Monitor
Private Capital Monitor 11/08
11th August 2023
WORTH A READ
The Financial Times reports that private equity firms are progressively offering incentives to major investors. These include management fee discounts and favourable co-investment terms. Due to the present fundraising climate, investors have gained an upper hand in negotiations, seeking better terms, particularly from larger funds.
NAV’s the way, uh-huh uh-huh, I like it!
Bloomberg reports that in the wake of declining private equity deal volumes, firms are seeking innovative ways to raise funds. These strategies include continuation funds, minority sales, fund securitization, and NAV loans – the latter allowing firms to increase their flexibility by borrowing against their portfolio’s net asset value. Augustin Duhamel of 17Capital highlights NAV financing’s capability to fund portfolio growth and bridge liquidity gaps without needing to sell assets in unfavourable markets.
The Financial Times’ Lex highlights the rise of secondary private equity deals, as institutions are reducing their private capital investments, impacting traditional fees. Lex suggests that the opaque nature of private capital might be to blame for sharp revaluations on these transactions, but differing expectations between LPs and secondary buyers only complicates matters.
The Wall Street Journal reports that President Joe Biden issued an executive order prohibiting Americans from investing in some Chinese companies focused on developing advanced semiconductors and quantum computers starting next year. The order also requires US private equity and venture capital firms to disclose investments in Chinese AI and other types of semiconductors. Chinese officials voiced disappointment regarding what they see as an attempt to stifle economic growth, while House Foreign Affairs Committee members look to impose even more sweeping restrictions in the name of national security.
MEDIA OF THE WEEK
Blackstone chairman and CEO Stephen Schwarzman joins ‘Squawk Box’ to discuss becoming the first private equity firm to hit $1 trillion in assets, real estate market, politics, Fitch’s U.S. rating downgrade, and more.
DEAL CHART
| Acquisition Target | Buyer | Seller | Value | Date | Region | Sector |
| Avid Technology | STG | $1.4 billion | 09/08/2023 | US | Media Editing Software | |
| Cadent | Novacap | $600 million | 09/08/2023 | Canada | TV Adtech | |
| NeXtWind | Sandbrook Capital | $600 million | 09/08/2023 | Germany | Renewable Energy | |
| ADT Commercial | GTCR | ADT | $1.6 billion | 08/08/2023 | US | Security |
| Zimmermann | Advent | Founders Style Capital |
>$1 billion | 08/08/2023 | Australia | Fashion |
| Accent | Apollo | 07/08/2023 | US | Recycling | ||
| Veritiv | Clayton, Dubilier & Rice | *P2P* | $2.3 billion | 07/08/2023 | US | Packaging |
| Simon & Scuster | KKR | Paramount Global | $1.62 billion | 07/08/2023 | US | Publishing |
| Estia Health | Bain | *P2P* | AU$838 million | 07/08/2023 | Australia | Care Homes |
| Worldwide Clinical Trials | Kohlberg & Company | 07/08/2023 | US | Biotech & Pharmaceuticals |
WALL OF MONEY
Clayton Dubilier & Rice to Close Its Largest-Ever Fund at $26 Billion
Clayton Dubilier & Rice Fund XII LP is expected to close at $26 billion, exceeding its initial $20 billion target despite the current challenging market.
DigitalBridge touts AI aspirations amid $1.2bn flagship fundraise
In DigitalBridge’s Q2 2023 earnings call, the group revealed that this quarter, fundraising tallied $2.7 billion in total – far exceeding Q1’s total of $700 million. The digital infra giant revealed it is near a first close for its third fund, Digitial Bridge Partners III, currently on its third vintage – raked in an initial $1.2 billion.
MOVERS AND SHAKERS
- Kim Kardashian’s private equity firm SKKY Partners has hired Angela Ahrendts, former Burberry chief executive, as a senior operating adviser.
- Allen & Overy has hired Kfir Abutbul as head of its U.S. energy private equity group, as the London-founded law firm continues to expand in the United States.
FROM THE HORSE’S MOUTH
“Almost every firm in our suite of clients is contemplating or has employed some form of incentive for investors to put capital in as quickly as possible and in as large a size as possible” – Sunaina Sinha, Head of Private Capital at Raymond James
“Private equity managers and investors are using [NAV loans] to either finance growth in their portfolios or to help bridge the ‘liquidity gap’ and avoid selling portfolio companies or LP positions in a heavily discounted market.” – Augustin Duhamel, Managing Partner at 17Capital
“When you’re paid to do a job, it’s better to give a few minutes more to it, than a few minutes less” – Enid Blyton, English children’s writer and fifth most popular author in the world, born on this day, 1897
