Maitland/AMO Private Equity Monitor – 31 July 2020
Worth a read
“The barbarians are crying foul”, wrote Sujeet Indeep of the Financial Times this week, and complaining about the actions taken by rival creditors in company restructuring during the coronavirus. The pandemic has led to a “scrambling of traditional roles” which means that private equity groups are increasingly looking to their growing credit arms to lend to distressed companies and that distressed debt investors like Elliott are starting buyout funds.
The Sunday Telegraph last weekend suggested that “private equity firms must now prove their strength” and pick up where Rishi Sunak’s emergency loans left off. The article stated that buyout groups should draw comparisons with the financial crisis of 2008, where those funds who rushed in to do deals tended to do badly, but those who waited were able to provide vital capital to struggling businesses and, ultimately, provide greater outcomes for investors.
The Wall Street Journal yesterday reported that Apollo Global Management’s second quarter earnings rose on the back of rising values in its private equity portfolio compared with a trickier first quarter this year during the coronavirus pandemic. The firm’s corporate credit portfolio also climbed by 7.7% as assets under management exceeded $400bn for the first time.
The Financial Times wrote on the recent tenth anniversary of the Dodd-Frank Act which, among its lesser-known features, also forced hedge funds and private equity firms to register as investment advisers, subjecting them to the scrutiny of the SEC’s regulation. Then, last month, the SEC’s OCIE published a “risk alert” to help these firms stay on top of regulations and bring investors up to speed on areas of misconduct. While this has not led to increased scrutiny, the risk alert has highlighted the need for continued, improved transparency in fees and expenses, and an enhanced focus on strong fiduciary duties.
Wall of money
Antin Infrastructure Partners has closed its largest ever fund on €6.5bn as it seeks to expand into North America. The fund beat its original target of €5.5bn and is almost double the size of the predecessor.
Carlyle Group has collected at least $1.84bn for its latest long-lasting investment fund, according to an SEC filing. It has received commitments from at least 21 investors so far.
Madrid-based Azora has raised €680m for a new fund focused on hotel investments around the Mediterranean, surpassing its initial target of €600m. The fund has a €750m hard-cap and will predominantly invest in Spanish leisure hotel opportunities.
Tikehau Capital subsidiary Ace has held a first close of €630m on a new aeronautics fund, which has received a €200m commitment from the French state. The fund is targeting at least €1bn and received €230m from Tikehau Capital.
|Acquisition Target||Buyer||Seller||Value||Date Announced||Region||Sector|
|Porterhouse Medical Communications||Waterland Private Equity||-||Undisclosed||31/07/2020||UK||Healthcare|
|Education First Kids & Teens||Permira||-||Undisclosed||30/07/2020||Switzerland||Education|
|Finaxy||Ardian||Equistone Partners||Undisclosed||30/07/2020||France||Financial Services|
|SOC Telemed||Shulman Ventures-backed blank cheque company||Warburg Pincus||Undisclosed||30/07/2020||US||Healthcare|
|Noden Pharma||Stanley Capital||-||Undisclosed||30/07/2020||Ireland||Pharmaceuticals|
|IMA||BC Partners||-||Undisclosed, €2.9bn EV||29/07/2020||Italy||Manufacturing|
|Community Fibre||Warburg Pincus, DTCP||-||Undisclosed||29/07/2020||UK||Telecoms|
|Hornetsecurity Group||Providence Strategic Growth, Verdane||-||Undisclosed||29/07/2020||Germany||Cybersecurity|
|Leupold and Schneller||Waterland Private Equity||-||Undisclosed||29/07/2020||Germany||Packaging|
|Thought Machine||Eurazeo, British Patient Capital, SEB||-||$125m||28/07/2020||UK||Fintech|
|Aposan||Santé Cie Group||IK Investment Partners||Undisclosed, 4x return||27/07/2020||Germany||Pharmaceuticals|
|TeleClinic||Zur Rose||Idinvest Partners||Undisclosed, 40% IRR||24/07/2020||Germany||Healthcare|
Movers and Shakers
Citigroup has launched a team in London focused on equity raising for private companies and special purpose acquisition companies (or Spacs), which will be made up of five investment bankers.
Edward Green, Nassim Cherchali and Tasilo Arnhold have been promoted to partner at AnaCap and will also join the the investment committee as voting members for private equity and credit.
Placement agency BerchWood Partners has hired Vic Koetcha from Argo Capital to lead the firm’s distribution efforts across EMEA from London. BerchWood also recruited Cory Osetkowski from BNP Paribas as an associate in its New York office.
TPG has hired Michael Woolhouse as a partner to launch a secondaries strategy for the firm in both the US and Europe. Woolhouse joins from CPPIB and will be based in Toronto.
From the horse’s mouth...
“Great brands are built over the long term, but private equity takes a short-term view and to hell with the consequences — running businesses very hot and stripping out costs works near-term, but leaves a hollowed-out husk.” – Peter Williams, co-founder of collapsed fashion brand Jack Wills, criticises the role of private equity in the high street’s demise
“Private equity will come back to the high street. It always does.” – Claire Madden, managing partner at Connection Capital
“The poor are discussed as this homogeneous mash, like porridge. The idea that they might be individuals, and be where they are for very different, diverse reasons, again seems to escape some people.” – J.K. Rowling, British author born on this day in 1965