisclosed20/01/2020FranceEducation
Zadig & VoltairePeninsula CapitalTA AssociatesUndisclosed20/01/2020FranceFashion
Santé Cie GroupArdian, HLD, UI Gestion-Undisclosed20/01/2020FranceHealthcare
OpportunityOmnes-c. €14m17/01/2020FranceSoftware

Movers and Shakers

UK & Europe

Mayfair Equity Partners has hired Neil Price as managing director from Lloyds Bank. Previously, Price was head of strategic debt finance and capital structure advisory at Lloyds.

Stephen Green, Richard Tudor have set up Averna Capital, a new private equity firm targeting European business. The pair had worked together at Apax PartnersPierre-Edouard Harant joins them from RPD International.

LLCP has hired Josh Kaufman and Lucan Sandmann as managing director and associate director. They will be based in London and work on structured equity investments across the UK and Northern Europe.

Hamilton Lane has promoted Jim Strang to the newly created position of chairman for EMEA while Richard Hope who is currently a managing director will succeed Strang as leader of the EMEA business and head of the London office.

North America

Florian Kawohl has been appointed managing director of HIG Bayside Capital, the distressed debt and special situations arm of HIG Capital.

From the horse’s mouth...

The thought of detailed portfolio company information, getting to the public at large, that’s a scary thought. There’s really no value to it and in many ways [it] can injure our companies,” – Howard Ross, partner at LLR Partners feels a little queasy at the urge for increased transparency in the industry

We’re in a post-private equity world.” – Ken Young, partner at law firm Dechert, gives his view on the growing number of private credit businesses in private equity firms

“I still need practice in enjoying the fruits of success.” – Neil Diamond, American singer-songwriter born on this day in 1941