Maitland/AMO Private Equity Monitor – 30 October 2020

30th October 2020

Worth a read


One size must fit all

The world’s largest asset manager BlackRock has called for an end to the “alphabet soup” of standards used by companies to showcase their sustainability efforts, to be replaced by a globally recognised framework. FTfm reported yesterday that the firm has warned that the current “proliferation of disclosure initiatives…has led to duplicative efforts by reporters and a lack of consistent and comparable data”. Despite five sustainability organisations, including the CDP, stating they would work together to develop a global system, BlackRock has thrown its weight behind the approach of the IFRS foundation.

The succession plan

The Financial Times featured an in-depth piece this week on the succession planning that has taken place in recent years at Apollo Global Management, in an attempt to imagine the firm beyond Leon Black. The article pointed to the appointment of Scott Kleinman and Jim Zelter as co-presidents to run the private equity and credit businesses’ investment activity respectively, as well as the firm’s overall shift from riskier leveraged buyout funds to the use of permanent capital and a vast credit platform.

The tax boogeyman

According to Reuters Breakingviews, private equity’s “recipe for creating riches has two main ingredients: debt and tax perks” and Presidential candidate Joe Biden poses a serious risk to the continuation of the second of these. Biden’s assault focuses on capital gains tax, which currently sits at a lower level than income tax for rich Americans, meaning buyout executives can collect “hefty rewards” in the form of carried interest. The article suggested that all but the most “blockbuster” firms will struggle to convince investors to pay more for the privilege of investing with them.

Private for public

A partner at London-headquartered Cinven has suggested that private equity firms are likely to be a much larger source of funding for public companies in the next decade as a result of the financing issues caused by the coronavirus pandemic. Private Equity International reported that Jorge Quemada, speaking at the Spanish Venture Capital & Private Equity Associations’s conference, said that private equity funds will be able to add more value for listed businesses as they get larger.

Vista urges calm

As the firm grapples with the fallout of the recent $140m tax probe settlement by its founder Robert Smith, Vista Equity Partners has attempted to calm investors over the potential exit of co-founder Brian Sheth. The Wall Street Journal wrote that Mr Sheth is responsible for much of the deal activity and agreed to delay his departure from the firm, reported as early as December last year, until the tax issue had been sorted.

Cautious optimism in distress

The Financial Times featured an analysis of the opportunities for distressed debt and special situations funds that have been created by the coronavirus pandemic and subsequent economic turmoil, an area of the market that had been muted in the past decade or so due to low interest rates and a resilient global economy. While some industry players like Strategic Value Partners see the current opportunity set as “rich”, others are more guarded due to the reaction by central banks to prop up global economies.


Wall of money


Thoma Bravo raises over $22bn in record tech-fundraising haul

Thoma Bravo has raised an eyewatering $22.8bn in what is one of the largest tech focused private equity fundraising hauls to date. The Chicago-based private equity firm’s flagship buyout fund is now 41% larger than its predecessor, which closed with $12.6bn in January last year. Commentators note that at this size, the new flagship fund ranks as the largest tech-focused buyout fund ever raised by an independent private equity firm and pips rival software focused PE firm Vista Equity Partners to the post. The PE firm also collected $3.9bn for its Thomas Bravo Discover Fund which backs midsize enterprise software and technology businesses, while also hoovering up $1.1bn for the Thoma Bravo Explore Fund, which targets small businesses in the sector.

Blackstone raises €8bn for its second long-life fund

Blackstone Group has collected an impressive $8.2bn for its long-hold private equity fund. According to a regulatory finding, as at 10 March 2020, it had not yet received any commitments to the new fund meaning that it raised most of the funds during the teeth of the pandemic.

Castik Capital collects €1.25bn for its second long-term fund

Continuing with the theme of long-term funds, Luxembourg based Castik Capital has reached the final close of its second buyout fund at a hard cap of €1.25bn. The fund aims to make up to seven investments in continental Europe of between €200m-€700m with roughly €100m – €300m committed per deal.

Schroders' Adveq Europe in the market

The private equity arm of Schroders has launched a new European strategy which seeks to raise $1bn. Its main targets are small and mid sized buyouts including growth, turnaround and sector specialist opportunities.

EMH Partners raise €650m for second growth fund

Munich based EMH Partners raised €650m for a new growth fund focused on midsize companies across the DACH region. Despite travel restrictions, EMH still reached the fund’s hard cap – and attracted new LPs.


Deal chart


Acquisition TargetBuyerSellerValueDate AnnouncedRegionSector
Market PayAnaCap Financial PartnersCarrefour€300m30/10/2020FrancePayments
FlenderThe Carlyle GroupSiemens€2bn29/10/2020GermanyIndustrials
HeadFirstKartesia-€75m29/10/2020NetherlandsSoftware
EWMarlowe PLCLDC£59m29/10/2020UKProfessional Services
Eureka Education GroupNaxicap PartnersAbénex, Finoli GrouUndisclosed29/10/2020FranceEducation
VIPRTenzing-Undisclosed27/10/2020UKSoftware
Third FinancialGrafton Capital-£7m27/10/2020UKFinancial Services
CalastoneThe Carlyle GroupOctopus Ventures, AccelUndisclosed26/10/2020UKFinancial Services
Logistics portfolioThe Carlyle Group-Undisclosed26/10/2020EuropeReal Estate
TotalmobileBowmark CapitalHorizon CapitalUndisclosed26/10/2020UKTMT

Movers and Shakers


Europe

Ardian has hired two new managing directors, Scarlett Omar Broca and Heiko Geissler, from Goldman Sachs and Montagu Private Equity respectively.

Baird Investment Banking has hired Andrew Nicholson to lead its global healthcare team from London. He joins from KPMG.

North America

Pantheon Ventures has appointed former GoldPoint Partners executive Matt Cashion as its new co-investment partner.


From the horse’s mouth...

I’ve reached a goodly age and  my objectives are quite limited: keeping fit and enjoying life. There’s no point in being heroic about it.” – Jon Moulton, private equity veteran looks to his next chapter 

“It’s a moment in time where the opportunity set is so rich.” – Victor Khosla, head of Strategic Value Partners on the current environment for distressed debt investors

To believe all men honest is folly. To believe none is something worse.” – John Adams, Founding Father and second President of the United States of America, born on this day in 1735