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Monitor

Private Capital Monitor 01/12

01st December 2023

 

WORTH A READ 

United States 

BREATHING DOWN MY NECK  

Nine out of ten portfolio company CFOs worry about the security of their jobs following private equity investment in their employer, writes WSJ’s Laura Kreutzer. Finance chiefs often butt heads on spending priorities with private equity sponsors, who place a greater focus on M&A. 

INVEST AT YOUR OWN RISK  

While private investment strategies such as PE are opening up accreditation criteria to a greater population, there are pitfalls associated with mom-and-pop investors pouring money into private companies. Because accreditation requirements have not adjusted for inflation, 13% of households qualified as accredited investors in 2019 vs. just 1-2% in 1983.    

MAN’S BEST FRIEND  

American pet ownership has skyrocketed since the pandemic, and private equity got ahead of this trend by entering the veterinarian real estate space in 2020. The “recession-proof, e-commerce growth-proof” niche industry is seen as a stable investment, and the size of the US veterinary market is expected grow by more than double from 2021 to 2030.  

 

Europe

A GOLDEN MOMENT

Huw van Steenis, vice-chair at Oliver Wyman, forecasts a coming “golden age” for private credit as banks continue to unload their assets and loans swell in size. Apollo CEO Marc Rowan echoes this view, stating the “debanking” fuelling private credit’s growth is still early days. Van Steenis argues scaled private credit leaders like Apollo will be the prime beneficiaries, thanks to the market’s preference for firms with more capital, specialists with scale to purchase, and those with established partnerships.

CUP HALF FULL  

Sifted highlights the “topsy-turvy picture of European tech” off the back of Atomico’s 2023 report, which features data from a number of deals counting platforms, alongside a survey of more than 4,100 founders, VCs, LPs and startup operators. Whilst diversity and fundraising for remains abysmal (3% of total capital went to all-women teams in 2023 — compared to 82% for all-male teams), VCs are sitting on record amounts of dry powder, early-stage funding has stayed relatively stable across 2023 and Europe is producing more new founders than the US.   

THE ASCENT  

Bloomberg’s Silas Brown and Davide Scigliuzzo offer a big take on the probability of the private credit boom. The pair focus their attention on HPS Investment Partners, who bought itself out of JPMorgan Chase & Co. in 2016 for close to $1 billion, and are now considering listing, at eight times as much.  

FINGERPRINTS  

Julius Baer’s CEO, Philipp Rickenbacher, announced a review of the wealth manager’s private debt business following the crisis involving Austrian property group Signa. Julius Baer is among the major lenders to Signa, a European luxury developer with notable assets like a stake in Germany’s KaDeWe and the Chrysler Building in New York. The bank’s shares have declined by 16% since disclosing a SFr70 million ($80 million) provision for losses in its credit portfolio last week. 

 

WALL OF MONEY

Pantheon closes secondaries fund PGSF VII on $3.25bn 

Pantheon has closed its latest private equity secondaries fund, Pantheon Global Secondaries Fund VII (PGSF VII), and associated vehicles on $3.25bn. 

Blackstone raises $2.6bn for real estate secondaries fund  

The private equity giant has announced the close of Strategic Partners Real Estate VIII. 

Eurazeo closes sixth direct lending fund on €2.3bn 

European alternative investment manager Eurazeo has held a final close of its sixth direct lending fund with €2.3 billion, bringing total investable capital for the strategy to €3.2 billion. 

 

DEAL CHART 

Acquisition Target Buyer Seller Value Date Region Sector
ISMS.online ECI Partners 29/11/2023 United Kingdom Information security SaaS
Global Atlantic KKR $2.7bn (37% stake) 29/11/2023 United States Insurance
Rover Blackstone $2.3bn 29/11/2023 United States Online marketplace
Heathrow Airport PIF Ferrovial £2.37bn (10% stake) 29/11/2023 United Kingdom Airports
FGP Topco Ardian Ferrovial 15% stake 29/11/2023 Spain Airports
Nichii Holdings Nippon Life Insurance Bain Capital et al $1.41bn 28/11/2023 Japan Nursing care
L3Harris Commercial Aviation TJC $800mn 28/11/2023 United States Flight training
Pareto FM Pictet Alternative Advisors NVM PE 27/11/2023 United Kingdom Facilities management
Potter Global Technologies KKR 27/11/2023 United States Safety equipment
Efeso Partners Eurazeo and Tower Brook EV of €450m 27/11/2023 France Consultancy services
Verne Global Ardian Digital 9 Infrastructure 27/11/2023 United Kingdom Data center solutions

 

MEDIA OF THE WEEK  

Randy Schwimmer, co-head of senior lending at Churchill Asset Management, joins Bloomberg Radio to discuss the private credit boom. 

Watch the video here

 

MOVERS AND SHAKERS 

  • Latham & Watkins has hired Fergus Wheeler and Paul Yin as private credit partners in London from rival US law firm Akin Gump. 
  • Axa Investment Managers has appointed Matthew Ducharme as head of private equity secondaries at Axa IM Prime. 
  • Astanor Ventures, the agrifood and tech impact investing firm, has appointed Thomas Nagy as operational partner. 

 

FROM THE HORSE’S MOUTH 

[On the growth of private equity in the financial order] “You’re seeing the rebuilding of Western capital markets beyond the banking system” –  Scott Kapnick, HPS Chief Executive Officer.  

“As private credit investors, this is the environment we’ve been waiting for. The unprecedented pace of interest rate hikes and resulting volatility are providing abundant potential opportunities in the liquid public markets now, and private opportunities are beginning to materialize in market areas where underwriting became lax. The next few years will be great vintages, we believe, across the private opportunity set for a wide range of investor objectives. With demand for capital outstripping supply, investors won’t need to take large risks, in our view, to generate compelling returns.” Jamie Weinstein, American political journalist, opinion commentator, and satirist. 

“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” Winston Churchill. Former Prime Minister of the United Kingdom, born on this day in 1874. 

 

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Rebecca Gaffney

Analyst
rebecca.gaffney@h-advisors.global
+44 (0) 2073 954 433