Monitor
Private Capital Monitor 28/07
28th July 2023
Worth a read
Steven Moon, managing director at Alvarez & Marsal, writes for Private Equity News on the challenges private equity firms are facing in the current economic climate. Moon notes that to sustain above-market returns, firms must focus on operational improvements within portfolio companies. Moon stresses maximising value requires a shift towards operational transformation, better pricing, service excellence, and digitalisation. Moon believes that robust digital infrastructure has become vital for value creation and that firms must demonstrate agility and creativity to thrive in the current landscape.
Reclaim Finance published an assessment of fifteen major private equity firms in North America and Europe illustrating their lack of action on climate change compared to other investors. The assessment found that only two of these firms have policies regarding investments in the coal sector, and just one has a policy for the oil and gas industry. Between 2020 and 2021, these firms bought $60 billion of fossil fuel assets. Reclaim Finance has urged institutional investors to use their influence to push private equity firms to divest from fossil fuels.
The Financial Times reports that private equity group, 777 Partners, has acquired a majority stake in Hertha Berlin football club from financier Lars Windhorst for less than €15 million, a significant loss compared to his original €374 million investment. The deal includes a €65 million purchase price offset against a €50 million loan previously provided by 777. Windhorst’s ownership of the club was marred by controversies, including a scandal involving the hiring of an Israeli intelligence firm to remove the club’s president. Additionally, the financier was recently hit with a €150mn freezing order by London’s High Court in relation to a separate creditor claim.
The Wall Street Journal reports that private equity fundraising slumped in Q2, with global firms raising $106.7 billion, a 35% decline compared to the same period last year. This is the industry’s lowest quarterly total since Q2 2018, driven by tighter financial conditions, the “denominator effect and slow asset sales. Despite improved sentiment from institutional investors, the fundraising slowdown hit smaller and less experienced investment firms the hardest. However, private-equity secondaries saw high demand.
The Financial Times reports that Singapore’s sovereign wealth fund, GIC, has warned that the golden age for private equity is over due to higher interest rates and increased volatility. The favourable conditions of high valuations, low leverage costs, and low interest rates have disappeared and are unlikely to return soon. Despite this, GIC remains focused on opportunities in the private market, allocating funds towards logistics, infrastructure, and inflation-insulated assets. The fund also sees potential in other parts of Asia as multinational companies diversify supply chains away from China.
Deal chart
| Acquisition Target | Buyer | Seller | Value | Date | Region | Sector |
| Certinia | Haveli Investments General Atlantic |
Advent International | approx. $1 billion | 26-Jul | US | Business Software |
| Rbmedia | HIG Capital | KKR | more than $1 Billion | 25-Jul | US | Audiobooks |
| Evolution Funding | Carlyle | LDC | n/a | 25-Jul | UK | Auto Finance |
| e-attestations | Keensight | – | n/a | 25-Jul | France | Third-Party Risk Management |
| Imperva | Thales | Thoma Bravo | $3.6 Billion | 25-Jul | US | Cybersecurity |
| Simply Self Storage | Public Storage | Blackstone Real Estate IT | $2.2 Billion | 24-Jul | US | Self Storage |
| Attero | Ardian | – | n/a | 24-Jul | The Netherlands | Circular Economy Waste Management |
| Blacktrace Group | Unchained Labs | Maven Capital Partners | n/a | 24-Jul | UK | Life Sciences |
| DWF | Inflexion | – | £342 million | 21-Jul | UK | Law |
| SK AeroSafety | Bridgepoint | Levine Leichtman | n/a | 20-Jul | UK | Aircraft Safety |
| With Intelligence | Motive Partners | ICG | £400 million | 20-Jul | UK | Business Support |
Wall of money
Astorg scales down Fund VIII target by €2bn
Astorg has revised the fundraising target and hard cap for its eighth flagship fund. Astorg interim closing of its flagship fund, represents about 90% of the target size, a revised hard cap of €4.5bn, and a nearly 10% increase on Astorg’s predecessor fund. At launch, in January 2021, the fund targeted €6.5 billion.
Neuberger Berman Raises $2.5 Billion Fund to Finance Private Companies
NB Capital Solutions, a unit of Neuberger Berman that finances companies owned by private equity firms, has raised $2.5 billion for NB Credit Opportunities Fund II, circa. $1 billion more than its initial target.
Deal delays put Bridgepoint fundraising on the back foot
Bridgepoint has given itself more time to raise €7 billion for its next main fund and has warned that deals to sell some investments might be delayed. Bridgepoint has also revealed that it was extending the fundraising for its Bridgepoint Europe VII fund into the first quarter of next year, having so far secured commitments for €6 billion.
Movers and shakers
- Guy Hands, Chief Investment Officer and Chair at Terra Firma Capital Partners is stepping down. A spokesperson for the company said that Terra Firma will now be led by Paul Hatter as chief operating officer and Richard Hands as managing director responsible for residential investments and new deals.
From the Horse’s mouth
“The long-term desire to commit money is high, but the ability of limited partners to deploy capital has been hit.” – Cameron Joyce, head of private equity at Preqin
“Many of the things that were tailwinds for the private equity industry have come to an end… and I don’t think they are coming back any time soon.” – Jeffrey Jaensubhakij, chief investment officer at Singapore’s GIC
“Our knowledge can only be finite, while our ignorance must necessarily be infinite.” – Karl Popper, Austrian-British philosopher, born on this day 1902
