Monitor

Private Capital Monitor 15/09

15th September 2023

H/Advisors’ Private Capital Monitor has bridged the Atlantic! Going forward, this newsletter will provide the latest trends and developments in alternative asset management in both Europe and the United States. 

Worth a Read

United States 

AN EYE FOR COMPSCI

Private equity firms are beginning to look to data-science professionals to bolster their workforces as artificial intelligence becomes more prevalent, WSJ’s Laura Kreutzer reports. Larger firms such as EQT already boast established data-science teams, with many others poaching talent from data wings of consulting firms like McKinsey. Communication skills are as key as technical skills in these roles, as experts need to be able to interpret data for firm partners and investors.

BIGGER ISN’T ALWAYS BETTER

Fund managers should consider the appropriate size of a fund when raising capital, which may mean lowering or “right-sizing” fund targets to align with market conditions, according to Venture Capital Journal. LPs are increasingly cutting their allocations to private investments as fewer companies are meriting investment, and one LP was quoted in the piece as saying that 2024 isn’t forecasted to be any better from a fundraising standpoint.

DIET STARTS TODAY

The “better-for-you” health food space has emerged as an attractive target for PE investment as consumers adopt more nutritious diets in the post-pandemic era, PE Hub reports. Despite sector headwinds such as inflation and supply chain issues, investors have raved at the niche market’s “inherent resilience, fragmentation and unharvested growth potential.” The article cited one study as saying that the market is set to see investments of more than $600 billion by 2026.

Europe 

BIRKENSTOCKS & SHARES

Birkenstock’s IPO this week has sparked conversation around valuations and a recovery in the IPO market. Reuters reports that the potential listing underscores a pickup in equity markets. Following the UK’s chip-designer ARM, Birkenstock became the second big European company to seek a foreign listing this month.

A GAME OF RISK

The International Organization of Securities Commissions (IOSCO) has warned that private equity and debt funds might be overlooking significant risks, as reported by the Financial Times. Iosco believes that current financial conditions could lead to defaults, forced asset sales, and valuation challenges.

SMALL YARD, HIGH FENCE

BVCA chief executive, Michael Moore, argues that while limited trade restrictions may be necessary, we must remain vigilant against excessive protectionism. He notes that while private capital has adapted to changing national security priorities, fully “de-globalising” would not be his ideal outcome, and we must re-state the case for an open framework of global trade and investment.

Wall of Money

HIG Capital raises $5.5bn for mid-market LBO strategy

HIG Middle Market LBO Fund IV will make control equity investments in complex situations in US middle market companies with asymmetric risk/reward profiles and a differentiated value proposition.

Verdane hits €1.1 hard-cap for its sixth fund

Verdane Capital XI will look to invest in European growth companies, deploying inside two themes: digitalisation and decarbonisation. The firm is seeking minority or majority stakes, either in single companies or through portfolios of companies, approximately investing between €20m and €150m in equity.

Media of the Week

Goldman Sachs’ Co-head of Global Banking & Markets Jim Esposito explains how companies and investing clients are navigating markets and the global economy in the latest episode of Goldman Sachs Exchanges.

Listen to the podcast here

Deal Chart

Movers and Shakers

• Barclays has hired JPMorgan Chase’s Christian Oberle to oversee its relationships with private equity firms in the Americas region as the head of its financial sponsors group. This comes in line with Barclays’ long-held desire to grow these relationships.

• Deloitte is planning a private equity hiring spree in order to win more business from buyout shops, setting an internal 2026 target to build its private equity consulting team to 500 people by 2026. The target comes in the wake of several senior hires in recent months.

• New Mountain Capital, with approximately $40 billion under management across private equity, credit and net lease capital strategies, has named Sastry Chilukuri as a member of the firm’s advisory council and executive chairman of portfolio company Emmes.

From the Horse’s Mouth

“There is a degree of nervousness out there but also, frankly speaking, a little too much confidence that all will be fine,” – Jean-Paul Servais, Chairman of IOSCO

“If you are a person who knows data science and dealspeak, you are a special person, and your market value has increased,” – Joseph Healey, Private Markets Practice Leader, Korn Ferry 

“Good advice is always certain to be ignored, but that’s no reason not to give it.” – Agatha Christie, English Novelist, Born on this day 1890