Monitor
Private Capital Monitor 12/01
17th January 2024
WORTH A READ
Europe
With higher interest rates causing lenders to retrench, companies are left looking for new sources of finance. Hedge funds are considering legal action against the restrictions imposed by private equity firms that control who can lend to or buy the debt of buyout-backed companies and the practice of ‘whitelists’, arguing they restrict market liquidity and often lead to sponsor-friendly restructurings rather than ones in the best interests of the companies.
Equity capital markets bankers predict a 2024 IPO resurgence, fuelled by investor and private equity demand for liquidity. FT Alphaville highlights that success will depend on bridging the valuation gap between private and public markets but identifies that the toxic co-dependency between private and public investors is hindering the necessary convergence of valuations for a sustained IPO recovery.
Sport is seeing a continuing surge in private equity interest, fuelled by the belief that sports assets are non-correlated to the general market and offer a hedge against economic downturns. However, some in the industry warn of a potential bubble being caused by inexperienced capital chasing sporting success and driving artificial inflation of asset valuations.
US
Financial Times reports that BlackRock has agreed to buy Global Infrastructure Partners, an infrastructure-focused private equity firm with around $106 billion in AUM, for over $12.5 billion in cash and stock. By acquiring GIP, BlackRock will become the world’s second-largest infrastructure asset manager behind Macquarie and bolster its alternatives investment platform amid increasing client demand for the high-return asset class.
Bloomberg reports that 2023 was a difficult year for private equity as US firms sold or bought only $871 billion in assets – the lowest level since 2016. Higher borrowing costs, economic uncertainty and fundraising troubles have contributed to the turmoil. While some expect increased dealmaking in 2024, Brenda Rainey, partner at Bain & Co., warns “the industry is a snake digesting an elephant that they swallowed in peak dealmaking years,” meaning firms are likely to hold onto their investments for now.
I WANNA BE A MINI-MILLIONAIRE SO FREAKING BAD
Private equity funds like Blackstone have taken an interest in a class of investors called mini-millionaires – individuals with wealth in the $5 to $50 million range – reports Bloomberg’s opinion columnist Aaron Brown. As high interest rates make it more difficult for firms to rely primarily on institutional investors, asset managers have identified potential opportunities presented by tapping into this pool. Experts, however, wonder if mini-millionaires will take the bait.
WALL OF MONEY
Ares nears €20bn close for direct-lending fund
Based on sources, the fund is on track to be the largest direct-lending allocation in history, with at least €15 billion from investors and an additional €5 billion in leverage.
Cinven closes its flagship fund at $14.5bn
Hitting its hard cap, Cinven Fund 8 will continue the strategy of its predecessors, investing in “control positions in growth-oriented, market leading, cash generative companies.”
Apollo aims for $2bn for new secondary credit investments fund
According to sources, the fund will be being marketing towards the end of this quarter.
Blackstone raises $1.3bn for retail fund
Blackstone Private Equity Strategies Fund, or BXPE, is a result of the firm’s decade-long effort to identify new sources of cash beyond institutions like pension funds.
DEAL CHART
| Acquisition Target | Buyer | Seller | Value | Date | Region | Sector |
| SB Software-Broker assets | Soft & Cloud | – | – | 1/11/2023 | Germany | Software |
| GBUK | A&M Capital | H2 Equity Partners | – | 1/10/2024 | UK | Medical Devices |
| Best in Class Technology Services | Investcorp | Dunes Point Capital | – | 1/10/2024 | America | Technology Services |
| Mabtech | EQT | IK Partners and Mérieux Equity Partners | – | 1/9/2024 | Sweden | Biotechnology |
| Triple Oak Power | Energy Capital Partners | EnCap Energy Transition Fund I, Yorktown Partners and Mercuria Energy | – | 1/9/2024 | America | Energy |
| Augusta Sportswear Brands and Founder Sport Group | Platinum Equity | – | – | 1/9/2024 | America | Clothing |
| Moreld Group | McIntyre Partners | HitecVision | – | 1/8/2024 | UK | Energy |
| American Tower Corp’s | Brookfield | – | $2.5 bln | 1/5/2024 | India | Telecoms |
MEDIA OF THE WEEK
The Debunking Economics podcast: Private equity funds – capitalists or leeches?
Listen to the podcast here
MOVERS AND SHAKERS
- IK Partners has promoted of Carl Jakobsson and Frederik Jacobs to Partner in the Mid Cap Investment teams in the Nordics and the Benelux respectively.
- Ares Management has appointed Stefano Questa as Partner and Co-Head of Europe for Alternative Credit.
- Bain & Company has made Christophe De as its new Global Chief Executive. Christohpe was previously European Private Equity Head at the house.
- ICG has appointed David Saitowitz as Head of US Liquid Credit working out of the firm’s New York office.
- Permira has appointed Jon Maschmeyer as Partner, working in the firm’s US healthcare team.
FROM THE HORSE’S MOUTH
[On the problem with whitelists] “How are you going to negotiate with a sponsor during a debt restructuring knowing that you will go to the naughty list if you don’t roll over and play dead.” – Allan Schweitzer, portfolio manager at credit hedge fund Beach Point
“Everyone knows it’s a bubble…There is a tremendous amount of inexperienced capital chasing sports. I just think everybody has to calm down a little bit. We need some sober, unemotional, non-trophy-hunting investing in sports.” – Gerry Cardinale, founder of RedBird Capital Partners (owners of AC Milan)
“Be stubborn on vision, but flexible on details.” – Jeff Bezos, founder and executive chairman of Amazon, born on this day in 1964
