Private Capital Monitor 01/09

01st September 2023


Worth a read  

Honey, I Shrunk the Kids 

Alternative funds have raised $740bn since the start of the year, down 27% from $1.02tn in same period last year, according to data provider Preqin. Investments in alternative funds were expected to double in size between 2021 to 2026, according to a 2022 Preqin report.  Madison Darbyshire, Correspondent at the Financial Times claims “the pullback comes after a frenetic period of dealmaking, with large, institutional managers and mutual fund houses swallowing up alternative managers in a race to offer the products to investors.” 

In the Trenches 

As traditional methods for generating returns such as high leverage and multiple arbitrages become obsolete, private equity firms are forced to become more hands-on with their portfolio companies, according to a report from Institutional Investor. With higher interest rates and difficult environments for dealmaking and fundraising, firms are relying heavily on their operational capabilities and working even more closely with their portfolio companies to recruit employees and generate strong returns. 

Moving with the Wires  

Matt Wirz, Reporter at The Wall Street Journal notes private equity firms see “money to be made” in the construction of broadband fiber-optic networks, part of a nationwide push in America to widen high-speed internet access.  Wirz argues “this push into broadband is part of a broad shift by investment firms over the past decade toward renewable energy and technology projects.” 

Starting them Young

In 2023, the private equity recruitment process began exceptionally early, with firms seeking candidates in July for 2025 positions, according to Wall Street Journal’s Chris Cumming. PE firms are now selecting from smaller pools of applicants from investment banking analyst classes, with only about 25% of IB analysts interviewing for private equity roles, compared to 50-75% in previous years. This “on-cycle” recruiting period has created turmoil for firms and recruiters, as hiring quotas are going unfulfilled and new employees often lack experience in finance or have not even started their IB positions. 

Media of the Week

Startup Europe — The Sifted Podcast | Klarna is back in black after a tough 2022

Listen to the podcast here

Deal Chart

Acquisition Target Buyer Seller Value Date Region Sector
Instem Archimed *P2P* £203 million 30/08/2023 UK Life science software
Speed Fibre Cordiant Digital Infrastructure Irish Infrastructure Fund €190.5 million 30/08/2023 Ireland Fibre infrastructure
Urbaser Nordic Cube Infrastructure Managers Urbaser €390 million 29/08/2023 Nordics Waste collection
Hersha Hospitality KSL Capital Partners *P2P* $1.4 billion 28/08/2023 US Hotel REIT
Circle Health group PureHealth Centene $1.2 billion 28/08/2023 UK Insurance
Thorne HealthTech L Catterton *P2P* $680 million 28/08/2023 US HealthTech
American Heart of Poland GKSD
San Donato
$539 million 25/08/2023 Poland Cardiovascular care
Epassi TA Associates
Warburg Pincus
Bregal Milestone n/a 25/08/2023 Finland Mobile payment solutions
Alphia PAI Partners JH Whitney Capital $1 billion 24/08/2023 US Pet food

Wall of Money 

HDFC Capital Advisors seek to raise $1 billion for real estate credit 

An arm of India’s biggest lender, HDFC Bank, seeks to raise from $1bn – $2bn for a real estate private credit fund. The move underscores increased demand for real estate credit as new homes surge in India.  

Hillhouse targets over $1.4bn for renminbi healthcare fund 

Hillhouse Capital is seeking Chinese investors for its new renminbi fund which will focus on investments in the healthcare sector. This move comes amidst an industry-wide decline in dollar funding for Chinese investments.  

Movers and shakers 

TPG has hired has appointed Flavio Porciani as a Partner based in London.  

Swiss asset manager, Bellevue Group, has appointed Gebhard Giselbrecht as new CEO. 

From the Horse’s mouth  

“Fundraising has been more challenging in the last 12 months than any time in the last 15 years” Drew Schardt, Head of Investment Strategy at Hamilton Lane 

“The traditional way to generate returns from financial engineering, including multiple arbitrage and highly levering companies, is no longer the norm. Managers have to focus more on creating value through more active management through the implementation of their well-honed operational playbooks” Elizabeth Traxler, Managing Director of Neuberger Berman  

“I have made mistakes but I have never made the mistake of claiming that I have never made one. Many a good newspaper story has been ruined by over verification” – James Gordon Bennett, Founder, Editor and Publisher of the New York Herald, born on this day in 1795.  

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