Maitland/AMO Private Equity Monitor – 26 June 2020

26th June 2020

Worth a read


Raising the drawbridge?

The UK is strengthening its takeover defences, joining a wave of protectionism that is sweeping Europe as countries try to shield companies deemed vulnerable to unwanted approaches by foreign acquirers in the wake of pandemic lockdowns, according to Private Equity News. In particular, the UK government is moving to strengthen powers to block takeovers of companies involved in combating public health threats such as Covid-19.

The PE Money Heist

Following several articles last week covering Professor Ludovic Phalippou’s report on “The Billionaire Factory” that is private equity, Jonathan Ford of the Financial Times has also weighed in on the argument, comparing the $230bn taken in fees to Netflix’s hit Spanish show Money Heist. Ford questioned whether pension funds are getting value for their investment and whether they may be better off in other asset classes, such as US equity tracker funds.

Private equity: unleash the beast

The Wall Street Journal featured an article suggesting that “it is time to unleash the power of private equity”, but that the US government needs to throw buyout firms a lifeline in the form of low interest rates or a reduction in capital-gains tax. The authored piece from Mr Desoky of Skema Business School states that private equity firms save hundreds of businesses and thousands of jobs every year and should be encouraged to continue to do so during the coronavirus pandemic, else millions of Americans will remain out of work.

The Abraaj debacle rumbles on

A second former senior executive at the Abraaj Group is cooperating with American authorities and is expected to plead guilty to unspecified charges – so reports Private Equity News. Sev Vettivetpillai is one of six former Abraaj employees accused of racketeering and fraud at what was once one of the world’s most influential investors in emerging markets.

Private equity managers rapped across the knuckles

The Financial Times reported that the SEC has rebuked private equity and hedge fund mangers for overcharging investors and secretly favouring their higher rolling clients over other customers in “clear contravention of existing regulations”. The article notes that the criticisms by the SEC will add fuel to the debate over whether investors are treated fairly by the “handful of super-wealthy Wall Street barons who have accumulated multibillion-dollar fortunes by running opaque private equity strategies”.

Private equity in retirement plans?

The Wall Street Journal considered a problem germane to America: whether pension plans should contain private equity – an illiquid investment. The article notes that concerns have been raised as to the inclusion of buyout funds in part due to high fees and also due to a lack of transparency. But there may be a feather in the industry’s cap: earlier this month the US Labor Department issued guidance which confirmed that retirement plans can offer private equity in a diversified funds.


Wall of money


Ackman's SPAC target

Hedge fund manager, Bill Ackman, is looking to raise as much as $6.5bn in a share sale to create one of the largest buyout vehicles of its kind, what is known as a special purpose acquisition vehicle or SPAC, reports the Financial Times. The new company is aiming to seize opportunities created by the Covid-19 pandemic — anything from start-ups to private equity-backed companies or family-owned businesses in need of capital.

Nordic Capital targets largest ever fund

Nordic Capital is seeking to raise €5bn for its tenth private equity fund, which would make it the firm’s largest ever. According to a pension fund document, the fund will make investments in mid-market businesses in Northern Europe.

Amazon to launch $2bn clean energy VC fund

Tech giant Amazon has announced that it is launching a $2bn internal venture capital fund focused on technology investments that reduce the impact of climate change, called The Climate Pledge Fund. Amazon has come under fire for its environmental record in recent years and has launched a number of sustainability initiatives.

Tenzing's virtual fundraise

Despite the predominantly bleak news about Covid-19 there have also been instances of impressive innovation. Private Equity News reported that London-based Tenzing has announced that it has collected £400m for its second fund. It is the first buyout fund raised “through an entirely virtual process” and was closed in just nine weeks.

Mediobanca and Russell renew partnership

In addition to innovation, Covid-19 has also provided opportunities: Private Equity News noted that Italian investment bank Mediobanca and American fund manager Russell Investments are tying up to launch their third private markets fund. The new strategy is due to “exploit new opportunities” which arise from the market dislocation caused by the pandemic.


Deal chart


Acquisition TargetBuyerSellerValueDate AnnouncedRegionSector
EggplantKeysight TechnologiesCarlyle Group$330m, 7x return26/06/2020UKSoftware
Infrastrutture Wireless ItalianeArdian-led consortiumTelecom Italia€1.6bn25/06/2020ItalyTMT
RAM TrackingH2-Undisclosed25/06/2020UKSoftware
Matrix SCMBridgepoint-Undisclosed25/06/2020UKTMT
Normec GroupAstorgSummit PartnersUndisclosed25/06/2020NetherlandsBusiness Services
UAE gas pipelinesGlobal Infrastructure Partners, Brookfield et al-$10bn24/06/2020UAEInfrastructure
WorkhumanICG-Undisclosed, minority stake23/06/2020IrelandSoftware
Rosemont PharmaceuticalsInflexionPerrigo£156m19/06/2020UKPharmaceuticals

Movers and Shakers


Europe

PAI Partners has hired Marc Boullier as a managing director, in a boost to its senior operations team where he will lead IT and digital transformation across the firm and its portfolio companies. Previously, Boullier was COO at Mobility Work.

Invest Europe, the private equity trade body, has announced that Thierry Baudon will remain as chair of the organisation following the untimely passing of Rory Macmillan last moth. Anne Fossemalle, a director at the European Bank for Reconstruction and Development, has been appointed as chair elect for 2021-2022.

HSBC has recruited Adam Bagshaw as global co-head of advisory and investment banking coverageMr Bagshaw had spent the last 14 years at Deutsche Bank where he was co-head of corporate finance for EMEA.

North America 

Ontario Teachers’ Pension Plan Board has hired the CEO of Barclays Private Bank, Karen Frank, to lead its equities department.


From the horse’s mouth...

“There were bargains out there only for two weeks. Things have snapped back a lot.”Tony James, executive vice chairman at Blackstone Group

“Insolvency is the predictable outcome of fraud with debt.” – Carson Block, founder of Muddy Waters on Wirecard

“If you’re going to play at all, you’re out to win.”Derek Jeter, US baseball player born on this day in 1974