Maitland/AMO Private Equity Monitor – 26 February 2021

26th February 2021

Maitland/AMO is pleased to announce that this week we were named the City PR Agency of the Year by the PRCA, the industry’s leading trade association, in recognition of the excellent work that was carried out throughout 2020, thanks to our strong partnerships with our clients and the hard work and dedication of the whole team. Financial services and private equity have always been a core practice for the business, but if you’d like any more information please do not hesitate to contact us. 

Worth a read

U.S. Crackdown on Fraud

Private equity’s move into business that rely on taxpayer money, such as health care, has exposed them to “so-called false-claims actions, where corporate whistle-blowers bring allegations of civil fraud to the attention of the federal government.” so far, only a handful of cases have emerged. But experts expect more. “The ultimate safeguard you have is the threat of enforcement,” said William McSwain, who left his post as Philadelphia’s top federal prosecutor in January to join law firm Duane Morris. “That won’t change under President Biden; it will intensify.”

How Fair are PE Funds' Valuations?

A study published this month in the Journal of Corporate Finance has found that the pressure to raise money in a follow-on fundraising could drive some general partners, no matter their reputation, to take “shortcuts” and manipulate performance numbers. During the fundraising process, PE firms are most susceptible to “inflate” the numbers in order to make them look good to investors.

Private Equity and the Entertainment Industry

Private Equity Wire suggests that “combining the rigorous financial expertise of private equity firms with the innovation and fearless ambition of creatives” can produce significant benefits. Joseph Lee, Head of Asia at Atwater Capital, said that “overall, private equity firms should not only be interested in, but thoroughly excited about unlocking investment opportunities in this dynamic and rewarding” entertainment industry. Joseph, who has extensive experience in this sector, also suggested that while the opportunities are “plentiful, investment firms should endeavour to adopt a different mentality to the one they may use for the more commonly PE-backed businesses in their portfolio.”

Secondaries Set for Rapid Rebound

The hiatus in private equity deal activity following Covid-19 lockdowns last year may have weighed heavily on the secondaries market, but most fund managers are now confident a rapid rebound is on the way. A survey by Investec has found that more than 77% of secondary fund managers believe deal flow will return to 2018 levels within the next 12 months. Additionally, none of those surveyed expect this return to take longer than 24 months.

Private Equity Must Diversify

Blackstone’s Verdun Perry has said the private equity industry needs to step up when it comes to diversifying its ranks and increase the number of places where it seeks out talent. The largest alternative asset manager, which recruited from just nine schools in 2015, now searches for future employees at 44 of them.

ESG Hits the Mainstream for European PE

In January there was €7.48bn of European sponsored loan issuance, according to LCD, which is equivalent to nearly 20% of the total private equity-backed volume recorded in the whole of 2020. In addition to this, for PE firms, ESG became a key theme in 2020. “It can be quite difficult to measure the impact of ESG, but some studies have cited companies that are more focused on these issues are more profitable,” says Cinven’s Maydon. “Private equity is profit-driven, we’re focused on generating returns and we’re always asking what is the upside? Where is the value uplift in a business? There’s now more evidence that this is the right approach.”

Wall of money

Carlyle Group looks to raise $130bn

The Carlyle Group has reached for the sky with its fundraising prospects and has set its target at $130bn and hopes to reach it by 2024. The funds are expected to be drawn from existing groups like global equity and private equity, which include bets in real estate and natural resources.

Hellman & Friedman pledges over $1bn to its own fund

Hellman & Friedman plans to commit over $1bn of its own capital to its latest fund. The fund has a $20bn target and at that amount, would be 21% larger than its predecessor, which closed on $16.5bn in 2018.

Tikehau Capital to fund energy transition

Paris based investment firm Tikehau Capital has amassed over €1bn for its energy transition fund. The firm had initially expected to raise between €750bn and €1bn and that exceeding these targets reflects the need to “strengthen companies’ equity bases to move faster with energy transition”.

Deal chart

Acquisition TargetBuyerSellerValueDate AnnouncedRegionSector
FairstoneTA AssociatesSynova CapitalUndisclosed, 4.5x return25/02/2021UKWealth Management
GBA GroupArdianQuadriga CapitalUndisclosed25/02/2021GermanySciences
InnovyzeAutodeskEQTc. $1bn24/02/2021USInfrastructure
SchollYellow Wood PartnersReckitt BenckiserUndisclosed24/02/2021FranceHealthcare
AteraK1 Investment Management-Undisclosed24/02/2021IsraelSoftware
Ardagh GroupGores Group-$8.5bn23/02/2021LuxembourgPackaging
IWSRBowmark CapitalFPE CapitalUndisclosed23/02/2021UKFood & Drink
WhitePressRTB HouseInnova CapitalUndisclosed23/02/2021PolandMarketing
FormuesIK Investment Partners, ICG-Undisclosed22/02/2021NorwayWealth Management
AmeosICGThe Carlyle GroupUndisclosed22/02/2021SwitzerlandHealthcare
Residential assetsHIG Capital-Undisclosed19/02/2021PortugalReal Estate

Movers and Shakers

UK & Europe

HIG Capital has hired Ignacio Blasco from Houlihan Lokey as managing director of its WhiteHorse direct lending team based in Madrid.

17Capital has hired Pauline Chatin as an investor relations and fundraising director with a focus on French-speaking countries. Chatin joins from Lyxor Asset Management.

Mid-market private equity firm A&M Capital Europe has appointed Alessandro Luongo as managing director. He joins from Investindustrial.

August Equity has hired Greg Walsh, Mark Stevens and Michael Coates to join its investment team. They join from PwC, Endless and Grant Thornton respectively.

North America

UK-based ECI Partners has announced the opening of a New York office, which will be led by Brett Prentz. Prentz previously held consulting roles at Bain and Teneo.

Former US House of Representatives speaker Paul Ryan will join Solamere Capital after partnering with the firm last year on the launch of a spac.

From the horse’s mouth...

“Above all, in a sector notorious for proprietary deal sourcing, having a solid reputation and being known as enjoyable to work with, really pays.” – Joseph Lee, Head of Asia, Atwater Capital. 

“You’re seeing a lot of people in the middle market now start to recognize that having representation from women and minorities is incredibly important to the sustainability of the business.”Verdun Perry, Blackstone Group. 

Money can’t buy love, but it improves your bargaining position“- Christopher (Kit) Marlowe, English playwright, poet, and dramatist, born on this day in 1564.