Maitland/AMO Private Equity Monitor – 9 August 2019

9th August 2019

Worth a read


Data deals and high returns

This week, Financial News reports on the lucrative investment opportunities in the data space – mentioning LSE’s $27bn acquisition of Refinitiv as a recent example. It goes on to reveal that the data analytics market is expected to grow to $189.1bn this year and is forecast to reach a $274.3bn revenue industry by 2022. For investors, the appeal of subscription-based data services lies in their high margin of growth and predictable revenues.

Private equity and #MeToo

This week Private Equity International discusses how private equity firms attitudes are changing post #MeToo. Vantage Leadership Consulting has found that some PE executives’ willingness to address sexual harassment has declined and that they struggle to understand what is expected of them or how to approach the situation. However, while some PE executives are ‘treading on eggshells’, some companies like law firm Travers Smith, which advises PE sponsors, have taken steps to tackle the problem by introducing so-called safe words.

UK private equity hits five-year low

Private equity investment in the UK has fallen in the first half of 2019 to its lowest level in over five years. KPMG has cited Brexit uncertainty as the reason behind the cautious market behaviour. Private Equity News reveals that there were 384 deals between January and June, down from 594 from the same period last year. However, despite the slump, KPMG is optimistic and has confidence that once the Brexit dilemma is resolved, there could be a “flurry of asset sales, investment activity and deal making”.

Business media stays strong

While private equity investment in the UK has been falling, Private Equity News reports that business media and the information sector has remained resilient with investment in the sector at a record high. The article details that the most popular areas of the sector are live events and professional information and quotes “recurring revenues, strong cashflows, scalability, and immunity to trade barriers” as reasons that make these investments so attractive.

Changing attitudes in Germany

The Financial Times reports on how attitudes towards the private equity industry in Germany are changing. Past hostility has been erased as more and more German conglomerates divest businesses and buyout firms raise new record sums for deals within Europe. Whilst in the past the private equity industry has been likened to a “plague of locusts”, private equity groups have proven success in creating jobs rather than eliminating them. However, a potential buffer to growth is the use of the ‘domination agreement’ in Germany, a feature that allows buyers to issue legally binding instructions to a target’s management and obtain direct control of the company’s cash flows, that does not exist anywhere else in Europe.


Wall of money


Pension funds commit $5bn to private equity

According to a report from data company eVestment, public pension commitments to private equity rose by 19% between May and June, the greatest increase of any private markets asset class. While the number of commitments fell, the value of investments was up from $4bn to $5bn.

Investcorp sees inflows triple

The Bahrain-headquartered alternative asset manager Investcorp said in its annual results that placements and fundraising reached $1.9bn in the 12 months to 30 June 2019. The fundraising increase was largely driven by the launch of its $1bn European private equity buyout vehicle.

Brookfield raises $1.6bn for infrastructure

Brookfield Asset Management has raised at least this amount for its “long-life” infrastructure fund, according to a regulatory filing. The new fund, Brookfield Super-Core Infrastructure Partners, had raised about $1bn at its first close in December.

Actis looks to Asian real estate

Emerging markets specialist Actis has said it is seeking up to $600m for its first Asian real estate fund, according to sources. The launch follows the acquisition of Standard Chartered’s real estate unit, which added an investment team and two new offices in Shanghai and Seoul.


Deal chart


Acquisition TargetBuyerSellerValueDate AnnouncedRegionSector
CambrexPermira-$2.4bn08/08/2019USLife sciences
BioDueArmonia and Fidim-Undisclosed08/08/2019ItalyHealth
CytoxMaven-Undisclosed07/08/2019UKMedical
EllabEQT PartnersIK Investment PartnersUndisclosed07/08/2019DenmarkPharmaceutical
BC PartnersBlackstone Strategic Capital Group-€500m06/08/2019USPrivate Equity
hedielpay GroupKKRAnaCap Financial Partners>€600m05/08/2019GermanyFintech
BT Fleet SolutionsAurelius Equity OpportunitiesBT GroupUndisclosed05/08/2019UKTelecommunications
Adco GroupApax Partners-Undisclosed05/08/2019GermanySanitation

Movers and Shakers


Europe

LDC has hired Stefan Gunn as investment director to boost its South West and Wales team. Previously Gunn was at NatWest.

Proskauer Rose has hired Leith Moghil to join as a partner in its global private funds practice. Previously, Moghil was at Reed Smith where he was a partner in its private equity and investment funds practice.

 

US

Bob Brown has resigned as global co-head of Houlihan Lokey’s private funds group. Brown joined the company a year ago after his firm BearTooth Advisors was acquired by Houlihan Lokey.

 

Asia

US private equity firm TPG Capital has hired David Tan from KKR to help expand its investment team in Southeast Asia. Tan’s new role will see him helping invest TPG’s latest $4.6bn Asian flagship fund.


From the horse’s mouth...

The dark history of the ‘locusts’ and the reputation that private equity had in the country has changed” – Rolf-Magnus Weddigen, partner at Bain & Co’s German private equity practice notes that Germany has begun to change its perception of private equity

There’s a meme around which is, can Uber ever be profitable? I have certainly heard that meme” – Dara Khosrowshahi, CEO of Uber acknowledging the difficulties the company is facing

“I like being a woman, even in a man’s world. After all, men can’t wear dresses, but we can wear the pants” – Whitney Houston, American singer born on this day in 1963