Monitor
Private Capital Monitor 24/08
24th August 2023
Worth a Read
The Financial Times reports on the SEC’s vote requiring private equity, venture capital and hedge funds to publish detailed quarterly reports on performance and increased disclosure on expenses. It also put new limits on secret side deals that give better terms to some investors. These changes will affect US and overseas managers.
The Financial Times reports that major private equity players are handing distressed firms to lending arms of their rivals. The trend reflects the problems many buyout firms face as portfolio companies contend with higher interest rates, stubborn inflation, supply chain issues and financed buyouts that were not hedged against inflation.
The Telegraph reports that Britain’s largest pension scheme, NEST, plans to allocate up to a fifth of pension pots to high-growth private companies over the next decade. Mark Fawcett, Nest’s CIO, stated that younger members could see 20% of their pension pots invested in unlisted equities, given their longer investment horizon. This move aligns with Chancellor Jeremy Hunt’s goal to encourage pension funds to embrace riskier assets for enhanced retirement income. Despite concerns over high fees from private equity, Nest aims to negotiate competitive deals for its growing portfolio.
Cash deployed by UK Venture capital trust (VCT) was up 8% last year, despite raising less cash, but fell short of inflation around 8.8%, according to the Venture Capital Trust Association, a trade body. Rafe Uddin, Money Reporter, Financial Times argues high inflation has yet to “seriously squeeze” VCT investors but notes the number of start-ups likely to grow and justify additional investment, known as the graduation rate, is still expected to decline as many struggle with the current economic climate.
Subway, the largest sub-style sandwich company in the U.S. is being acquired by Roark Capital, WSJ’s Heather Haddon reports. Roark, one of the largest PE investors in U.S. restaurant change, will try to revive a company whose sales peaked more than a decade ago by reversing its trend of closures and expanding globally. Known for its franchisee model, Subway remains a top-ten player in the U.S. fast food market, but competitors have gained ground in recent years and sandwich chains have grown slower annually vs. other categories such as burgers and pizza.
Media of the Week
The Hidden Genius of Kim Kardashian’s Private Equity Fund! (SKKY Partners)
Ben Cohn, former JP Morgan investment banker, provides an overview of Kim Kardashian’s private equity fund SKKY, the team, and why he thinks it could be a unique and successful firm.
Deal Chart
| Acquisition Target | Buyer | Seller | Value | Date | Region | Sector |
| Broad Reach Power | Engie | EnCap Apollo |
$1.6 billion | 24/08 | US | Energy storage |
| PikeTec | Synopsys | ECM | n/a | 24/08 | Germany | Semiconductor design |
| Assessio | Pollen Street Capital | Main Capital Partners | n/a | 24/08 | Sweden | Talent assessment |
| Subway | Roark Capital | – | $9.55 billion | 24/08 | US | Fast-food |
| Maslow Capital | Arrow Global | n/a | 23/08 | UK | Real estate credit | |
| Catec | Apollo | – | n/a | 23/08 | US | Natural gas & hydrogen |
| Vinoteca | Breal Capital | Interpath | n/a | 23/08 | UK | Wine bars |
| The Weather Company | Francisco Partner | IBM | n/a | 22/08 | US | Meteorology |
| Hypergiant Industries | Trive Capital | – | n/a | 22/08 | US | AI |
| Suse | EQT | *P2P* | €650 million | 17/08 | Germany | Open-source software |
| A-Gas | TPG | KKR | £500 million | 17/08 | UK | Refrigerant gases |
Wall of money
England captain Stokes seeks edge with launch of venture fund
Ben Stokes, the England Test cricket captain, and former team-mate Stuart Broad are among a group of leading sportsmen backing a new venture capital fund targeting a distinctive position in the crowded arena of early-stage investments. The Players Fund will be backed by £40m of funding committed by venture capitalists, Sky News understands.
Hayfin raises €6bn to lend to European companies
UK investment firm Hayfin has raised more than €6bn for direct lending to European companies — one of the largest private credit funds to close in the region this year. It is about six times more than the $1bn (€917mn) raised for direct lending by Europe-focused funds in the first quarter, the lowest figure in a decade, according to data provider Preqin.
Allianz looking to raise €1.5bn for new private credit fund
Allianz Global Investors is looking to raise their new global private credit fund by tapping into increased investor demand for exposure to the asset class. Allianz raised €3.3bn for a previous fund which closed in April, way in excess of its original €1.5bn target.
From the Horse’s Mouth
“[Private equity] continued to push the boundary on the debt those companies were taking on. That’s OK when you have earnings growth but then we’ve had Covid, Ukraine and interest rate increases.” – Jeanine Arnold, executive at Moody’s
“Everyone talks about the public markets having bounced back and being expensive again, but that’s when people are looking at the indices, which are often driven by large cap stocks. When you look at small to medium sized companies, a lot of them are still at quite low valuations.” – Oliver Haarmann, founding partner of Searchlight
“Some age, others mature.” – Sean Connery, Scottish actor best known for playing James Bond, born on this day 1930
