Maitland/AMO Private Equity Monitor – 25 September 2020

25th September 2020

Worth a read

Do companies flourish under private equity ownership?

That’s a question posed by The Times which uses Gardaworld’s hostile bid for G4S to reignite the debate as to whether or not buyout companies are good for British businesses. The piece suggested that the buyout industry has had a “chequered reputation that stretches back for decades”. The piece is fairly negative in tone, mentioning a revival of unpopular dividend recapitalisations in America and posits that some companies struggle under their debt loads once the buyout houses have headed for the door. However, others like Ludovic Phalippou from Oxford’s Said Business School cautioned that it is “not easy to establish a causal link” between a company’s time under private equity ownership and any later problems it might suffer.

IRR - what does it mean?

Jonathan Ford has written an opinion piece in The Financial Times in which he takes up the baton of Professor Phalippou’s crusade against IRR as indicative of a general opacity in the private equity industry as a whole. Ford argued that it is “in the mathematical nature of an IRR calculation to overstate long-run outcomes” and much of a buyout firm’s figures gives a “misleading picture”. This leads Mr Ford to conclude that if they want a regular Joe to invest, then buyout firms have to subject themselves to “the same strict disclosure requirements” that the SEC sets for US mutual funds.

Finding the tipping point

According to the latest LP Sentiment Update by placement agent Campbell Lutyens, GPs are finding it increasingly difficult to establish whether an LP is likely to commit capital to a fund when due diligence is largely conducted over video conference. Private Equity International reported that the research found it was harder to spot the “tipping point” for investors and to gauge whether they were just window shopping. It noted that, during the coronavirus, the decision to take an opportunity to investment committee was becoming the “key indicator of interest”.

Pass the debt parcel

The Financial Times reported that creditors are giving up their right to have their loans repaid when a company is sold. Private equity companies are the beneficiaries of so-called portability language into loan documentation, as the debt would transfer with the company to its new owner- thereby making it easier for private equity to sell companies which are debt heavy. However the piece notes that this removes an “important potential check on leverage” in the financial system.

Proprietary testing

The Times featured an article about businesses in the UK sidestepping the UK government’s coronavirus testing system by developing their own programmes for employees. Private equity firms Advent and Blackstone are highlighted, with the former providing fortnightly home-testing kits and requiring employees to have tested negative before returning to the office and the latter ensuring employees register themselves as symptomless on an app before coming in.

Wall of money

Blackstone closes largest ever RE debt fund

Blackstone Group has announced a final close of $8bn for its real estate debt fund, making it the largest fund of its kind ever. The firm began fundraising in the spring of 2019 and said that the coronavirus pandemic actually boosted its efforts on the fundraising trail.

SwanCap targets €400m

SwanCap Partners has said that it is targeting a first close of its fifth fund of funds by the end of October. The fund is a co-mingled strategy combining primary, secondary and co-investment transactions between €10m and €30m.

EOS Partners closes debt fund

The firm founded by former senior executives at buyout houses EQT and Hg, namely Peter Winkler, Philipp Wegener and Thomas Roehrl, has closed EOS Fund I on its €175m hard-cap, €50m more than the original target. The capital raised will target companies with an EBITDA of between €1.5m and €6m.

Deal chart

Acquisition TargetBuyerSellerValueDate AnnouncedRegionSector
SynagroWest Street Infrastructure Partners IIIEQTUndisclosed24/09/2020SwedenWaste Management
Transparity SolutionsBeech Tree Private Equity-Undisclosed24/09/2020UKSoftware
Reliance IndustriesKKR-$755m23/09/2020IndiaTMT
SalsifyWarburg Pincus-led Series E-$155m23/09/2020USMarketing
A-Plan GroupHowdenHgUndisclosed23/09/2020UKInsurance
dLocal GroupGeneral Atlantic-led financing-$200m22/09/2020UruguayFintech
NeuraxpharmPermiraApax PartnersUndisclosed22/09/2020GermanyPharmaceuticals
Calnex SolutionsBGF-Undisclosed22/09/2020UKTMT

Movers and Shakers


The private equity arm of Lloyds Banking Group, LDC, has hired Mark Howden as an investment director from Bentley Motors to strengthen the firm’s activities in the Midlands.

Paladin Capital has recruited Ciaran Martin as a managing director in London to focus on the European cybersecurity market. He joins from the UK Government’s National Cyber Security Centre, where he was CEO.

Eurazeo has announced that Sophie Flak, currently Managing Partner, CSR and Digital, will be promoted to its Executive Committee. Sophie will be responsible for driving Eurazeo’s new O+ ESG Strategy.

Alantra has expanded its investment banking team with the addition of César Ciriza as managing partner. Ciriza will head the firm’s infrastructure and energy activity.

North America

Hamilton Lane has named long-time managing director Paul Yett as its first head of ESG investing. He will oversee ESG integration across the firm’s investment teams.

From the horse’s mouth...

It is time for the SEC to ban the use of the IRR by private equity managers. It makes absolutely no sense.” – Professor Ludovic Phalippou, of Oxford’s Said Business School calls upon the industry to eschew IRR as a metric

Portability makes a company a much more attractive opportunity for buyers because they can be assured that financing is in place already.” – Charles Tricomi, head of leveraged loan research at Xtract Research on the benefits of portability 

“What we’re seeing through Covid-19 is the world can change on a dime, and it can change during your hold period.” – Megan Starr, head of impact at The Carlyle Group on the need for investment planning