Maitland/AMO Private Equity Monitor – 7 June 2019
Worth a read
It’s the sort of thing about which Mel Brooks would have composed a musical. Like The Producers. Buy companies which languish at the bottom of the ESG pile, flip them around and sell for a song following much needed improvement. Lovely jubbly. But Private Equity News writes that it’s not just about finding the black sheep of the ESG family and making higher returns. The sphere of influence has changed: ESG, once a niche happy add-on has swiftly supplanted the gas guzzlers and cigar chompers to become the bedrock of many PE firms. And inside a fairly crowded market, firms are trying to think as innovatively as possible in order to differentiate themselves from other ESG offerings, bowing to investors’ demands. Interestingly it’s not seen as a zero-sum gain: many houses don’t have to sacrifice financial performance at the altar of non-financial impact.
It’s a bit like interest rates and bonds. When one goes up, the other comes down. And so too for financial markets: when traditional mainstays of financial markets like investment banks go down. Private equity firms though, go up. The Financial Times makes the point that private equity’s ascendance reflects the shift in the balance of power caused by the financial crisis. The article makes the point that Kirkland & Ellis, an American law firm which was hitherto renowned for its litigation prowess has latched onto the private equity jet and become a behemoth of a law firm and holds the crown for the highest grossing law firm in the world with revenues at $3.7bn last year. The chaos of 2008 brought clarity to the Chicago headquartered firm in terms of its understanding of private equity’s potential as an asset class and, one partner just about concedes, a little bit of luck.
Celebrated and celebrity chef, Alain Ducasse, who has recently opened “Le Chocolat” just a short stroll away from our offices (alas he doesn’t do Deliveroo), has sold a majority stake in his cookery schools business to private equity firm, Eurazeo. But, before other investment houses start working up an appetite for the potential sell off of his restaurant business, I’m afraid that for now, that seems to be off the menu. The Financial Times reports that Mr Ducasse’s reluctance to sell his restaurants to private equity firms echo last week’s piece in the same publication by British restaurateur, Jeremy King, who also shied away from involving private equity firms.
To float or not to float. That is the question. Well it certainly is for a number of publicly traded private equity firms. And many of them have a point: they feel that their stock is unfairly undervalued. America’s Observer writes on the dichotomy between private equity firms’ business models and those which are publicly traded. The article explores the pros and cons of listing and rues the fact that the market has not yet caught up with the value of prime assets.
If you’re looking for a quick fix in the private equity world, have a little shopping spree. Real Deals notes that European private equity continues to favour bolt-ons if they are after swift growth. According to a recent report, there was an 8% uplift of firms undertaking add-ons in 2018 as opposed to 2017. The UK and Ireland remain the most active region for add-ons which, some say, look like something of a silver lining against a cumulus Brexit cloud of uncertainty.
Wall of money
Advent International has raised $17.5bn for its latest buyout fund, one of the largest amounts ever raised for leveraged buyouts and a record for the company. The fund surpassed its $16bn goal and will predominantly target North America and Europe.
A group of international investors and entrepreneurs have launched a climate endowment fund with a goal of €40bn assets under management over 30 years. The fund will be headquartered in Berlin and will start fundraising in September.
Permira will soon reach the final close of its growth fund at around $1.7bn, they have currently raised at least $1.44bn for Permira Growth Opportunities I LP 1.
Glenmont Partners has closed its Clean Energy Fund III at €850m, in excess of its original €600m target.The fund will focus on infrastructure deals and counts a number of UK local authority pension plans among its investors.
|Acquisition Target||Buyer||Seller||Value||Date Announced||Region||Sector|
|Loch Lomond Group||Hillhouse Capital Management||Exponent Private Equity||Undisclosed||06/06/2019||UK||Food & Drink|
|Knjaz Miloš||PepsiCo & Karlovarské Minerální Vody||Mid Europa Partners||Undisclosed, 5x return||05/06/2019||Serbia||Food & Drink|
|Intergas||Rheem||Bregal Freshstream||Undisclosed, c. 3x return||05/06/2019||Netherlands||Heating & Cooling|
|La Galvanina||-||The Riverside Company||Undisclosed||04/06/2019||Italy||Food & Drink|
|US warehouse network||Blackstone Group||GLP||$18.7bn||03/06/2019||US||Industrial real estate|
|Kiwi.com||General Atlantic||-||Undisclosed||03/06/2019||Czechia||Travel & Leisure|
|Kent Pharmaceuticals||Duke Street||DCC Vital||Undisclosed||03/06/2019||UK||Pharmaceuticals|
Movers and Shakers
Volpi Capital has announced the appointment of Joerg Klasmeyer who will join its investment team. Klasmeyer was previously at Investindustrial.
Pemberton has appointed Jean Tournaire and Mark Darell-Brown as portfolio manager and consultant, respectively. They will be part of the firm’s trade receivable finance investment team. Tournaire was previously at Santander Corporate and Investment Banking UK and Darell-Brown founded Tostock Capital in 2017.
Markus Boettcher joins EY as a part of its private equity advisory team. Prior to this, Boettcher spent 15 years at Bain.
From the horse’s mouth...
“With compensation, we can go as high as we want” – A partner from law firm Kirkland & Ellis reveals part of the secret to its recruitment strategy
“The entire private equity industry has more than $1trn of dry powder but it’s not like you go to jail if you don’t invest the money. You have to get good deals to make this work – it’s not like it’s burning a hole in our pocket” – David Rubenstein, Co-Founder & Co-Executive Chairman of the Carlyle Group explains to a journalist next steps for the private equity industry
“My mother was an artist. My aunt was a very good art dealer. I didn’t have the talent [to be an artist], but I’ve always had a great interest in art” – Leon Black, founder and CEO of Apollo Global management reflecting on his substantial art collection which includes a pastel version of Edvard Munch’s “The Scream” for $120m.