Maitland/AMO Private Equity Monitor – 7 May 2020

7th May 2020

Worth a read


Financial folly

The Financial Times’ Jonathan Ford wrotethis week that the coronavirus pandemic is doing a good job of exposing the folly of some financial strategies, including private equity investment which fills a company with debt and the presence of alternative lenders in the market. He notes that private equity is now worth 14% of the institutional market but has led to corporates with higher leverage than most listed businesses.

Failure to launch

The Financial Times’ Lex column this week wrote on the decision by L Brands and Sycamore Partners to abandon a deal for Victoria’s Secret, suggesting that “the hottest area of M&A right now is getting out of deals rather than getting into them”. The article refers to another failed deal for home rental company Front Yard, which managed to extract a break-up fee and unsecured credit from suitor Amherst Residential.

Aim high

Private equity funds are expected to target Aim-listed companies once lockdown has eased and deal making is resumed, according to City AM. The number of private equity-backed deals for Aim companies trebled in the past 12 months. PE funds bought and took 12 companies private in 2019/20, compared to just four deals in the previous year ended 31 March.

Back of the net

The Italian football league is the latest to seek an injection of capital as it battles with the cancellation of fixtures due to Covid-19, according to the Financial Times, with CVC and Blackstone rumoured to be in separate discussions. Blackstone is also thought to be considering lending to the individual clubs in the league to keep them afloat.

Thyssenkrupp deal seeks extra capital

The Financial Times wrote that Cinven and Advent are searching for other investors to help them pay for the buyout of Thyssenkrupp’s elevators business as they seek to reduce exposure to the deal. The firms are thought to have spoken with rival Brookfield, which was defeated in the auction process in what was the year’s most recent megadeal.

The corona-slowdown

Private Equity News reported on a survey of private equity groups from investment bank, Investec. More than 80% of groups that responded to the survey said they will not sell their holdings over the next year and some 33% of those surveyed already have or expect to suspend or postpone fundraising for their next fund.


Wall of money


Apollo due to raise $20bn

Apollo Global Management is due to raise money “aggressively” to capitalise on demand for loans during the pandemic. The firm said that it expects to raise $20bn over 2020.

Oberland raises $1.05bn

Oberland Capital Management has raised $1.05 billion for its latest health-care royalty fund. The company said that it plans to use the fund to provide capital to biopharmaceutical, diagnostic and medical device companies with products in late-stage clinical development or under review by regulatory authorities.

Ara Partners raises $400m for its first fund

Ara Partners has raised about $400 million for its debut fund, and has closed off entreaties from new investors. The fund is due to invest in low carbon manufacturing and infrastructure.

Morgan Stanley IM raises $110m

Morgan Stanley Investment Management’s private markets arm has raised $110m for its global climate impact fund. The fund is due to build on the group’s $800m impact investing strategy.


Deal chart


Acquisition TargetBuyerSellerValueDate AnnouncedRegionSector
Jio PlatformsSilver Lake-$750m06/05/2020IndiaTMT
Crail MetersEquitixSmart Metering Systems£291m066/05/2020UKUtilities
SiPMLevine Leichtman Capital Parrtners Europe-Undisclosed05/05/2020BelgiumTMT
Argon & CoArdian-Undisclosed04/05/2020FranceManagement Consultancy
HuntsworthClayton, Dubilier & Rice-£577m01/05/2020UKHealthcare

Movers and Shakers


Europe

ECI Partners has promoted Tom Wrenn to its Investment Committee, while Steve Tudge will become non-executive chair after a 26-year career with the firm.

Laura Sisson has joined YFM Equity Partners as an investment manager from KPMG‘s transaction services team in Manchester.

North America

Blackstone Group has hired Vincent Letteri from KKR as a senior managing director in its growth equity platform, Blackstone Growth. He will be based in San Francisco.


From the horse’s mouth...

“Each crisis is unique in its own right. It is difficult to compare a financial crisis with a pandemic crisis.”Research group eFront on the comparisons being drawn with the GFC

“Now they’ve managed to find a whole bunch of other fruit loops to take over.” Hedge fund manager Russell Clark on the current crop of central bankers

Inspiration is a guest that does not willingly visit the lazy” – Pyotr Ilyich Tchaikovsky, Russian composer, born on this day in 1840