Monitor
Private Capital Monitor 10/11
11th November 2023
WORTH A READ
US
Private equity firms have been ramping up pay for junior and mid-level employees to keep them happy during an industry downturn, writes Bloomberg’s Loukia Gyftopolou. PE professionals at all levels are seeing higher salaries this year, but the growth has been most pronounced for mid-level employees. Gyftopolou says staff are being offered additional benefits including additional paid time off, gym reimbursements and student loan repayments.
Deal flow involving “midlife co-investments,” where a PE firm sells a stake in a portfolio company to one of its LPs to raise cash, was up over 80 percent in the first half of 2023, according to Institutional Investor. The strategy remains a niche part of private equity, but pricing uncertainty means midlife co-investments offer LPs a method to get the exposure and liquidity they want at the right cost.
US Senators Bob Casey and Rick Scott enacted a bill this week that would require private equity firms to disclose details around their investments in China, Reuters reports. The bill was introduced out of concern that heavy PE investment into the country in recent years has helped China modernize its military. “Our adversaries, like Communist China, benefit from a complete lack of transparency,” said Senator Scott. The bill also includes investments in Iran, Russia and North Korea to be disclosed to the SEC.
Europe
Bloomberg reports private equity firms, traditionally targeting clients with a minimum of $5 million in investable assets, are now shifting their focus to individuals with $1 million to $5 million. This group, known as “mini-millionaires,” has grown by almost 60% to 12.7 million households in the 15 years leading up to 2022, according to CEG Insights.
Bloomberg argues amid a prolonged downturn in dealmaking, private equity firms are diversifying away from traditional buyout strategies and scrutinising costs more closely. One of the options firms are taking is to shift towards private credit, with KKR raising more from this part of the business than their private equity arm.
The Times reveals Venture Capital firm Ada Ventures has accused the industry of “gender washing”, suggesting firms are hiring more women but in junior and non-ownership roles to artificially boost gender diversity. The firm also claims that high ranking titles are being awarded without the corresponding authority to make investment decisions, again obscuring gender imbalances.
WALL OF MONEY
Kennedy Lewis Raises $4.1 Billion to Ride Private-Credit Wave
The new fund will focus on making private investments that are high in the capital structure, taking a “go anywhere” approach to areas where traditional banks have been retreating. The fund surpassed an earlier target for $3 billion and has already deployed half the capital raised.
KKR raises $2.8 billion for second global impact fund
The second fund is more than double its first $1.3 billion impact fund raised in 2020.
Eurazeo raises €2.3bn to invest in mid to large buyouts
Eurazeo first close of its Capital V fund includes about €600m from third parties and is part of Eurazeo’s mid to large buyout strategy that looks to invest in companies with an EV of more than €300m.
DEAL CHART
| Acquisition Target | Buyer | Seller | Value | Date | Region | Sector |
| Cyxtera | Brookfield Infrastructure Partners | – | $775 million | 2-Nov | US | Data Centre Services |
| Strutural Building Components LLC | HB Capital | – | – | 1-Nov | US | Structural Construction |
| Ascential Digital Commerce | Omnicom Group | Ascential | $900 million | 30-Oct | UK | Information and Analytics |
| Ascential Consumer Research (WGSN) | Apax Partners | Ascential | £700 million | 30-Oct | UK | Information and Analytics |
| Entergy Gas Distribution | Bernhard Capital Partners | Entergy | $484 million | 30-Oct | US | Energy |
| Alerce | Oakley Capital | – | – | 30-Oct | Spain | Transport Management Software |
| Profi Rom Food SRL | Koninklijke Ahold Delhaize | Mid Europa Partners | €1.3 billion | 30-Oct | Romania | Grocery Retail |
| Dollar Shave Club | Nexus Capital Management | Unilever | – | 26-Oct | US | Grooming |
| Christine McVie’s Fleetwood Mac royalties | Harbourview Equity Partners | The Estate of Christine McVie | – | 26-Oct | US | Music |
MEDIA OF THE WEEK
“China has done a lot, but it is not enough.” Fred Hu, chief executive officer of Chinese investment firm Primavera Capital, discusses the state of the world’s second-largest economy, its prospects and the government’s efforts to support growth. He speaks on the sidelines of the Bloomberg New Economy Forum in Singapore with Yvonne Man on “Bloomberg Markets: China Open.”
Please watch the full interview here
MOVERS AND SHAKERS
- Grupo Romero Asset Management, the investment arm of Peruvian conglomerate Grupo Romero, has brought on Carlyle’s Latin America-focused team to launch a new buyout fund that will invest in Hispanic businesses across the Americas.
- Venture capital veteran Juliet de Baubigny is joining BDT & MSD Partners as a partner and global head of technology.
- Chicago-based private equity firm GTCR has promoted Jeff Wright to managing director and Cameron Rouzer to principal.
- Energy-focused private equity firm Quantum Capital Group has hired IFM Investors’ David Altshuler as a partner and co-head of client solutions in Houston.
FROM THE HORSE’S MOUTH
[On his outlook for dealmaking activity] “There is a lot of work to do, [my] own opinion is that lower activity levels and reduced confidence will likely persist for a bit longer.” – Harvey Schwartz, Carlyle CEO.
[A midlife deal is a] “very good way to offer co-investments to current LPs in order for them to get the same exposure at the best price. That could be the reason why these middle life co-investments are developing.” – Agnès Lossi, Partner at INDEFI.
“Optimal behavior takes risks that are worthwhile. This is the central paradigm of finance: we must take risks to achieve rewards, but not all risks are equally rewarded.” – Robert F. Engle, American economist, born on this day in 1942.
