Monitor
Private Capital Monitor 16/02
21st February 2024
WORTH A READ
US
PUBLIC COMPANIES – TAKE NOTES!
Earlier this week, Jeffrey M. Cohn penned an opinion piece in Harvard Business Review asserting that boards of private equity firms are more actively engaged in shaping strategy and culture at their respective organizations compared with boards of public companies. Cohn outlines six guiding rules that public company boards should take note of, including helping to create strategy, building trust, shaping culture, providing information, thinking outside of the box and building relationships with “future CEOs”.
That’s what Christopher Ailman, outgoing investment chief at CalSTRS a US pension fund and large PE industry investor, told the Financial Times in a recent interview on the state of the private equity industry. Ailman points out that executives make large fortunes from fees charged to firms like CalSTRS and told the FT that “they need to also share the wealth with the workers of those companies and with the communities they invest in.”
Bloomberg’s Swetha Gopinath and Kat Hidalgo report that private equity returns to investors reached a 15-year low in 2023. According to Raymond James Financial, distributions to limited partners totalled just 11.2% of funds’ net asset value, meaning investors are limited in their ability to invest in new funds or existing investments.
Europe
Chris Hughes, Bloomberg Opinion Columnist, argues that the rally in buyout firms’ stocks has gained further fuel from quarterly updates, and as sentiment improves, the margin for error narrows. He warns that in the longer term, there are also reasons to be wary due to the growing appreciation of the listed players’ diversification away from conventional private equity, typically into credit and secondaries. Hughes argues this means some high expectations are already comfortably embedded in the listed sector’s shares.
In Private Equity News, Michael Moore, Chief Executive of the British Private Equity and Venture Capital Association, reflects on his recent appearance in front of a select committee. He urges private equity firms not to be complacent about their level of engagement with industry-regulated standards, which he asserts aren’t overly burdensome, and encourages the industry to embrace the upcoming updates to the regulatory process constructively – or notes they risk wrong-footing themself.
Peter Morris, a well-respected independent researcher and academic, writes a letter to the Financial Times, urging the media and policymakers to “up their game” when engaging with private equity. He argues that the pair give favourable treatment to the industry and asks for disclosure to be made mandatory to “mitigate the cherry-picking that private equity firms can and do get away with today.”
WALL OF MONEY
Infranity raises €2bn for infrastructure impact debt funds
Generali Investments’ infrastructure arm has raised €2bn for its two flagship Europe infrastructure impact debt funds – doubling its targets.
Ares Raises $1.7 Billion for Australia Private Credit Fund
The Ares Asia Direct Lending fund has raised A$2.6 billion ($1.7 billion) for investments in Australia and New Zealand. The strategy seeks to capitalise off banks retreating from leveraged lending in the region.
Epiris Fund III holds final close on £1.044bn
Fund III held its final close at £1.044bn, surpassing its £850m target, and will target UK and international businesses with enterprise values of £75m – £500m. Ticket sizes vary between £40m and £150m of equity.
DEAL CHART
| Acquisition Target | Buyer | Seller | Value | Date | Region | Sector |
| Sharp Hills Wind Farm Project | CC&L Infrastructure | EDP Renewables | €516m | 15-Feb | North America | Sustainable Infrastructure |
| Cubelogic | Bowmark Capital | Growth Capital Partners | – | 15-Feb | United Kingdom | SaaS for Financial Services |
| Omnetic | Kartesia & CVI | – | €100m | 14-Feb | Czechia | Automotive Services |
| Glintech | Valiantys (Keensight-backed) | – | – | 14-Feb | United Kingdom | IT Services Provider |
| Cotiviti | KKR & Co | Veritas Capital | $11bn | 14-Feb | North America | Healthcare Analytics |
| Eurofeu Group | IK Partners | Capza | – | 13-Feb | France | Fire Protection Equipment |
| Coretrax | Expro | – | £166m | 13-Feb | United Kingdom | Energy Service |
| Shearer’s Foods | CD&R | Ontario Teachers | – | 13-Feb | North America | Food Label Manufacturer |
| Zafin | Nordic Capital | – | – | 13-Feb | North America | SaaS Solutions |
| Believe | EQT, TCV, et al | – | €1.5bn | 12-Feb | France | Music Recording Company |
| Officine Maccaferri | Ambienta | – | – | 12-Feb | Italy | Civil Engineering |
MEDIA OF THE WEEK
In this Viewsroom podcast, Reuters Breakingviews columnists discuss how a dearth of deals is spotlighting a shift of focus among traditional buyout houses like KKR and Carlyle into areas like private credit.
MOVERS AND SHAKERS
- Donald Mackenzie, one of CVC Capital Partners’ co-founders and most successful dealmakers, is stepping back from the firm.
- Fenchurch Advisory Partners has recruited two former leads of FIG: Paul Miller as a Senior Managing Director, and Eric Richard as a Vice Chairman focusing on Europe.
- Apollo has appointed Harry Seeking as co-head of infrastructure. He joins from InfraRed Capital Partners.
FROM THE HORSE’S MOUTH
“The private equity sector can only be congratulated on the skill with which it continues to play its PR hand.” – Peter Morris, a well-respected independent researcher and academic in the buyout industry.
“Private equity has not shared enough revenues…It’s great they make money for our retirees….but they need to also share the wealth with the workers of those companies and with the communities they invest in.” – Christopher Ailman, outgoing investment chief, Calstrs.
“All truths are easy to understand once they are discovered; the point is to discover them.” – Galileo Galilei, Italian Astronomer, born on this day in 1564.
