MISSING OUT? Some LPs frustrated by deal allocation around sponsor- backed SPACs 28 www.buyoutsnews.com May 29, 2017 • Issue 12 Jerome Greene, pioneer in raising capital for PE, dies 8 CalPERS OKs $1.68 bln budget, excludes PE expenses 12 Tecum Capital partners with Pennsylvania family office 14 Rubenstein: All Carlyle funds will hit their hard caps 16 Northeast Dermatology Associates explores a sale 22 BUYOUTS Vol. 30, No. 12, May 29, 2017 Missing Out? LPs Scrutinize SPACs
Transcript
MISSING OUT?Some LPs frustrated by deal
allocation around sponsor-backed SPACs
28
www.buyoutsnews.com May 29, 2017 • Issue 12
Jerome Greene, pioneer in raising capital for PE, dies 8
CalPERS OKs $1.68 bln budget, excludes PE expenses 12
Tecum Capital partners with Pennsylvania family office 14
Rubenstein: All Carlyle funds will hit their hard caps 16
Northeast Dermatology Associates explores a sale 22
BUYOUTS Vol. 30, No. 12, M
ay 29, 2017 M
issing Out? LPs Scrutinize SPACs
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SECONDARY MARKET ISSUE including our annual GUIDE TO SECONDARY BUYERS - June 26 issue of BUYOUTS (Advertising Closing date: June 15)
A deep dive into the Secondary market including:
• Restructurings
• De-regulation taking pressure off the banks to sell
• SEC scrutiny of secondary deals
• Who the big sellers are
• Fundraising in secondaries
• Secondaries deal volume at the half year mark
• How secondary funds are restructuring to get a new lease on life
EMERGING MANAGER ISSUE July 10 issue of BUYOUTS: (Advertising Close date: June 29)
• Spotlight on the market’s top emerging manager
• Emerging managers on the rise
• Fundraising for emerging manager funds
• LPs with emerging manager programs
• Top performing emerging funds
• GP profile on a firm that graduated from an emerging manager program
HEALTHCARE ISSUE August 28 issue of Buyouts: (Advertising close date: July 13)
• Which healthcare sectors are ripe for investment
• Who’s raising money
• The macro story
• What new players have emerged
• What’s on the auction block
• Deal valuations and EBITDA multiples
• Who’s advising who
• Auction process intel & deal analysis
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Vol. 30 No. 12 May 29, 2017
Private Equity Editor: Chris WitkowskyExecutive Editor: David [email protected] (646) 356-4507Editor-in-Chief: Lawrence AragonManaging Editor: Robert DanielSenior Writers: Luisa Beltran, Sam Sutton, Sarah PringleResearch Editor: Paul Centopani
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NEWS ANALYSISIPOs decline as more firms stay private 6Buyout shops find niches amid rosy economic outlook 7Jerome Greene, pioneer in raising capital for PE, dies 8
EXITSTalking Top Quartile with Mark Dorman of Endeavor Capital 9
FRESH CAPITALCalPERS, GPs consult as possible PE shuffle looms 10Ohio Police & Fire boosts real assets holdings 11CalPERS OKs $1.68 bln budget, excludes PE expenses 12CalPERS, challenged by state law, widens PE ranks 13
FUND NEWSTecum Capital partners with Pennsylvania family office 14Onex starts raising Fund V, targets $6.5 bln 15Rubenstein: All Carlyle funds will hit their hard caps 16Vista Equity closes Fund VI on $11 bln 17Barclays spinout Glendon targets reserve fund up to $2 bln 17Valor Equity Partners targets $750 mln for Fund IV 18CS Fund eyes minority stakes in hedge funds, PE 18Bernhard back in market targeting $1 bln for Fund II 19Discretionary fund closed by Taurus at $157 mln 19
LEVERAGED LOANSS&P sees Nine West debt revamp; Moody’s cuts Cole Haan 20Ratings Wrap-Up 20City MD expansion proceeds well, entails risks: S&P 21Lincoln International snapshot on loan pricing and terms 21
DEAL FLOWNortheast Dermatology Associates explores a sale 22PE said to vie for $905 mln Capita asset-services sale 23TPG Growth wins auction for Medical Solutions 23Francisco sees 5x return on Paymetric sale 24Madison Dearborn to make 2.3x its money on VWR 24Vector Capital to make 6x return on sale of 20-20 Tech 25Siris, expected to fundraise, seeks buyer for Digital River 25Allergy Partners on block; may test PE’s interest in field 26Beecken Petty wins auction for Cortec’s Cranial 26
MARKET INTELLIGENCE 30-43
ON THE MOVE 44-45
BUYOUTS BEAT 46-47
LAST WORDWeighing risk in an increasingly insular world 48Private equity cartoon 48
Private Eye: DeVos-family-backed firm raises co-investment pools 27By David Toll
FEATURES:
LPs eye deal allocation around SPACs from sponsors 28By Chris Witkowsky
“[PE] firms have started to spend more money on how they look and how they sound and, lately, what news and stories they share with the marketplace.”
—Brandon Labrum, founder and CEO, Fund Lab p47
28
COMPANY INDEX
www.buyoutsnews.com2 | BUYOUTS | May 29, 2017
AAbry Partners 22ACON Investments 3Agriculture Capital 11AlpInvest Partners 18Altaris Capital Partners 11, 23Anteil Capital Partners 18Apax Partners 20Apollo Global Management 7Aquiline Capital 23Ares Management 22Avista Capital Partners 24Audax Group 22Auxo Investment Partners 27
BBeecken Petty O’Keefe & Co 23, 26Bernhard Capital Partners 19Blackstone Group 7, 10, 18
CCaisse de depot et placement du Quebec 3, 15California Public Employees’ Retirement System 10, 12, 13, 18California State Teachers’ Retirement System 13Candescent Partners 22Carlyle Group 7, 16, 18Centerbridge 23Charterhouse 8Cinven 23Clayton, Dubilier & Rice 10Cortec Group 26Consensus Capital Holdings 27CVC Capital Partners 23
DDyal Capital Partners 17
EEaton Partners 8Elliot Management 24Endeavor Capital 9
FFNB Capital Partners 14Fondo de Ahorro de Panama 48Forstmann Little & Co 8Francisco Partners 24, 25Freeman Spogli 8Fundamental Advisors 3
GGlendon Capital Management 11, 17Golden Gate Capital 25GoldPoint Partners 3GTCR 23, 25
HHarvest Partners 22Hycroft Capital 18
IIFM Investors 11Illinois Municipal Retirement Fund 18Incline Equity Partners 14
K,LKayne Anderson Capital Advisors 28Kohlberg Kravis Roberts & Co 3, 6, 15, 23Leonard Green & Partners 8Los Angeles City Employees’ Retirement System 17
MMadison Dearborn Partners 24McCarthy Capital 23Meketa Investment Group 10
NNeuberger Berman 18New Jersey Division of Investment 17New Mountain Capital 24New York State Teachers’ Retirement System 18NGP Energy Capital Management 16, 28
OOaktree Capital Management 17Ohio Police & Fire Pension Fund 11Omers Private Equity 22Onex Corp 15Oregon Investment Council 17Oregon Public Employees Retirement Fund 17Ottawa Avenue Private Capital 27
P,RPantheon 8PNC Riverarch Capital 14Revelstoke Capital Partners 8Riverstone 28
SSerent Capital 26Siris Capital Group 25Stanford Management Co 18Sterling Partners 47Sycamore Partners 20
TTaurus Investment Holdings 19Tecum Capital Partners 14Tenex Capital 23Thomas H Lee Partners 8, 23TPG Capital Management 8, 23, 26, 28
WWarburg Pincus 21Welsh, Carson, Anderson & Stowe 25Western Allegheny Capital 14
www.buyoutsnews.com May 29, 2017 | BUYOUTS | 3
MARKET AT A GLANCE
By Paul Centopani
U.S.-based buyout and mezzanine fun-draising slowed over the past two weeks. Since Buyouts last went to press, the yearly total grew by $4.3 billion. Thus far in 2017, $97.3 billion has been raised, leading the same time last year by $31.3 billion, or 47.4 percent.
Vista Equity Partners made the final close on its sixth flagship at $11 billion. Fund VI is the largest the tech-focused firm has ever raised.
GoldPoint Par tners, the New York Life affiliate, wrapped up its fourth mezza-nine fund at $1.3 billion in commitments.
ACON Investments hit the hard cap for ACON Equity Partners IV, collecting nearly $1.1 billion.
Fundamental Advisors reached the fin-ish with its oversubscribed third pool. Fundamental Partners III finished with $933 million over a $750 million target, and will invest in distressed assets in the municipal and public-purpose sector.
Deal-making kept churning at a high pace. The 2017 total grew by $8.8 billion, with nearly $8.5 billion coming from two deals struck by Kohlberg Kravis Roberts & Co. The yearly aggregate now sits at $75.7 billion, trailing 2016’s total by only $1 bil-lion, or 1.4 percent.
The largest deal was for USI Insur-ance Services. KKR and Caisse de depot et placement du Quebec split the acquisi-tion of the insurance brokerage for a total of $4.3 billion.
KKR also bought out the entire share capital of Calsonic Kansei for about $4.2 billion. Based in Japan, Calsonic Kansei manufactures and wholesales industrial machinery.
Complex dealsdemand higherthinking.
We do deals up to $750 million—but there’s no cap on the brainpower we bring to the table.Knowledge is Closing Power
0 50 100 150 200
Deals Completed
Buyout/Mezzanine Funds Raised
$75.7B
$76.7B
$159.9B
$97.3B
$66.0B
$196.7B
(in billions)
YTD 2017 Comparable 2016 FY 2016
Source: Thomson Reuters
Source: Buyouts
All figures representative of global activity for U.S.-based buyout firms
4 | BUYOUTS | May 29, 2017
Lead Agent and Lender of Middle-Market Loans to Private Equity Sponsors and Corporations for Over 21 Years
YTD 2017 Activity: Over $2.0 Billion of Credit Facilities across 30 Transactions
Capital: Over $13.0 Billion
Clients: Over 215 Financial Sponsors
Differentiation: � Consistent Capital Provider since 1995 � Certainty of Transaction Closure and Terms � Flexible Capital Structures � Speed of Execution
$45,000,000Lead Agent
an affiliate of Sun Capital Partners, Inc.
$86,850,000Lead Agent
The Carlyle Group
$55,000,000Lead Agent
Warburg Pincus
$220,000,000Lead Agent
One Equity Partners
$100,000,000Lead Agent
Siris Capital Group
$275,000,000Lead Agent
Charlesbank Capital Partners
$233,000,000Lead Agent
MidOcean Partners
$65,500,000Lead Agent
an affiliate of Sun Capital Partners, Inc.
*Data as of May 2, 2017www.cerberuscapital.com | For more information call Dan Wolf, Gerry Daniello, or Keith Read at 212.891.2100
Bottom Quartile Predecessor Fund Third Quartile Predecessor Fund
Second Quartile Predecessor Fund Top Quartile Predecessor Fund
www.buyoutsnews.com
Location, location, location - where sovereign-wealth funds make RE investments
More than half of SWFs take a global focus in order to mitigate any risks associated with specializing in a geographic concentration.
Europe (63 percent) and North America (60 percent) are grabbing the most interest of sovereign-wealth funds investing in the private real estate space. Real estate constitutes a significant portion of sovereign-fund portfolios, and these regions are viewed as the best bets.
56%
60%
63%
50%
31%
48%
46%
0% 10% 20% 30% 40% 50% 60% 70%
Global
North America
Europe
Asia
MENA
Other
Emerging Markets
Source: 2017 Preqin Sovereign Wealth Fund Review
According to Preqin’s numbers, a successor to a top quartile PE real estate fund is 17 percentage points more likely to be oversubscribed than undersubscribed.
If you struck it rich with your last real estate fund, odds are good that people will trust you with their money. The largest group of oversubscribed subsequent funds included those whose managers ran previous top-quartile funds. Only 13 percent of follow-ups to a bottom-quartile fund closed above target. Preqin‘s real estate database contains performance from over 1,600 funds.
Source: Preqin Real Estate Spotlight, May 2017
By Paul Centopani
CHARTS OF THE WEEK
Past performance determines ease of raising capital in real estate
Regional Real Estate Preferences of Sovereign Wealth Funds
Previous PE Real Estate Fund Quartiles - Subsequent Fund Fundraising
Lead Agent and Lender of Middle-Market Loans to Private Equity Sponsors and Corporations for Over 21 Years
YTD 2017 Activity: Over $2.0 Billion of Credit Facilities across 30 Transactions
Capital: Over $13.0 Billion
Clients: Over 215 Financial Sponsors
Differentiation: � Consistent Capital Provider since 1995 � Certainty of Transaction Closure and Terms � Flexible Capital Structures � Speed of Execution
$45,000,000Lead Agent
an affiliate of Sun Capital Partners, Inc.
$86,850,000Lead Agent
The Carlyle Group
$55,000,000Lead Agent
Warburg Pincus
$220,000,000Lead Agent
One Equity Partners
$100,000,000Lead Agent
Siris Capital Group
$275,000,000Lead Agent
Charlesbank Capital Partners
$233,000,000Lead Agent
MidOcean Partners
$65,500,000Lead Agent
an affiliate of Sun Capital Partners, Inc.
*Data as of May 2, 2017www.cerberuscapital.com | For more information call Dan Wolf, Gerry Daniello, or Keith Read at 212.891.2100
NEWS ANALYSISwww.buyoutsnews.com6 | BUYOUTS | May 29, 2017
IPOs decline as more firms stay privateBy Luisa Beltran• Number of IPOs has halved since 1997: Ljungqvist• IPOs aim to provide liquidity to holders• High number of companies are delisting
Globalization, the M&A market and the ability to stay private longer have con-tributed to a dearth of U.S. initial public offerings, executives at an SEC-New York University event said.
“There is an unprecedented level of pri-vate capital in the marketplace,” said Chris Cooper, global CFO of Sequoia Capital, who noted that globalization has not been mentioned when discussing IPOs. “There is unprecedented foreign capital coming into the marketplace.”
The “aggregation” of private capital is looking for a home, Cooper said. At the same time, many companies are keeping “unprecedented” amounts of cash on their balance sheets. Five technology companies, Apple, Microsoft, Alphabet, Cisco and Ora-cle, had amassed $504 billion of cash by the end of 2015, the Financial Times reported in May 2016, citing a report from Moody’s Investors Service. The $504 billion is near-ly one-third of the total $1.7 trillion held on the balance sheets of U.S. non-financial companies, the story said.
Large companies are paying premiums to buy companies that would normally go public, Cooper said. “Activity that once took place in the public markets [is] taking place in the private sector,” said Cooper, who spoke May 10 at the “SEC-NYU Dialogue on Securities Market Regulation Topic: Reviv-ing the U.S. IPO Market.”
Adam Smith, head of capital markets at KKR, said companies are opting to stay pri-vate longer, but “it’s not private forever.”
"Staying private longer gives compa-nies the opportunity to grow and develop while private and, in some cases, pivot their strategies or technologies in more flexible ways.” said Smith. Both Smith and Cooper spoke on the “Panel on Regulatory and Other Market Influences.”
Steven Bochner, a partner at Wilson Sonsini Goodrich & Rosati, who also spoke on the regulatory panel, said the Jumpstart Our Business Startups, or Jobs, Act was help-ful but the “benefits were incremental.”
The Jobs Act, signed into law in 2012, aims to ease the regulatory burden on smaller companies.
The law lets emerging growth compa-nies file to go public confidentially. It also enables them to meet with qualified insti-tutional buyers and accredited investors to gauge their interest before filing a registra-tion statement with the SEC, Buyouts has reported. If investor demand turns out to be weak, the company can pull the filing without it ever being public. Companies also must have annual revenues of less than $1 billion to qualify as an emerging growth company.
KKR’s Smith said the Jobs Act was a “game changer” for the firm’s portfolio companies because it made IPOs “safer” and allowed them to “smooth things out.”
“The only thing I scratch my head at is the $1 billion revenue cutoff,” Smith said. “Why can’t this be for all companies?”
Earlier, a trio of academics and an econo-mist presented data on the decline in IPOs. The number of new issues has dropped sig-nificantly. In the 1990s, there were about 450 new issues annually; that number has dropped to 155, said Scott Bauguess, acting chief economist for the SEC.
Alex Ljungqvist, a professor of finance at New York University Stern School of Busi-ness, said the number of IPOs has halved since 1997. “There have never been fewer listed firms than there are today,” he said. “We should be seeing some new blood
going to market but we’re not really see-ing that.”
Rene Stulz, a finance professor at Ohio State University, said that while a very low number of new firms are listing, a very high number of companies are delist-ing. “Delisting is the important part of the story,” Stulz said. Companies, he said, are delisting because they are merging.
Roni Michaely, a professor of finance at Cornell University, said that raising cash is not the main reason companies go pub-lic. Firms go public when the markets are overvalued, he said.
Companies today go public to obtain liquidity for their investors, said Robin Graham, a managing director and head of technology, media and communications for investment banking at Oppenheimer Holdings.
Graham, who spoke on the panel “How to Revive the IPO Market,” said he wasn’t sure the IPO market should be revived. He said that in the 1990s, considered a boom time for IPOs, it was hard to figure out which public companies would survive. “We’re seeing fewer [but] more mature companies going public. This is good for investors.”
Steven Bochner, partner at Wilson Sonsini Goodrich & Rosati.Photo by Chad Ziemendorf.
NEWS ANALYSISwww.buyoutsnews.com May 29, 2017 | BUYOUTS | 7
Buyout shops find niches amid economic optimismBy Sam Sutton• Funds eye niches, international markets amid high prices• Apollo “focused on monetizing the portfolio”: Harris• Carlyle’s Conway optimistic, despite 0.7 pct headline GDP growth
The leaders of the largest domestic pri-vate equity funds continue to face chal-lenges deploying capital amid a buoyant, high-priced economy in the early days of President Donald Trump’s administration.
Despite concern that Trump’s saber-rattling foreign policy and unpredictable approach to fiscal and monetary policy could trigger a downturn, public- and pri-vate-market valuations continued to expand through the first quarter, PE leaders told reporters and analysts during their earn-ings calls.
Blackstone Group’s Hamilton James said his firm avoided pricier segments of the market by pursuing investments in cheap-er energy and healthcare companies, along with consolidations of smaller companies.
Apollo Global Management is trying to make its money “on the buy” by acquiring portfolio companies “five multiples south of the private equity averages,” Senior Manag-ing Director Joshua Harris told analysts.
Rosy economy, sharp pricingCarlyle Group Co-Founder Bill Conway
said on the firm’s call that “despite this rosy economic environment, the investment environment remains challenging, charac-terized by high prices and significant com-petition. During this period, we’re focused on finding deals where Carlyle has an edge and if we do, we’ll aggressively pursue those transactions.”
Meanwhile, Kohlberg Kravis Roberts is all but avoiding domestic markets, with just 17 percent of the $5.4 billion it invested in Q1 coming from its North American PE business.
“Most of our deployment as of late is coming out of Asia. Newer market for us, lower multiples, different macroeconomic considerations, opportunities for global growth,” said KKR’s global head of capital and asset management, Scott Nuttall, dur-
ing the earnings call.“We are quite cautious about investing
in this market in private equity in the U.S. and Europe, in particular, but we are find-ing some opportunities we like. But there’s been more selling than buying.”
Each of the firms sounded generally opti-mistic about the U.S. economy, albeit with the now-common caveats that the market is in the later innings of an unusually long bull market.
Carlyle is projecting the U.S. economy to grow around 2.4 percent this year, roughly a full percentage point faster than it did last year, Conway said during the call. Recent reports that the U.S. economy is softening may be overstated, he added.
Business outlays recover“I would not read too much into the
headline GDP figure of 0.7 percent growth reported” in late April, Conway said. “More
importantly, government data captured the same recovery in business spending that we have observed in our portfolio and have reported to our LPs over the last several months.”
While auto sales fell in recent months, the firm isn’t seeing much evidence of a slowdown in consumer spending, Conway said. Companies are allocating more to capital expenditures than they have in two years.
With that in mind, each of the firms said it’s a good time to exit portfolio holdings. Blackstone’s PE unit realized a record $6.2 billion during the quarter, while KKR in a news release called its exit activity “robust.”
“We are incredibly focused on monetiz-ing the portfolio because to a large extent we believe that we are heading into the ninth year of an economic recovery, financ-ing markets are ebullient, equity markets are aggressively pricing things in most cases, and so we are doing everything we can,” Apollo’s Harris said.
Readily available debt led Apollo to recap-italize some of its portfolio companies in recent months, he added.
starfotograf/iStock/Getty Images
ACTION ITEMFor economic outlooks: data.world-
bank.org
Despite uncertainty about Trump policies, valuations continued to rise in Q1.
NEWS ANALYSISwww.buyoutsnews.com8 | BUYOUTS | May 29, 2017
Jerome Greene, pioneer in raising capital for PE, diesBy Chris Witkowsky• Greene formed Merrill Lynch PE fundraising group• Hired many top names in industry today• Considered ‘pioneer’ in PE fundraising
Robert Johnston, founder and CEO of Beacon Hill Financial, remembers the meet-ing when he told Jerome Greene about his new business of raising capital for buyout funds.
Johnston, one of the pioneers of the private equity placement industry, said he met Greene at a New York City hotel in the early 1980s and told him about the alterna-tive investments that pensions, endowments and foundations were exploring.
At that time, Johnston had just signed up a firm called Forstmann Little & Co to raise a debt and equity fund, and that success caught Greene’s attention.
“Jerry gave me a call and asked, ‘can you tell me what you’re doing?’” Johnston said, adding with a laugh: “I probably shouldn’t have told him.”
Greene took the idea and created what for a long time was the only bank-run PE-capital-raising group in the market. His team at Merrill Lynch helped seed what today is a thriving, lucrative industry. Many of the people who worked on Greene’s team went on to form their own teams or take high-profile private equity roles at firms.
The group also helped some of the big-gest names in private equity raise early capi-tal, including Leonard Green, TPG, Thomas Lee, Freeman Spogli and Charterhouse.
Greene died April 27 after a battle with cancer. He was 75.
“Merrill was clearly the first investment banking firm in the fundraising space and the godfather of placement team spinouts,” said Loren Boston, senior managing direc-tor at placement shop MVision, who worked with Greene at Merrill. Greene “was truly a great man in our industry. … He was truly a pioneer,” Boston said.
“He was a pioneer of raising private equity capital on the Street. … He spot-ted an opportunity and went after it,” said Phil Pool, a veteran PE fundraiser whom Greene hired at Merrill Lynch in the 1980s.
Pool is co-founder and chairman of iCapital Network.
“He completely invented the business in the ’80s at Merrill Lynch” said Dale Meyer, managing partner at Revelstoke Capital Partners, who worked with Greene at Mer-rill. Greene “institutionalized the fundrais-ing process. Without him it might still be all friends and family investing in private equity. [He] put a lot of famous buyout and venture guys in business.”
Greene joined Merrill Lynch in 1980 and left in 1990, joining boutique placement shop Benedetto, Gartland & Greene. He left in 1997 and formed his own capital-raising business, JP Greene & Associates. Greene worked at Salomon Brothers from 1972 to 1980, where he ran the firm’s private-place-ment group, raising mezzanine debt from insurance companies for deals.
At Merrill Lynch, Greene had the idea that he could help buyout funds raise capi-tal from the same insurers where he raised private debt, sources said. The idea was, “why don’t we help you and find some insur-ance companies you don’t know,” said Kevin Albert, a partner at Pantheon who worked with Greene at Merrill Lynch.
Insurance companies were happy to invest equity into buyout funds to get a piece of the firm’s debt business when they did deals, Albert said. At that time, before high-yield funds exploded in popularity, buyout shops used bank loans and mezzanine capi-tal from insurance companies for deals.
Around this time, too, public pensions started committing to private equity funds, greatly expanding the universe of investors for them.
“There wasn’t an organized business plan to get into the placement-agent business, but there was some early success helping peo-ple like Tom Lee raise money,” he recalled. “More people kept coming to us; there was no one else in the world doing this, no big boutiques, none of the other [banks] had a placement-agent group.” Some smaller bou-tique fundraisers were around at that time, including Johnston and Charles Eaton, who formed Eaton Partners.
One of the things Greene did was figure out what kind of people he needed to be placement agents. There were two roles: originators or project managers who pre-pared paperwork and performed due dili-gence, a role for banker types; and selling funds to institutional investors, a role for salespeople.
“Once pensions got involved, there were too many relationships for the banker types to manage, so we would bring in full-time dedicated institutional sales folks,” Albert said. “Those folks would work to develop relationships with pension funds. … That ended up being a pretty common format.”
Salespeople had to understand how to build longer-term relationships, which took a certain type of personality, Boston said. “The challenge was really in pioneering a new product. … You were basically finding the right investors and educating them on the concept of investing in funds.”
On the GP side, “we helped them with structuring and documents, educated them on what investors needed to know, and taught them how to present themselves to the market,” he said.
Greene is survived by his wife of 24 years, Susanne McAlister. He is also survived by two children, Dawn Greene, of Manches-ter, Massachusetts, and Jerome Greene Jr of Indianapolis.
Greene graduated from Boston College and served in the United States Navy as a communications officer. He earned an MBA from the University of Massachu-setts, Amherst, and started his career as an alternative-investments analyst at Phoenix Mutual Life Insurance Co in Hartford, Con-necticut, according to his obituary.
Outside of work, Greene was a photogra-pher, long-distance runner and sailor.
Jerome Greene, pioneer in raising capital for private equity. Photo courtesy of the Greene family.
ACTION ITEMGreene’s obit: www.legacy.com/obituar-
ies/indystar/obituary.aspx?pid=185236587
www.buyoutsnews.com May 29, 2017 | BUYOUTS | 9
EXITS
You’ve been with Endeavour for near-ly 20 of its 26 years. What’s the firm’s mission today?
We are still committed to our goals of building a legacy firm, partnering with qual-ity middle-market companies and managers in the Western U.S. and generating favorable risk-adjusted returns for our investors.
Do your successful deals have any common themes?
Without mentioning names, our five or so most successful investments involved companies that were in an expanding indus-try or market niche, had a leading or siz-able market presence that they were able to leverage into attractive free cash flow mar-gins and, most importantly, were led by an excellent management team.
Any key lessons from deals that didn’t perform up to expectations?
As you would expect, our worst-per-forming investments had the opposite characteristics of the best-performing ones. These typically involved a negative indus-try dynamic, such as regulatory change or a new disruptive force, and a board and man-agement team that was either slow or failed adapt to these changes. ... As you would expect, an underperforming board and management team is typically the primary reason for underperforming investments.
How has your deal-sourcing practice evolved?
Our deal sourcing strategy and activi-
ties have remained focused on developing relationships with what we view as the best companies, managers and service providers in the Western U.S. ... We recently invested in a company that we had known for over 20 years.
Neuberger Berman’s Dyal Capital and others have moved to buy stakes in PE firms. Has the firm considered doing something similar?
I think it can make sense for some firms and partners. Selling too big a stake can obviously impact a firm’s ability to retain senior level talent over the long term. We have not considered selling any interest in the firm to a third party.
What’s the most successful sector forEndeavour?
Our successful transactions have been in a broad range of industries. The most repre-sented industries would be food, consumer, transportation and logistics, and business services.
Are you looking at branching out into any new sectors?
We have no plans to add any new broad sectors to our proactive industry coverage efforts. We will continue to evaluate new subsectors within our key industries of manufacturing, food and consumer, health-care, transportation/logistics and business services. Targeted subsectors are typically capitalizing on particular outsourcing, con-sumer and/or industry trends.
Any lessons from earlier in your career that help you now?
[Private equity] is an apprentice business [and you] learn something from every invest-ment. The most important lessons relate to evaluating potential management teams and being able to risk-adjust the returns of poten-tial investment opportunities.
What about succession planning as your senior leadership matures?
We have been very deliberate about suc-cession planning, given our focus on creat-ing a legacy firm. This includes a mentoring process that involves every partner-track professional in the firm, a broad sharing of firm responsibilities and a merit-based sys-tem of compensation. We are proud that no senior level partner has ever left the firm.
Talking Top Quartile with Mark Dorman of Endeavour CapitalBy Steve Gelsi
Endeavour Capital, the Portland, Oregon, buyout firm, has delivered strong returns on at least two of its funds. The vintage 2000 Endeavour Capital Fund III generated an IRR of 29.6 pct as of March 31, 2016, for Oregon Public Employees Retirement Fund, according to public documents. That compares with a top-quartile threshold of 17.1 percent for the same vintage year, an analysis of public-pension fund returns by Buyouts shows. The firm’s vintage 2004 Endeavour Capital Fund IV logged a 28.2 pct IRR for Oregon as of that date. The compares with a top-quartile threshold of 11.6 percent.
0
5
10
15
20
25
30
Vintage 2004 Endeavour
Capital Fund IV
Top quartile threshold for year
Median IRR for vintage year
IRR
28.2
11.6
7.1
Endeavour Capital Fund Performance
Source: Public pension fund data analysis by Buyouts
Mark Dorman
www.buyoutsnews.com10 | BUYOUTS | May 29, 2017
Eliopoulos: CalPERS, GPs consult as possible PE shuffle loomsBy Sam Sutton• “There’s an incredible amount of capital” chasing PE, says Eliopoulos• CalPERS hasn't disclosed new commitment to PE since December• PE Portfolio valued at more than $25 bln
California Public Employees’ Retirement System has been reaching out to its private equity managers over the past six months as it reviews the portfolio for a possible overhaul, CIO Ted Eliopoulos told Buyouts in an interview.
“Any time we’re looking at our program, our asset allocation, our business models, there’s going to be legitimate questions from our partners. What does this mean for us? What’s the direction? What’s the strat-egy going forward?” Eliopoulos told Buyouts. “I’ve actually been meeting with them [gen-eral partners] over the last six months, so I think the lines of communication are well opened.”
Earlier this year, the Wall Street Journal reported CalPERS was considering pur-chasing a PE firm — allowing it to keep a greater share of the returns generated by whatever companies are acquired — as well as making more direct investments.
Combining PE, public equity?CalPERS might merge its private equity
and public equity portfolios into a larger program, which it will refer to as “growth” holdings, as well. CalPERS is expected to release more information about its plans for the PE program this summer, spokes-people said.
“I’m excited about our initiative to look at alternative ways to invest in private equity. It’s very embryonic. It’s very early days, but I think long term that’s something CalPERS could be a leader in,” Chief Operat-ing Investment Officer Wylie Tollette told Buyouts.
CalPERS launched its review of the pri-vate equity program before longtime PE chief Réal Desrochers left for a position at a large overseas bank earlier this year, spokes-
man Wayne Davis told Buyouts. Portfolio con-sultant PCA, which advised CalPERS on its PE investment decisions, resigned from its contract with the pension system in March.
Sarah Corr was elevated from within CalPERS to manage the portfolio on an interim basis. Meketa Investment Group was tapped to advise the PE program.
CalPERS’s approach to private equity shifted slowly over the past several years as it began concentrating its holding with fewer fund managers. In 2015, the system began reducing the number of PE firms that manage its holdings through several avenues, including sales on the secondary market. The retirement system also began committing larger amounts to new funds raised by its small group of “core” manag-ers, such as Blackstone Group.
While CalPERS ends relationships with certain managers, passing on re-up opportu-nities and selling off stakes in older funds, both Tollette and Eliopoulos said their evolv-ing approaches to private equity shouldn’t be interpreted as antagonism toward invest-ment managers.
The system’s review of its PE portfolio came during a relatively fallow period for the program. CalPERS, which committed $3.3 billion to 2016 vintage funds, has not disclosed a new commitment to a pri-vate equity fund since it placed $150 mil-lion in Clayton, Dubilier & Rice Fund X in December, monthly investment disclosures show.
“This is a marketplace. It’s a marketplace for talent. And we’re very comfortable as investors operating in various marketplaces,
including ones for talent,” Eliopoulos said. “Right now, there’s an incredible amount of capital looking for private equity talent.”
‘We’re competing well’The amount of limited partner capital
clamoring for space in funds managed by PE firms “gives the negotiating strength to the GPs in today’s marketplace. I think we’ve done well on terms, but the fee load is just one part of getting alignment,” he added. “We think we’re competing well.”
The $320 billion retirement system has cut the average management fee it pays to new commitments incrementally each year since 2012, investment documents show. It’s also collecting a greater share of each PE fund’s carried interest.
CalPERS in recent years has faced mounting pressure around the costs asso-ciated with its $25.7 billion private equity portfolio. These tensions were highlighted in exchanges between board member JJ Jelincic and Desrochers that attracted the scrutiny of elected officials like Treasurer John Chiang, also a CalPERS board member, and State Assemblyman Ken Cooley.
Assembly Bill 2833, signed into law by Gov. Jerry Brown last year, formalized the amount of information PE firms must pro-vide to CalPERS, and how much of that information must be released to the public.
FRESH CAPITAL
ACTION ITEMFor more information on CalPERS,
visit: www.calpers.ca.gov
Ted Eliopoulos (left), chief investment officer, and Wylie Tollette, chief operating investment offi-cer, at California Public Employees’ Retirement System. Photo courtesy of the retirement system.
www.buyoutsnews.com May 29, 2017 | BUYOUTS | 11
Ohio Police & Fire boosts real assets holdings By Sam Sutton• Ohio Police & Fire commits $30 mln each to Altaris, Glendon• Backs open-ended IFM Investors fund for up to $100 mln• $15.1 bln pension system has 6.3 pct allocation to private markets
Ohio Police & Fire Pension Fund commit-ted up to $210 million to private market funds at its May 16 meeting, including up to $30 million to Altaris Capital Partners, the retirement system said.
Some $6 million of Ohio Police & Fire’s commitment will go to Altaris Constellation Fund IV, a $200 million co-investment vehicle the firm is raising alongside its flagship fund. The flagship, Altaris Health Partners VI, is targeting $800 million with a $1 billion hard cap, Buyouts reported earlier this week.
The retirement system committed up to $30 million to Glendon Opportunities Fund II, a distressed-debt fund managed by Glen-don Capital Management. The firm set a $2 billion target for Fund II, Buyouts reported this year.
Ohio P&F also made commitments to infrastructure and agriculture-focused funds at the meeting, allocating up to $100 million to IFM Global Infrastructure Fund and up to $50 million to ACM Fund II.
The commitment to IFM Investors’ open-ended fund is Ohio P&F’s first allocation to infrastructure through its dedicated real assets portfolio. The retirement system set a 5 percent allocation to the asset class.
ACM Fund II, managed by Agriculture Capital, is targeting $400 million for invest-ments in sustainability-driven agriculture and food investments, according to an SEC filing and the firm’s website. The commit-ment to ACM Fund II was also made through Ohio Police & Fire’s real assets allocation.
Ohio Police & Fire Pension Fund man-aged $15.1 billion of assets as of May 16. The retirement system held 6.3 percent of its assets in private markets funds as of March 31.
With ample liquidity and no financing contingencies, CODI is the right acquirer of businesses with
$10-70 million in cash flow.
www.buyoutsnews.com12 | BUYOUTS | May 29, 2017
CalPERS OKs $1.68 bln budget, excludes PE expensesBy Sam Sutton• New budget omits PE fund expenses included in previous budgets• PE fund expenses totaled $75 mln in 2015-2016 fiscal year• State senators, board candidate question the shift
California Public Employees’ Retire-ment System approved a $1.68 billion budget that omits tens of millions in private equity expenses included in its previous annual budgets.
The $322.5 billion retirement system’s budget for PE-management fees fell to $260 million for the 2017-2018 fiscal year, a $131 million decline from what it had budgeted for the current fiscal year end-ing June 30.
The projected cuts to private equity helped reduce CalPERS’s overall operat-ing budget by $110.5 million from the previous year, a 6.2 percent decline, pen-sion documents show.
The new budget excludes, however, a variety of fund-related expenses that CalPERS pays its PE managers for legal and auditing services, amounts included in its budget in previous years. Those expenses were significant in the 2015-2016 fiscal year, totaling roughly $75 million.
It’s unclear how much CalPERS expects to pay in PE expenses in FY 2017-2018, or how those projections would have influ-enced its budget.
CalPERS will continue to pay these expenses, but they have no bearing on the retirement system’s annual budget, spokespeople told Buyouts earlier this month. The decline in costs was also attributed to the phasing out of older pri-vate equity funds that charged CalPERS higher annual management fees.
The CalPERS finance and administra-tion committee recently approved the 2017-2018 fiscal year budget after dis-cussing the exclusion of PE expenses. In a web broadcast of the meeting, board members appeared to agree with Chief Operating Investment Officer Wylie Tol-lette’s assertion that CalPERS can't con-trol the amounts PE managers charge in
expenses, placing those costs outside the purview of its budgeting process.
“Putting [private equity fund expens-es] in a budget might imply a level of control the limited partner does not have,” Tollette told Buyouts in an inter-view before the meeting. General part-ners charge partnership expenses to fund investors at their own discretion, he said, and “we don’t control those expenses. Putting those in our budget, frankly, doesn’t necessarily make a ton of sense to us.”
New accounting systemPE fund expenses should never have
been included in older budget documents or financial reports, a second CalPERS staffer told Buyouts. The retirement sys-tem’s new accounting system for its $26 billion private equity program, which it launched in mid-2015, enables CalPERS for the first time to separate expenses from private equity management fees. This made it easier to justify their remov-al from the budget.
Private equity expenses will continue to be footnoted in public reviews of the PE portfolio, as well as the annual finan-cial statement, moving forward, Tollette said.
CalPERS’s decision to exclude a sig-nificant component of its private equity program’s costs from its budget was criti-
cized by CalPERS board candidate Marga-ret Brown, who at a May 15 investment committee meeting questioned staff ’s motivation for making the change.
Those concerns were echoed by two senators on the state’s public employee and retirement system committee, Repub-licans John Moorlach and Mike Morrell.
“The rationale of, whether you have control over it, seems a little weak,” Moorlach told Buyouts. Moorlach, a certi-fied public accountant and financial plan-ner, added: “You wouldn’t reduce your rental income, in your second home, if you had to replace the air conditioner or the toilet. You’d have your income and then the long list of expenses.”
That said, if CalPERS’s reporting and disclosure of those expenses is in align-ment with accounting principles formal-ized by the Governmental Accounting Standards Board, which sets accounting standards for public pensions, Moorlach said his concerns are moot.
“It doesn’t seem like the proper approach, but if they have a GASB ... promulgation saying they can do it, then who am I [to say]?” he told Buyouts.
California State Sen. John Moorlach, a Republican representing a district including much of Orange County, fields media questions regarding Gov. Jerry Brown’s budget revision, on May 11, 2017, at the state capitol in Sacramento. Photo courtesy of Sen. Moorlach’s office.
FRESH CAPITAL
ACTION ITEMFor more information on CalPERS,
visit www.calpers.ca.gov
www.buyoutsnews.com May 29, 2017 | BUYOUTS | 13
CalPERS, challenged by state law, widens PE ranksBy Sam Sutton
• Prop. 209 bars gender, race-based criteria for selection• CalPERS program targets smaller firms• “CalPERS/CalSTRS driving level of diversity, which is quite grand”: portfolio manager
California Public Employees’ Retire-ment System’s emerging-manager program is increasingly targeting investments with women- and minority-owned private equity firms, even though it’s not an official goal of the program, Portfolio Manager John Greenwood said at Buyouts’ Emerging Man-ager Connect West on May 11.
“The State of California and CalPERS/CalSTRS are driving a level of diversity, which is quite grand,” he said.
Emerging-manager programs at CalPERS and CalSTRS don’t explicitly mandate diver-sity, unlike those at Illinois and New York
retirement systems. Both institutions are subject to a California law that prohibits investment decisions based on race or gen-der, challenging them as diversity became a priority.
California’s Proposition 209, approved by more than half the state’s voters in 1996, prevents state agencies from creating race- or gender-based criteria for hiring contrac-tors or investment managers.
CalSTRS CIO Christopher Ailman, speak-ing at CalPERS & CalSTRS Diversity Forum in Sacramento on May 10, called the law “cum-bersome.” CalPERS CIO Ted Eliopoulos said at that event that limited partners are more often asking managers about the racial and gender makeups of their investment teams.
In recent years, CalPERS has dedicated considerable resources to finding firms rais-ing their first or second funds, effectively diversifying its pool of managers without issuing requests for proposals that would have violated Prop. 209’s restrictions.
Less-established managers are more likely to be led by women and minorities. In effect, the emerging-manager program enables CalPERS to diversify its fund-man-ager group without formally establishing diversity as a priority, Greenwood said.
“I can see it growing,” he said, adding that he was encouraged by what he’d heard at the diversity event at which Ailman and Eliopoulos spoke earlier in the week.
The commitments CalPERS places with emerging managers could blossom into more significant relationships. In 2015, CalPERS introduced an “Emerging Man-ager Transition Plan” designed to maintain its relationships with managers that had outgrown its emerging-manager program but were too small to take on the $150 mil-lion allocations CalPERS places with larger managers. The emerging-manager program tends to allocate around $10 million or $15 million per commitment.
Another important thing with emerg-ing managers, Greenwood said, is that “we have a large portfolio at CalPERS, and some of those managers are going to fall away over time, and we have to replace those. So emerging managers are very important in that regard.”
FRESH CAPITAL
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ager program: http://bit.ly/2pGVEPO
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www.buyoutsnews.com14 | BUYOUTS | May 29, 2017
Tecum Capital partners with Pennsylvania family office on control fundBy Luisa Beltran• Tecum Capital was originally known as FNB Capital Partners• Fund II closed with $225 mln in April• Tecum Equity III will target lower and middle market companies
Tecum Capital Partners has partnered with a family office to launch a private equity fund.
Tecum Equity Partners III LP is a $50 million committed pool of capital backed by Western Allegheny Capital. Tecum Equity III will target control investments in industrial, distribution and more cycli-cal sectors like machine shops, tool and die, as well as other manufacturing, said Managing Partner Stephen Gurgovits.
Tecum Equity III will target lower- and middle-market companies, seeking to invest from $5 million to $20 million equity per deal. Unlike a traditional PE fund, Tecum Equity III does not have an end date. “We can hold in perpetuity,” Gurgovits said of Fund III’s investments.
Tecum III: strictly control equityTecum Equity is the PE strategy of
Tecum Capital, a Pittsburgh investment firm with two SBIC debt-oriented funds. Tecum Capital Partners I raised $200 mil-lion in 2013. The second pool closed in April with $225 million, Gurgovits said.
Tecum Equity represents the invest-ments of Western Allegheny, the family office of a Pennsylvania entrepreneur. The entrepreneur owns one of the largest pri-vately held companies in western Pennsyl-vania, Gurgovits said. Western Allegheny is an LP of Tecum Funds I and II, he said.
Gurgovits wouldn’t identify the entre-preneur, saying only: “He is known. He’s known in our region” of western Pennsylvania.
Tecum Capital decide to launch the PE strategy when it realized that its SBIC funds weren’t a good fit for certain M&A situations, Gurgovits said. The Tecum Capital funds are debt-oriented pools that
invest equity but only for minority stakes, he said. Tecum Equity III is “strictly con-trol equity,” he said.
Tecum Capital was originally known as FNB Capital Partners. It operated as a subsidiary of F.N.B. Corp, the financial-services company that also owns First National Bank of Pennsylvania.
The Dodd-Frank Act of 2010 “put the kibosh on banks’ direct involvement in private equity,” Gurgovits said. The Volck-er rule provision of Dodd-Frank, however, allowed SBIC-licensed banks to invest in pooled funds. In 2013, FNB Capital spun out when it received SBIC status and launched its first pool. FNB Bank is the largest investor of Tecum Capital I, Gur-govits said.
In 2016, the firm changed its name to Tecum Capital. Gurgovits said he felt as though he went through about 2,000 names before he read about Tecumseh, a famous Native American war chief from the Ohio valley region. In Latin, Tecum means “with you.” “That personifies how we do deals,” Gurgovits said.
Family offices have emerged as a force in M&A. More and more family offices are competing against PE and strategics in deals, Buyouts has reported. One critique of family offices is that they don’t know how to participate in mergers, sources said.
Many family offices want to do direct investing, Gurgovits said. Some are “very good” and can execute, while others don’t really know how to approach an auction process, he said. “That was our selling point to Allegheny. ‘Don’t make those mistakes. Let us do [the negotiations] for you.’”
Tecum Capital has quadrupled in size since it launched in 2013, when it had a staff of three, seven portfolio companies and $35 million in assets under man-agement. The firm’s 11th employee, an associate/analyst, will start next week, Gurgovits said.
Tecum currently has 26 portfolio com-panies and $457 million in AUM. Such growth is common in New York and Chi-cago but unusual in Pittsburgh, which has many endowments and foundations as well as an active VC community. The other large growth stories in Pittsburgh PE are Incline Equity Partners and PNC Riverarch Capital, he said.
“This is an old Rust Belt city. I’m sur-prised there’s not a lot more dedicated capital,” he said.
FUND NEWS
Stephen Gurgovits, managing partner at Tecum Capital Partners. Photo courtesy of the firm.
Onex starts raising Fund V, targets $6.5 blnBy Kirk Falconer• Toronto firm targets $6.5 bln for Fund V• Onex itself will commit about $2 bln• Fund at target would be 14 pct larger than previous
Onex Corp has set a $6.5 billion target for its fifth flagship fund, which would be the largest in the private equity firm’s 33-year history.
In its report of f irst-quarter 2017 results, the Toronto investor said it recently launched fundraising for Onex Partners V. Onex, a listed firm, plans to commit about $2 billion.
Closing on $6.5 billion would give the fund about 14 percent more in commit-ted capital than its predecessor, which collected $5.7 billion in 2014.
Founded in 1984 by Chairman and CEO Gerry Schwartz, Onex raised its first PE fund in 1999. In addition to con-tributing its own resources, Onex secures third-party capital from a range of global institutional investors, including pension funds, sovereign-wealth funds, banks, insurers and family offices.
Target: large-cap buyoutsThe Onex Partners funds have been
earmarked for large-cap buyouts of oper-ating companies in North America and Europe. Active in more than 15 sectors, the vehicles generally focus on carve-outs, growth platforms, restructurings and other opportunities.
Onex also has a mid-market invest-ment arm, ONCAP, which raised $1.1 bil-lion for its fourth fund last November. In all, eight Onex Partners and ONCAP funds have accounted for close to $12.4 billion in third-party capital.
Onex has been quite active on the deal-making front of late. In March, Onex Partners IV wrapped up its acqui-sition of Parkdean Resorts, a U.K. owner and operator of caravan holiday parks, for about $1.65 billion (£1.35 billion).
The Parkdean deal was preceded in December by Fund IV’s $1.37 billion buy of Save-A-Lot, one of the largest discount grocery retailers in the United States.
Onex has been just as busy monetiz-
ing portfolio assets. Since January, the firm has announced or completed three major liquidity events.
They include initial public offerings of trade-show operator Emerald Exposi-tions and door-and-window manufactur-er Jeld-Wen. Onex shared in the proceeds but continues to hold majority interests in both companies.
Onex also agreed in March to sell USI Insurance Services to KKR and Caisse de dépôt et placement du Québec for $4.3 billion. The sale is expected to provide Onex with a gross multiple of invested capital of 3.4x and a gross return of 34 percent.
Since inception, Onex reports its pri-vate equity activity has generated a gross 2.7x of invested capital, which translates into a gross IRR of 28 percent. Fund IV is currently showing a gross 1.1x of invest-ed capital and a gross IRR of 11 percent.
ACTION ITEMContact Onex: www.onex.com/Contact/
Index?KeyGenPage=1073751422
330 Madison Avenue, 27th Floor, New York, NY 10017 www.sentinelpartners.com | Tel: 212.688.3100 | Fax: 212.688.6513
S E N T I N E L C A P I T A L P A R T N E R S
Sentinel Capital Partnersbids a fond farewell to portfolio company
the leading franchisor and operator ofdouble drive-thru hamburger quick service restaurants
The undersigned sponsored the original acquisitionand provided equity from
Sentinel Capital Partners IV, L.P.
New York April 2017
in a management buyout transaction valued at
ARORIMMMIMMM
Buyouts - Checkers Sale Tombstone (4.2017)_Buyouts - Checkers Sale 4/24/2017 5:24 PM Page 1
FUND NEWS
www.buyoutsnews.com16 | BUYOUTS | May 29, 2017
Rubenstein: All Carlyle funds will hit their hard capsBy Sam Sutton• Fundraising environment “strongest I've seen”: Rubenstein• Demand for new funds reduces pressure on fees• Firm plans to raise $100 bln by end of 2019
Carlyle Group expects its new real estate fund to its hard cap. So will ener-gy business NGP Energy Capital Manage-ment’s next vehicle, along with Carlyle’s new mid-market debt fund and its finan-cial services fund.
In fact, the $162 billion asset man-agement firm is projecting that all its closed-end funds will hit their hard caps.
“I expect we’ll hit the cap of every single fund we have in market,” Co-Founder David Rubenstein said during a first-quarter earnings call on May 3. He called the current fundraising environ-ment “the strongest I’ve seen.”
Investors aren’t seeing much in the way of returns from anywhere else in their portfolios, which has driven up demand for PE and other alternative strategies offered by Carlyle and its peers, Rubenstein said. As a result, the firm’s new fund offerings have often met high demand.
Allocations come up shortFurthermore, demand is such that
many limited partners aren’t able to invest their preferred amounts, given the size and timing constraints on Car-lyle’s recent fundraises. The average PE firm spent 14.2 months marketing its new fund before holding a final close in 2016, Preqin data shows. That’s the speediest average amount of time spent on the road since at least 2009.
Rubenstein said he expected the firm to reduce the number of closings its funds hold in the future, compared with prior generations.
“If you don’t come into the first close, you’re not going to get your full alloca-tion,” Rubenstein said, relaying what Carlyle’s had to tell some of its longtime investors.
The breadth and depth of LPs’ demand
for new funds removed some of the pres-sure alternative-investment firms faced regarding management fees and carried interest as well, Rubenstein said. PE and real estate funds are generally consid-ered among the most expensive in the asset-management industry.
“Investors are focused less on the fees at this point than they are in get-ting access to the fund,” he said. “It may change. But the fees are pretty much being accepted at this point because they’re realizing the returns they’re get-ting” net of fees are pretty great.
At least some of the demand stems from newer entrants to the asset class, including certain family offices and sov-ereign-wealth funds, Rubenstein said. While U.S. public pensions continue to represent a significant part of Carlyle’s
fund investor base — roughly 30 percent — their slice of the pie narrowed as sov-ereign-wealth funds and family offices direct more capital toward Carlyle.
‘Family offices are proliferating’“Family offices are proliferating, not
in the U.S. only but around the world,” he said, adding, “You’re seeing a big inf luence and inf lux from the feeder funds” banks raise for high-net-worth individuals.
Last year, Carlyle said it planned to raise $100 billion for new funds between 2016 and the end of 2019. The firm’s PE platform will represent around a third of that total, with its real assets business, which includes real estate and energy funds, accounting for another third.
Carlyle finished the first quarter with its corporate private equity unit up 9 per-cent, contributing to the firm’s second strongest quarter for value creation since its public offering in 2012. “The long-term strength of the underlying portfolio supports our goal to raise $100 billion by the end of 2019,” Rubenstein said in a statement.
Carlyle Group Co-CEO David M. Rubenstein discusses the private equity industry at an employee retreat in spring 2017. Photo courtesy of the firm.
ACTION ITEMLearn more about Carlyle: www.carlyle.com
“The fees are pretty much being accepted because [investors] are realizing the [net] returns they’re getting” are strong.
FUND NEWS
www.buyoutsnews.com May 29, 2017 | BUYOUTS | 17
Vista Equity closes Fund VI on $11 blnBy Sam Sutton• Vista’s new fund almost double the size of Fund V• LA City Employees, NJ among LPs to commit• Includes $500 mln from the general partner
Vista Equity Partners closed its latest flagship fund on $11 billion, including $500 million from the firm itself, according to a source with knowledge of the firm.
Vista Equity Partners Fund VI is Vista’s largest fund to date and a little less than double the size of its $5.8 billion 2014 vintage fund. The firm earlier this year increased its hard cap to $10.5 billion from $10 billion. The Wall Street Journal first reported on the final close.
Vista VI was widely considered among the most sought-after funds of the past year, several LPs told Buyouts during the fundraise. Fund VI attracted commitments from a range of investors, including Los Angeles City Employees’ Retirement Sys-tem, New Jersey Division of Investment and Oregon Public Employees Retirement Fund.
The firm’s previous funds have per-formed consistently well, according to LP due-diligence materials reviewed by Buyouts. Its $3.5 billion 2012 vintage fund was netting a 22.1 percent internal rate of return and 1.76x multiple as of Sept. 30, Oregon Investment Council documents show. Fund V has yet to generate mean-ingful returns.
Vista Fund VI will pursue investments in enterprise software. The firm will target companies with enterprise values of $400 million to $5 billion and will typically invest at least $200 million of equity per deal, an Oregon investment memo says.
Led by founder Robert Smith, Vista sold a stake in its own management company to Dyal Capital Partners in 2015 for $875 million, according to a due-diligence memo obtained by Buyouts. The stake was widely reported as 20 percent of the firm.
Barclays spinout Glendon targets reserve fund at up to $2 blnBy Chris Witkowsky• Glendon targets $2 bln for reserve fund• First close expected this month• Firm formed in 2013 by Barclays executives
Glendon Capital Management, a Barclays spinout that invests in distressed debt, is raising up to $2 billion for a reserve fund that could be activated in a market down-turn, a source with knowledge of the pro-cess told Buyouts.
Glendon may amass more than $1 bil-lion in a first close later this month, the person said. Senior executives at the firm, which doesn’t appear to have a website, did not respond to connection requests over LinkedIn.
The Santa Monica, California, firm launched in 2013. It’s not clear how much the firm raised for Glendon Opportunities Fund. The firm’s Form ADV attributed about $1.2 billion to its debut fund, out of just over $2 billion in managed regulatory assets as of Dec. 31, 2016. The hard cap on Fund I was $1 billion, Buyouts previously reported. Altogeth-er the firm managed a bit more than $2 bil-lion in regulatory assets as of Dec. 31, 2016.
The firm has discretion over activating
the reserve fund based on various triggers, the person said. Park Hill Group is place-ment agent on the reserve fund; the firm also helped raise the debut fund.
Glendon invests in distressed situations across bank loans, corporate bonds, munici-pal debt, sovereign debt, asset-backed secu-rities, and equity securities related to debt restructurings and special situations, the Form ADV shows.
The firm was formed by Barclays’s head of distressed debt and special situa-tions, Matthew Barrett, and former manag-ing directors Holly Kim, Brian Berman and Eitan Melamed. Another partner, Michael Keegan, joined in May 2016, according to the Form ADV.
Barrett, Kim and Berman worked at Bar-clays from 2006 to 2013, according to regu-latory filings by Glendon. Earlier they had worked at Oaktree Capital Management.
With a mandate to invest in distressed credit and special situations at Barclays, the team tapped $1.5 billion from the bank’s bal-ance sheet. That figure was later increased to $2 billion.
By the the time of the spinout in April 2013, Glendon agreed to wind down the Bar-clays assets, which totaled about $700 mil-lion as of May 2014, according to a separate source.
A Barclays sign is seen outside a branch of the bank in London on Feb. 23, 2017. REUTERS/Stefan Wermuth
FUND NEWS
ACTION ITEMCheck out Glendon’s form ADV
here: http://bit.ly/2pCn34K
ACTION ITEMMore on Vista Equity Partners: www.
vistaequitypartners.com
www.buyoutsnews.com18 | BUYOUTS | May 29, 2017
Valor Equity Partners targets $750 mln for Fund IVBy Sam Sutton• Third fund raised $490 mln in 2015• Valor portfolio includes Tesla, SpaceX• Fund II netting 22.4 pct IRR
Valor Equity Partners is marketing its latest growth equity fund with a $750 million target, two limited partners told Buyouts. The firm has not set a hard cap, but Valor Equity Partners IV is unlikely to surpass $1 billion.
New York State Teachers’ Retirement System and Illinois Municipal Retirement Fund both committed up to $75 million to the fund earlier this year. Both retire-ment systems declined comment on the fund’s target or strategy.
The firm did not respond to requests for comment.
Valor closed its third flagship fund on $490 million in 2015. Fund III LPs included California Public Employees’ Retirement System.
Valor invested in several of Elon Musk’s businesses, including Tesla, space exploration technology company SpaceX and SolarCity, a solar power business. Other portfolio companies include Man-duka, which makes yoga equipment, food businesses Eatsa and Fooda and healthcare companies Marathon Phar-maceuticals and Family Home Health Services.
Valor’s second fund was netting a 22.4 percent internal rate of return and 2.6x multiple through June 30, according to CalPERS records. Fund III was netting an 8.5 percent IRR and 1.2x mutiple as of that date.
Antonio Gracias founded Valor Equity Partners in 1995. Susan Hassan, Juan Sabater, Jonathan Shulkin, Michael Soenen and Timothy Watkins are part-ners at the Chicago firm.
CS Fund eyes minority stakes in hedge funds, private equityBy Chris Witkowsky• Anteil group to target stakes in hedge funds and PE firms• Said to target up to $2 bln• Led by former Stanford Management Co chief John Powers
Another big financial institution is jumping into the race to buy minority stakes in private equity firms.
Credit Suisse is in market with a fund from its Anteil Capital Partners group that will buy minority stakes in hedge funds and PE firms, according to a per-son with knowledge of the group.
The fund’s target is unclear. Bloom-berg has reported Anteil was targeting up to $2 billion to buy stakes in hedge funds. A source with knowledge of the fund told Buyouts recently the pool was targeting stakes in hedge funds and PE firms.
The pool has raised $300 million to $400 million, the person said.
Candice Sun, a spokeswoman with
Credit Suisse, declined comment.The Anteil group is led by John Pow-
ers, former president and chief executive of Stanford Management Co. He joined Credit Suisse as a managing director in 2015.
Powers plans to create a diversified portfolio of 10 to 12 minority stakes, primarily hedge funds but also in PE firms across various strategies, accord-ing to the person and a description of the team that was part of a job description.
A popular strategyCredit Suisse joins several other firms
chasing stakes in GP management compa-nies, including Neuberger Berman’s Dyal Capital Partners, Goldman Sachs’s Peter-shill, Blackstone Group, Hycroft Capital and Carlyle Group’s AlpInvest Partners.
As more GPs explore selling stakes in their management companies, limited partners have raised concerns about such deals. Mainly, LPs worry senior partners are diluting future value for younger executives by dedicated portions of car-ried interest to third-parties.
Sources who have worked on GP-stake sales say these transactions give GPs per-manent capital to do things like expand the franchise and create incentive pro-grams for younger executives.
Tesla CEO Elon Musk celebrates at his company’s factory in Fremont, California, on June 22, 2012, as the car company began delivering its Model S electric sedan. REUTERS/Noah Berger
FUND NEWS
ACTION ITEMFor more information about Valor Equi-
ty Partners, visit www.valorep.com
www.buyoutsnews.com May 29, 2017 | BUYOUTS | 19
Bernhard back in the market targeting $1 bln for second fundBy Chris Witkowsky
SNAPSHOTFirm: Bernhard Capital PartnersFund: Bernhard Services Fund IITarget: $1 blnAmount Raised: N/APlacement Agent: Metric Point, Moelis
Bernhard Capital Partners is back in market in a quick turnaround with its sec-ond fund, this time targeting $1 billion, according to a person with knowledge of the process.
Bernhard closed its debut fund last year on $750 million for investments services companies in the industrial, energy and infrastructure sectors in the middle mar-ket. Fund I is generating a 20 percent net internal rate of return across 17 invest-ments, the person said.
Bernhard, Baton Rouge, Louisiana, was formed in 2013 by Jim Bernhard, founder and former chairman and chief executive of Fortune 500 energy giant Shaw Group. Bernhard formed the firm along with Jeff Jenkins, former chief operating officer of Shaw Environmental and Infrastructure.
Fund I was already at least half deployed by the time it held a final close last year.
Bernhard seeks investments in services around energy and industrials, which ties the firm less to oil-price volatility, a source with knowledge of the firm told Buyouts last year.
“They’re doing the construction and engineering and maintenance of things like power plants and refineries,” the source said. “It’s not like they’re trying to time the cycle. If a company is building a new refinery, spending billions of dollars … those companies still need to service their assets; they still need to have mainte-nance work done, engineering work done.”
Metric Point Capital, formed recently by three senior executives from Atlantic-Pacific Capital, and Moelis & Co. are place-ment agents on Bernhard Services Fund II. Atlantic-Pacific was placement agent on Bernhard’s first fund.
Discretionary fund closed by Taurus at $157 mlnBy Eamon Murphy
• Boston firm invests in commercial real estate globally• Sidecar vehicle expected to add $100 mln to equity platform• Fund will target multi-tenant Class B industrial properties
Private real estate firm Taurus Invest-ment Holdings closed its first discretionary fund, Taurus U.S. Logistics Fund I, with $157 million of equity commitments, CEO Peter Merrigan told Buyouts.
Investors were mostly large family offic-es, “of which we have a fairly extensive net-work,” Merrigan said. “A lot of our capital comes from Europe and the Middle East. We also own our own broker-dealer, so we raise capital in the U.S. through that vehicle.”
Fundraising started in November and continued for four months. Taurus and its
regular investors will also contribute capi-tal to a sidecar vehicle, which Merrigan said will raise an additional $100 million alongside the main fund. Previously, the firm raised capital “on more of a deal-by-deal basis,” he said.
“This fund is targeted to do multi-tenant, what we would call Class B industrial proj-ects in major markets,” Merrigan explained.
‘Quite a few club deals’Taurus has already done “quite a few club
deals on this basis before, and we decided to raise this discretionary fund to ramp up the program. … We’re trying to acquire assets below replacement cost and then move rents with shorter-term average lease terms, where we can renew tenants and improve the buildings and move them to market.”
Initial acquisitions will be financed by MetLife. Deals will typically include 60 per-cent to 65 percent bank or insurance com-pany financing.
Based in Boston, Taurus acts as a GP spon-sor of investments in commercial real estate, including multifamily residential, industrial, office and retail. The firm manages invest-ments in the U.S., Canada, the U.K. and Ger-many. “We have one project in Greece, we’ve done several projects in Turkey, we have one that we’re working on in India, and we have one that we’re working on in Argentina,” Merrigan said.
Taurus’s portfolio amounts to 16 mil-lion square feet of real estate. The firm also owns some 4,000 acres in various stages of development. In April, Taurus closed on the acquisition of a 190-unit Class A apart-ment complex in Everett, Massachusetts, for $56 million, including about $22 million of equity.
Merrigan founded Taurus in 2002 with two partners, brothers from Germa-ny, Lorenz and Guenther Riebling.
He said the firm intends to raise more funds like this one over the next several years: “We see a real demand for this kind of product from our investor base. We will also be open to institutional investors, but right now we primarily focus on large fam-ily offices.”
FUND NEWS
ACTION ITEMReach Taurus CEO Peter Merrigan at
+1 617-357-4440
Peter Merrigan, chief executive of Boston’s Taurus Investment Holdings.Photo courtesy of the firm.
www.buyoutsnews.com20 | BUYOUTS | May 29, 2017
S&P: Nine West more likely to revamp debt; Moody’s cuts Cole HaanBy Robert Daniel• Nine West capital structure “unsustainable”: S&P• Retail environment challenging: S&P and Moody’s• Cole Haan: fashion risk, good brand recognition: Moody’s
Nine West, the New York women’s apparel, footwear and accessories designer and retailer, is likely to restructure its debt because “its capital structure is unsustain-able,” Standard & Poor’s says.
Nine West recently retained Lazard Frères to figure out a capital-structure solution.
At Dec. 31, Nine West, backed by the private equity firm Sycamore Partners, had $1.5 billion of debt outstanding. The company has about $1 billion of debt maturing in 2019, and its unsecured debt is trading at 20 cents to 30 cents on the dollar, analyst Suyun Qu wrote in a recent report.
Qu cut her corporate-credit rating on Nine West to CCC- from CCC. The outlook remains negative.
Cash-f low generation is weak, debt leverage is “very high” and the retail environment for brick-and-mortar stores, which are Nine West's major customers, is “difficult,” Qu wrote.
Separately, Moody’s Investors Service cut its corporate-family rating on Apax Partners-backed Cole Haan, the Green-land, New Hampshire, designer and retail-er of footwear and accessories for men and women.
Analyst Raya Sokolyanska pared Cole Haan, formally Calceus Acquisition, to Caa1 from B3. She made a similar cut in the ratings for the senior secured first-lien term loan and for the probability of
default.The outlook is stable, the analyst said,
assessing that Cole Haan's liquidity is ade-quate for the next year even as she expects free-cash-flow generation to be “modestly negative” and earnings to decline.
The Caa1 rating reflects positives and negatives at Cole Haan.
EBITDA improved in the first three quarters of fiscal 2017. At Feb. 25, the debt-to-EBITDA multiple was 6.1x adjust-ed by management and 5.9x adjusted by Moody's, the analyst said.
But earnings trends over the next year or two are likely to be weak as industry conditions are challenging, even allowing for Cole Haan’s introduction of new prod-ucts and online initiatives.
Another pairing: The rating ref lects “increased fashion risk and exposure to discretionary spending,” offset by “good brand recognition, growth in the direct-to-consumer channel, and diverse distribu-tion channels,” Qu wrote.
Sycamore and Nine West declined com-ment. Apax and Cole Haan couldn’t be reached for comment.
The Cole Haan store at 620 Fifth Avenue, Rockefeller Center, Manhattan, on May 18, 2017. Photo by Buyouts Staff.
LEVERAGED LOANS
Ratings Wrap-Up (May 3, 2017 - May 16, 2017)The following table lists select ratings actions on the debt of an LBO-backed company by either Moody’s Investors Service or Standard & Poor’s.
Date Company: Sponsors: Arrow: Action: Highlight: Rating Service
City MD expansion proceeds well, entails risks: S&PBy Robert Daniel• Urgent-care chain expands rapidly• Risks include geographic concentration: S&P• Firm is increasing customer usage, maintaining margins
A strategy of rapid growth at City MD, the provider of urgent-care services largely in the New York City metro area, is pro-ceeding well but entails “considerable” risk, Standard & Poor's reported.
Analyst Matthew O'Neill assigned a B- corporate-credit rating and a stable outlook to what is formally WP CityMD Bidco LLC.
The analyst also rated B- the company's senior secured credit lines, consisting of a $30 million revolving credit and a $225 mil-lion first-lien term facility.
City MD is recapitalizing as part of its acquisition by the private equity firm War-burg Pincus.
“The company's debt burden is relatively high based on its size and cash EBITDA,” the analyst wrote in a May 12 report.
Providing immediate attention to medi-cal issues, the chain operates 70 centers, mostly in New York metro and New Jersey. The figure includes three in Seattle in a joint venture with Catholic Health Initiatives, the
Englewood, Colorado, healthcare system.City MD's business-risk profile is “vulner-
able,” O'Neill said. The risks the analyst sees include the chain’s limited scale, geographic concentration, and limited market share in a fragmented sector.
These risks are partly offset by City MD receiving 80 percent of its revenue from commercial payers and lower cost compared with hospital emergency rooms, the analyst wrote.
City MD is quickly integrating new facili-ties, increasing customer usage and reim-bursement at the new clinics and generally maintaining its “currently solid” EBITDA margins, the analyst wrote.
At the same time, as City MD expands to the outer NYC boroughs and the sub-urbs, those usage patterns could be tested and profitability could be hindered, O’Neill wrote.
“Additionally, acquisition multiples may rise” if the industry consolidates more quick-ly than it is now, “again reducing the return on investment,” the analyst wrote.
S&P estimates City MD’s adjusted lever-age multiple at 7.2x for 2017 and 6.6x for 2018, and it expects the figure to stay above 5x generally.
What could hurt the analyst rating? A sustained narrowing of three percentage points or more in the EBITDA margin “and some fall-off in revenue growth.”
What could prompt an upgrade? City MD generating and sustaining reported EBITDA of $45 million to $50 million, “which would cover its lease and interest expense while also leaving some positive cash flow,” O’Neill wrote.
A higher rating also could be prompted if the company grows bigger in its markets while maintaining its EBITDA margins, the analyst wrote.
Warburg Pincus declined comment. A spokesman for City MD was unavailable for comment.
LEVERAGED LOANS
ACTION ITEMView City MD’s service list: www.
citymd.com/services
Lincoln International's Snapshot View on Loan Pricing and TermsBorrowers by
EBITDA:Security Type Pricing Multiples Pricing Multiples Pricing Multiples
Sub DebtCash of 11.0% - 13.0%PIK of 1.0% - 2.0%All-in of 12.0% - 14.0%
4.00x - 5.00x EBITDACash of 10.0% - 11.0%PIK of 1.0% - 2.0%All-in of 11.0% - 13.0%
4.50x - 5.50x EBITDACash of 10.0% - 11.0%PIK of 1.0% - 2.0%All-in of 11.0% - 12.0%
5.00x - 6.00x EBITDA
EquityApproximately 35% - 40% of Total Capitalization
Approximately 35% of Total Capitalization
Approximately 35% of Total Capitalization
<$15mm of EBITDA $15mm to $40mm of EBITDA >$40mm of EBITDA
Note: The values presented above are based on prevailing metrics observed by Lincoln International in recent months; however, leverage multiples and pricing are highly dependent on a borrower’s credit profile and may be higher or lower than those shown above for certain companies.
The CityMD branch at 2710 Broadway in Manhattan on May 22, 2017. PHOTO BY BUYOUTS STAFF.
www.buyoutsnews.com22 | BUYOUTS | May 29, 2017
Northeast Dermatology Associates explores a saleBy Sarah Pringle• Brown Gibbons Lang conducts sales process• Asset generates just under $10 mln of EBITDA• NEDA likely to benefit from scarcity value
Northeast Dermatology Associates, one of the few independent dermatology groups of size that hasn't already gained private equity backing, is exploring a sale, Buyouts has learned.
The northern New England network of skin-treatment clinics is working with middle-market investment bank Browns Gibbons Lang, according to two sources familiar with the matter. Management meetings are getting underway, one of the people said.
NEDA is being marketed off of just under $10 million in EBITDA, the sourc-es say. It's unclear whether that figure includes an add-back for physician-adjusted salaries, which if excluded would bring the target’s EBITDA closer to $8 million, one of the sources noted.
The company is likely to benefit from the scarcity of platform-like opportuni-ties. NEDA could command a multiple of EBITDA as high as 15x, a third source speculated.
Logical suitorsA fund that wants to enter the der-
matology space and an existing PE-backed platform looking to expand in the Northeast are both logical suitors, the sources said. While a few of the larg-est assets in the sector traded hands last year, the dermatology sector is viewed as having tremendous runway for growth and remains highly fragmented.
Clinics at NEDA, which is based in Lawrence, Massachusetts, offer general and surgical dermatology treatments, as well as cosmetic services like Botox and laser hair removal. They also offer der-matopathology, or skin biopsies to detect diseases or tumors. Skin-cancer treat-ments include Mohs surgery, chemo-therapy and radiation therapy. Through its clinical-trial division, the company investigates new and emerging treat-
ments for skin diseases.NEDA encompasses 10 clinics primar-
ily in Massachusetts and New Hamp-shire, as well as one location in Maine.
One potential challenge is that non-competes in physician contracts are not enforceable in Massachusetts and New Hampshire, one source said. The absence of non-competes makes doing physician-practice deals in these states more chal-lenging, as it is more difficult to guard investments, this person explained.
The country’s most sizable derma-tology groups traded hands last year, kicking off with Varsity Healthcare Par tners’ February 2016 sale of its majority stake in Forefront Dermatology to Omers Private Equity. The deal com-manded a more than $450 million valu-ation, the Wall Street Journal reported at the time.
The 14x to 15x multiple of EBITDA Varsity commanded caused interest in the dermatology sector to accelerate, with a pair of secondary buyouts that followed in May 2016.
Harvest Partners in May 2016 com-pleted its recap of Advanced Derma-tology & Cosmetic Surger y, which is considered the largest derm practice group in the U.S. Audax Group main-tained a minority investment in con-nection with the transaction.
Financial terms of the Advanced Der-matology deal weren’t disclosed, but sources had speculated that the Jeffer-ies-run sales process would fetch 14x to 15x the company’s close to $50 million of EBITDA — or as high as about $750 million.
Just days after the Advanced Der-matology transaction, Abr y Par tners surfaced as the victorious suitor for Can-descent Partners’ Oliver Street Derma-tology Holdings, the holding company for Dermatology Associates.
While terms weren’t disclosed, Der-matology Associates posted close to $15 million in EBITDA in 2015, sources said at the time. Ares Management had been the frontrunner through much of the Houlihan Lokey-run process, they said.
Representatives of Northeast Derma-tology Associates and Browns Gibbons Lang couldn’t be reached.
LuckyBusiness/iStock/Getty Images
DEAL FLOW
ACTION ITEMFor more detail on NEDA’s services:
http://www.nedermatology.com/index.html#doctors
Some major U.S. dermatology groups changed hands in 2016
www.buyoutsnews.com May 29, 2017 | BUYOUTS | 23
PE said to vie for $905 mln Capita asset-services saleBy Luisa Beltran• Capita in December announced sale of asset services• Goldman Sachs advising on sale of Capita asset services• Asset-services sale expected to fetch 700 mln pounds ($905 mln)
Private-equity firms are bidding for the asset-services business of Capita Plc, sources said. Capita hired Goldman Sachs to run a process for the unit, sources said.
Capita is the London business-process-out-sourcing and professional-services company. The company produced revenue of 4.89 bil-lion pounds ($6.32 billion) in 2016. It employs 73,000 people.
The auction of Capita’s asset-services divi-sion is in the second round, sources said. It has attracted the interest of several PE firms, including KKR, CVC, GTCR and Aquiline, people said. Cinven and Centerbridge may also be involved. The division is expected to fetch 700 million pounds ($905 million).
The deal is composed of several different businesses that are overwhelmingly U.K.-based, one PE source said. “Capita is known for running a tight ship,” the source said. “A buyer would have to integrate the businesses and expand out of the U.K.”
In December, Capita said it would sell a majority of its asset-services division, along with other non-core businesses and cut 2,000 jobs. The asset-services unit provides share-holder, fund, debt and banking solutions, as well as trust and corporate services. Capita said it expects to complete the sale of the division during the second half.
Capita also is selling its specialist recruit-ment businesses, which includes Capita edu-cation recruitment, monarch, team24 and Medicare first. The recruitment business is not part of the current auction, a source said.
“Since the disposal process is proceed-ing currently, we will not comment on the process or valuation,” a Capita spokeswoman said, adding that the specialist recruitment company is an entirely separate process.
In March, Capita ousted CEO Andy Parker after reporting a 33 percent drop in pre-tax profit, the Financial Times reported. Parker will leave when a successor is found, the FT said.
TPG Growth wins auction for Medical SolutionsBy Sarah Pringle• Deal concludes Jefferies’ sponsor-driven auction• Travel nurse staffing firm posted ~$50 mln in EBITDA• Beecken Petty recapitalized company in 2015
Beecken Petty O’Keefe & Co. unloaded a majority of its investment in Medical Solu-tions in a deal valued around $500 million, Buyouts has learned.
TPG Growth, TPG Capital’s middle-mar-ket and growth-equity arm, said May 8 it agreed to acquire the largest U.S. indepen-dent travel nurse staffing agency. Terms weren’t disclosed.
The move follows a March Buyouts report that Medical Solutions had tapped Jefferies to explore a sale. Piper Jaffray co-advised the sellers, a news release said.
The parties began talks about three months ago, with a handful of financial buyers advancing through the end of the sales process, two sources said.
Medical Solutions, which places regis-tered nurses in temporary travel assign-ments nationwide, generated EBITDA of some $50 million over the past 12 months, one source said. That implies an enterprise
value-to-EBITDA multiple in the ballpark of 10x.
The transaction comes less than two years after Chicago sponsor Beecken Petty and Nashville venture capital firm Heritage Group completed their recap of Medical Solutions. The deal marked an exit for for-mer backers McCarthy Capital and Tenex Capital.
Medical Solutions has grown rapidly under Beecken Petty. Helping set the stage for a sale, the firm reached certain five-year targets in about 1 1/2 years, a source noted.
Beecken Petty will retain an equity stake in connection with Monday’s transac-tion. Certain members of management will also roll over a minority ownership stake.
A continued nursing shortage ought to present continued runway for growth under TPG. Medical Solutions is expected to leverage the firm’s relationships with vari-ous health systems, while add-on acquisi-tions in travel nursing or ancillary areas may also be on the table, one of the sources said.
Recent activity in travel nursing includes Altaris Capital Partners’ sale of Healthcare Staffing Services to Thomas H. Lee Part-ners in September 2015. Harris Williams & Co. advised the sellers on the process.
A worker shelters from the rain as he passes the London Stock Exchange at lunchtime Oct. 1, 2008. REUTERS/Toby Melville
DEAL FLOW
ACTION ITEMBeecken Petty’s current portfolio:
http://bpoc.com/portfolio/
www.buyoutsnews.com24 | BUYOUTS | May 29, 2017
Francisco sees 5x return on Paymetric saleBy Luisa Beltran• Vantiv paid $525 mln for Paymetric: source• Francisco Partners acquired majority of Paymetric in 2012 for $80.5 mln: SEC filing• William Blair advised on Paymetric sale
Francisco Partners appears to be mak-ing more than 5x its money with the sale of Paymetric Inc.
Vantiv Inc recently agreed to buy Pay-metric. Terms weren’t disclosed. Vantiv CFO Stephanie Ferris said on an April 26 earn-ings call that the acquisition was around $500 million, a spokesman said.
The Paymetric sale was closer to $525 million, sources told Buyouts. The sale price is much higher than what Francisco Partners paid for the company in 2013.
Paymetric, Atlanta, provides payment-processing-software for corporations. Fran-cisco acquired a majority of Paymetric for $80.5 million in 2013, a Sept. 23, 2013 SEC filing said. This gave Francisco around 80 percent of Paymetric, one of the sources said.
Paymetric’s sale to Vantiv means Francis-co stands to reap 5.21x its investment after 3 1/2 years.
Earlier this year, the San Francisco PE firm put Paymetric up for sale, seeking $500 million. William Blair provided finan-cial advice to Paymetric, while Credit Suisse advised Vantiv. At the end, Vantiv beat out two buyout shops to win Paymetric, one per-son said. It's unclear who the sponsors were.
Francisco Partners invests in technology and technology-enabled businesses. In April, Francisco invested $140 million in R2Net, the parent of JamesAllen.com, an online retailer of engagement rings and loose diamonds. One of the firm's more notable deals came in 2016. Francisco, along with Elliot Management, acquired Dell Soft-ware Group from Dell Inc. The price wasn’t disclosed.
The firm’s last flagship fund, Francisco Partners IV LP, collected $2.88 billion in 2015. Franciso’s prior pool collected $2 bil-lion in 2011.
Dan Daul led the William Blair deal team, which included Dan Connolly and Spencer Crawford. Kirkland & Ellis provided legal advice to Paymetric. Brian Gudofsky of Credit Suisse advised Vantiv.
Madison Dearborn to make 2.3x its money on VWRBy Sarah Pringle• MDP took 83.29 pct stake in VWR in 2007• Initial equity investment was ~$1.2 bln• Lab products company debuted on the Nasdaq in June 2015
Madison Dearborn Partners stands to make around 2.3x its money through the sale of VWR, the lab-products distributor it first invested in nearly decade ago.
The buyer is New Mountain Capital portfolio company Avantor, which said May 5 that it agreed to pay $33.25 cash per share for the Radnor, Pennsylvania, target. The agreement represents an enterprise value of $6.4 billion.
Madison Dearborn acquired an about 83.3 percent stake in VWR in June 2007 alongside minority investor Avista Capital Partners. The investment came from its Fund V, which collected $6.5 billion.
A total equity investment of $1.425 bil-lion was made at the time, an SEC filing shows, which implies Madison Dearborn injected an initial $1.186 billion in VWR.
In taking VWR public in June 2015, Madison Dearborn sold 18.4 million of
its 102 million shares, a Form S-1 filing at the time showed. The firm made about $464.2 million in proceeds in connection with the IPO, as its stake narrowed to 63.6 percent from 77.6 percent.
Offering proceeds, dividendThe combined proceeds from three
subsequent public offerings totaled about $778.14 million. By selling its remain-ing 34.8 percent stake to Avantor, about 44.55 million shares, the firm is set to reel in additional proceeds of about $1.486 billion.
Including a one-time $25 million divi-dend paid to Madison Dearborn in 2014, the firm stands to reap about 2.3x its investment after almost 10 years, accord-ing to Buyouts calculations.
Madison Dearborn, for its part, is run-ning a dual process for Evo Payments, Buyouts reported in late April. Deutsche Bank AG and JP Morgan Chase are advis-ing the payment processor, sources previ-ously said.
Madison Dearborn’s most recent flag-ship fund closed at $4.4 billion in August, topping its initial $3.75 billion target, Buy-outs reported.
A woman walks with a child along Crissy Field in the Presidio of San Francisco, part of the Golden Gate National Recreation Area, on March 1, 2013. REUTERS/Robert Galbraith
DEAL FLOW
ACTION ITEMMDP’s current portfolio: www.mdcp.
com/portfolio/
www.buyoutsnews.com May 29, 2017 | BUYOUTS | 25
Vector Capital to make 6x return on sale of 20-20 TechBy Luisa Beltran• Vector acquired 20-20 in a deal valued at $77 mln• Vector’s fourth fund raised $1.4 bln earlier this year• Founder Jean Mignault is keeping a chunk of 20-20
Vector Capital stands to make nearly 6x its money with the sale of 20-20 Technolo-gies, a source familiar with the situation said.
Vector said May 1 it agreed to sell 2020 to Golden Gate Capital. Terms weren’t dis-closed. Founded in 1987, 2020 provides inte-rior-space-planning software for designers, retailers and manufacturers in the interior-design and furniture industries. 2020 will keep its offices in Laval, Quebec, and West-wood, Massachusetts; it will continue to be led by its current senior management, including CEO Mark Goldstein, a statement said.
In 2012, Vector took 2020 private in a deal valued at C$77 million. Founder Jean Mignault kept a large chunk of the company. The transaction was Vector’s first Canadian purchase since it acquired Corel in 2009, according to press reports.
Vector, San Francisco, targets public and private companies in software, internet and digital media, communications and industri-al technology. Vector used its fourth flagship fund, which collected $1.2 billion in 2007, to buy 2020. The firm’s fifth fund raised $1.4 billion earlier this year.
Golden Gate has more than $15 billion of capital under management. The firm focuses on companies in sectors including software, hardware, telecom and semiconductors as well as IT and business services. Investments include Infor, BMC Software and Ex Libris.
The firm is known for its evergreen funds. In 2011, Golden Gate raised $3.5 bil-lion for its Opportunity Fund. The pool is a perpetual fund, where the firm asks inves-tors every four years to re-up, Buyouts has reported.
William Blair provided financial advice to 2020 and Vector Capital, while Sidley Austin was legal adviser. Goldman Sachs Specialty Lending Group is providing debt financing. Kirkland & Ellis and Nob Hill Law Group are the attorneys for Golden Gate.
Siris, expected to fundraise, seeks buyer for Digital RiverBy Luisa Beltran• Siris seen fundraising for latest pool later in 2017 or early next year• Siris acquired Digital River in February 2015 in $840 mln deal• Digital River sold Beanstream in November 2015
A little more than two years after it was sold to Siris Capital Group, Digital River is again the target of M&A.
Siris is looking to sell all of Digital River, a banking source said, while two other banking sources said only Digital River’s gateway business is on the block.
Raymond James is advising, sources said.
Bloomberg reported in April that Siris was seeking a buyer for all of Digital River, possibly at a $1 billion value.
Digital River, Minnetonka, Minne-sota, provides payment and marketing services. Siris Capital completed its $840 million buy of Digital River in February 2015. Siris invested $375 million equity into the deal, Buyouts reported. Digital River ended up selling Beanstream, a provider of payment, risk-management and authentication solutions to compa-nies and institutions in North America,
to Bambora the following November.Founded in 2011, Siris invests in tech-
nology companies. The private equity firm has invested in 11 companies includ-ing Pulse Secure, Airvana and Polycom.
Siris Capital is expected to be out fundraising for its latest pool late this year or early next year, Buyouts report-ed. The firm is expected to seek at least $3 billion, the story said. Siris Capital’s third fund collected $1.81 billion in 2015.
Private equity is a frequent investor in payments companies but lost out in two recent deals. FleetCor said May 1 that it agreed to buy Cambridge Global Payments for $675 million. Earlier this year, several PE firms vied for Cam-bridge, which provides payment tech-nology and currency-risk management, Buyouts reported. FT Partners advised on the auction.
Vantiv recently agreed to buy Paymet-ric, which provides payment-processing-software for corporations. The sale price was around $525 million, Buyouts said. Francisco Partners put Paymetric up for sale earlier this year, Buyouts said. Wil-liam Blair advised on the process. The auction drew interest from CardCon-nect, GTCR and Welsh, Carson, Anderson & Stowe, the story said.
LuckyBusiness/iStock/Getty Images
DEAL FLOW
ACTION ITEMContact Digital River; www.digitalriv-
er.com/contact-us/
www.buyoutsnews.com26 | BUYOUTS | May 29, 2017
Allergy Partners on block; may be test of PE’s interest in fieldBy Sarah Pringle• Wells Fargo provides financial advice to target• Allergy-care network generates EBITDA in low $20 mln range• Physician-owned company is largest of its kind in U.S.
Physician-owned Allergy Partners is on the auction block, according to four sources.
The company, considered the largest U.S. allergy and asthma practice group, has turned to Wells Fargo for financial advice, the sources said.
Allergy Partners generates EBITDA in the low $20 million range and ought to com-mand a double-digit multiple should the pro-cess produce a sale, two sources said. That suggests a valuation well past $200 million.
The process for Allergy Partners is viewed as something of a test case, as the allergy-testing and services market has seen minimal activity. With a couple additional allergy-care providers said to be weigh-ing potential transactions, Allergy Part-ners — the dominant U.S. player — would likely serve as a bellwether for future deal making.
Another PE-backed allergy-care provider is San Antonio’s United Allergy Services. San Francisco’s Serent Capital in April 2012 announced an investment in UAS. The size of the stake wasn’t disclosed, but the deal was valued at more than $50 million, the San Antonio Business Journal reported.
Allergy Partners, Asheville, North Caro-lina, describes itself as the nation’s largest single-specialty practice focused on allergic disease, asthma and immunology.
Its network encompasses 56 primary practice locations across 23 states, with more than 132 total locations of care, a November news release said.
The company is led by CEO David Brown, who co-founded Allergy Partners alongside J. Spencer Atawater Jr more than 25 years ago.
Beecken Petty wins auction for Cortec’s CranialBy Sarah Pringle• Company generates ~$12 mln in run-rate EBITDA• Cain sales process encompassed PE and strategics• Cranial Tech devices treat infants with flat-head
syndrome
Cortec Group concluded its auction for for Cranial Technologies, selecting Beecken Petty O’Keefe & Co as the winning suitor for the plagiocephaly-treatment provider.
The announcement confirms a May 3 Buyouts report that Cortec had chosen a Chicago private equity firm to acquire the maker of helmets that treat infants with flat-head syndrome.
Cain Brothers led the sales process for Cranial, while Raymond James & Associates co-advised.
The Tempe, Arizona, company’s run-rate EBITDA and revenue lie at roughly $12 million and $50 million, respectively, sources familiar with the matter say. The asset traded at a low-double-digit multiple of EBITDA, one source said, suggesting the transaction commanded a valuation north of $120 million.
The process encompassed both sponsors and strategics, including medical-device companies and multisite operators, one of
the sources said.Plagiocephaly is characterized by a flat
spot or misshapen head caused by “pressure from everyday surfaces, such as beds or car seats,” the website says.
Cranial’s custom-made devices — the DOC Band — were the first cranial helmets cleared by the Food and Drug Administra-tion to treat plagiocephaly. The DOC Band redirects a baby’s natural growth into a nor-mal head shape. The device has treated more than 100,000 babies with plagiocephaly, the website says.
Cranial Technologies has more than 30 clinics in the U.S., as well as licensed centers in Spain, France and Portugal.
Cranial was founded in 1986. Cortec bought Cranial from its founder in Decem-ber 2011 through its 2006 vintage Cor-tec Fund IV. The Cortec investment team included Jeffrey Lipsitz, Jeffrey Shannon, Bill Tucker and Jack Miner.
Recent healthcare investments for New York’s Cortec include its December 2016 recap of ICON Eyecare and January 2016 investment in Center for Vein Restoration.
For Beecken Petty, the transaction comes on the heels of its sale of travel-nurse-staff-ing firm Medical Solutions to TPG Growth.
Terms weren’t disclosed in the March 8 announcement, but the deal was valued at about $500 million, sources familiar with the matter said. Beecken Petty tapped Jeffer-ies and Piper Jaffray to sell the company less than two years after completing its recap.
grinvalds/iStock/Getty Images
DEAL FLOW
ACTION ITEMLearn more about Allergy Partners
here: https://www.allergypartners.com/about-us
www.buyoutsnews.com May 29, 2017 | BUYOUTS | 27
PRIVATE EYEDeVos-family-backed firm raises co-investment poolsBy David Toll
Ottawa Avenue Private Capital LLC, an investment arm of the family office of Richard DeVos, father-in-law to U.S. Secretary of Education Betsy DeVos, has raised at least $420 million for two funds in a series of annual co-investment pools, regulatory filings suggest.
The Grand Rapids, Michigan, firm, founded in 2015, had assets in Ottawa Avenue Fund 2017 LP valued at $250 mil-lion as of March, according to a Form ADV. A predecessor fund had assets valued at $170 million. Form D filings associated with the funds list Jerry Tubergen as presi-dent and CEO and Robert Schierbeek as COO, treasurer and secretary. According to a Bloomberg profile, the two executives have comparable roles at the family office. Investors in the fund had to make mini-mum commitments of $20 million.
Although modest in scope, the money-raising effort — principally from rich investors — is notable for revealing details on the broader private equity activities of RDV Corp, the family office of Rich-ard DeVos, a co-founder of direct sales giant Amway, and of his wife, Helen, and their family. The roughly 35-employee Ottawa Avenue Private Capital discloses those details in a Form ADV brochure filed this March — a requirement of its registration as an investment adviser with the U.S. SEC.
The details also help explain why Grand Rapids has become a more important hub for private equity in recent years. Ear-lier this month I reported on two startup PE firms based in Grand Rapids, Consen-sus Capital Holdings and Auxo Investment Partners, with plans to raise money from wealthy families. It is unclear whether Consensus Capital has a relationship with Ottawa Avenue Private Capital; a source familiar with Auxo Investment Partners said the firm has not done deals with or raised money from the DeVos family.
From the Form ADV we know that Ottawa Avenue Private Capital has dis-cretion over $6.3 billion in assets. This includes investments in private equity funds, PE co-investments, credit funds and
secondary funds, as well as investments in "other traditional and alternative asset classes." The filing doesn't list any specific investments.
However, the list of assets in the public financial disclosure report of Betsy DeVos, signed earlier this year as part of her con-firmation as education secretary, includes interests in a number of PE funds. Among them are AEA Investors 2006 Fund LP, AEA Europe Fund LP, Apollo Investment Fund IV LP, Beecken Petty O'Keefe QP Fund II LP, Cortec Group Fund IV LP, Industrial Growth Partners III LP, Northstar Mez-zanine Partners III LP, Northstar Seidler Mezzanine Partners II LP, Partners Group Secondary 2011 LP, Roundtable Healthcare Partners LP (and II and III), Snow Phipps II LP, Veritas Capital Fund III LP, Vista Equity Partners Fund V LP, and Wind Point Part-ners VI (and VII-A).
Other facts noted in the Form ADV:• Since 1991 the investment team, con-
sisting of some 15 people, had been man-aging investments in private equity and other illiquid asset classes for the family, as well as for related trusts, foundations and family-office employees.
• The investment team formed Ottawa Avenue Private Capital in 2015 to manage outside money, including through a series of annual co-investment funds. The funds are designed to be invested side by side with family money.
• The firm charges the co-investment funds both an asset-based management fee and carried interest once predetermined performance hurdles have been met. It shares 100 percent of transaction fees, monitoring and related fees with investors.
Ginny Seyferth, founder and president of SeyferthPR, which handles public rela-tions for the DeVos family office, declined to comment further on the PE activities of Ottawa Avenue Private Capital for this column, citing "the requirements of the federal securities laws."
Family patriarch Richard DeVos co-founded Amway in 1959 with a friend, Jay Van Andel; DeVos retired in 1993, accord-ing to Forbes, and the company is run by
his children. Richard and his wife, Helen, founded the Richard and Helen DeVos Family Foundation (part of RDV Corp) around 1969; and each of their four chil-dren later began running their own foun-dation, including the Dick and Betsy DeVos Foundation.
In covering the confirmation hear-ings of Betsy DeVos earlier this year, the Washington Post reported that RDV Corp had “extensive financial holdings” in real estate, telecommunications and online charter schools. The newspaper pointed to one company in particular that could pose a conflict of interest: Performant Financial Corp, a debt-collection agency that does significant business with the Education Department. DeVos agreed to divest her interest in that company as well as 101 other entities within 90 days of her con-firmation, according to a Bloomberg article, which pegged the net worth of her and her husband at about $890 million.
I was unable to learn whether Betsy DeVos divested her interests in any of the PE funds listed on her financial disclosure form. According to that form, she served as a director of RDV Corp from January 1998 through November 2016.
David Toll
ACTION ITEMLooking for a primary commitment
from the DeVos family, or maybe you have a co-investment opportunity to show them? The phone number listed on the Form D is +1 616-454-4114.
www.buyoutsnews.com28 | BUYOUTS | May 29, 2017
COVER STORYLPs question deal allocation around SPACs from sponsors By Chris Witkowsky
Special-Purpose Acquisition Vehicles raise limited partners’ concern that they might be missing out on quality deal flow that should go to firms’ traditional funds.
PeopleImages/DigitalVision/Getty Images
www.buyoutsnews.com
COVER STORYMay 29, 2017 | BUYOUTS | 29
Activity around private equity-sponsored special-purpose acquisition vehicles has some limited partners concerned they might be missing out on
quality deal flow that should go to a firm’s traditional funds, sources have told Buyouts in recent interviews.
SPACs are public vehicles raised to invest in specific deals, usually within a time limit of 18 months to two years. In some cases, a PE firm will back an indus-try veteran in raising a SPAC to chase a deal in a specific industry.
Slew of SPACsThis year has seen a slew of such funds
backed by big PE firms. Riverstone part-nered with James Hackett to launch Silver Run Acquisition Corp II, which raised $1 billion in March. This is Riverstone’s sec-ond Silver Run SPAC; the firm partnered with energy veteran Mark Papa in 2015 on Silver Run Acquisition Corp, which raised $450 million in its IPO and bought a stake in Centennial Resource Development LLC.
TPG Capital earlier this year formed TPG Pace Energy Holdings with Stephen Chazen, former chief executive of Occi-dental Petroleum, to raise up to $600 million.
Other PE firms sponsoring SPACs include Kayne Anderson Capital Advisors to raise up to $402 million, and NGP, seek-ing $460 million, the Wall Street Journal reported.
As of April 18, nine SPACs have raised about $3.26 billion, according to Thom-son Reuters. This is close to full-year 2015, when 18 SPACS raised a total of about $3.6 billion, Thomson Reuters said.
The peak year since 2010 was 2015, when 28 SPACS raised just over $5 billion.
Some LPs are questioning how deal flow to GP-sponsored SPACs gets allocated, and whether they should get a look at those deals.
“LPs are sensitive to the potential con-flicts posed by additional vehicles man-aged by their GPs, and the impact these vehicles may have on the deal flow avail-able to the LPs’ funds,” said Peter Freire, CEO of the Institutional Limited Partners Association.
“Whether it be co-investments, co-sponsored deals, cross-fund investments or SPACs, we encourage LPs and GPs to address the disclosure issues around allo-cation of these vehicles up front in the relationship.”
Firms take different approaches to sponsored SPACs. Riverstone’s Fund VI
invested alongside the first Silver Run SPAC in Centennial Resource Develop-ment, getting exposure to the company the SPAC acquired, according to a second person with knowledge of the process.
Silver Run Acquisition Corp II resides entirely within Fund VI, so the fund has access to sponsor economics, the person said.
TPG Pace Energy Holdings pursues deals that fall outside the mandate of existing TPG funds, or they are invest-ments on which TPG has passed, said a source familiar with the process.
Key points to considerSome key points GPs should consider
before using a SPAC to acquire a company: whether the target asset falls within the mandate of the traditional PE fund; wheth-er the PE fund’s commitment period has expired; and whether the SPAC acquisition would put the GP in a position of conflict, according to Andrew Panayides, general counsel with Duke Street.
If a conflict is created, the GP would usually have to consult with and obtain consent from the fund’s limited partner advisory committee, Panayides said.
“In practice, you would expect GPs to fully adhere to the constitutional docu-ments relating to their respective fund vehicles, particularly since there are com-mercial, legal and reputational conse-quences for GPs that fail to do so,” he said.
Stephen Chazen, as CEO of Occidental Petroleum, on April 4, 2016, rings the opening bell at the New York Stock Exchange. Chazen now leads TPG Pace Energy Holdings. REUTERS/Brendan McDermid
SPAC Activity - 2017 Issue Date Issuer Nation Proceeds
3/23/17 Silver Run Acquisition II Corp U.S. 900.00
4/10/17 Vantage Energy Acq Corp U.S. 480.00
3/8/17 Ocelot Partners Ltd U.S. 417.65
1/12/17 Gores Holdings II Inc U.S. 375.00
3/29/17 Kayne Anderson Acq Corp U.S. 350.00
3/10/17 Matlin & Partners Acq Corp U.S. 300.00
1/19/17 Fintech Acquisition Corp II U.S. 153.00
4/7/17 Forum Merger Corp U.S. 150.00
3/10/17 Crescita SpA Italy 138.77
Source: Thomson Reuters
www.buyoutsnews.com30 | BUYOUTS | May 29, 2017
MARKET INTELLIGENCE
RECENT DEALSAnnounced, Pending LBOs By U.S. Sponsors (May 4, 2017 - May 17, 2017)CONSUMER PRODUCTS AND SERVICES
Rank Date Target Name Target Short Business Description
Acquiror Full Name Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/09/17 West Corp Telephone Answering Services
Apollo Global Management LLC
Apollo Global Management LLC
4950.566 US - Apollo Global Management LLC (Apollo) definitively agreed to acquire the entire share capital of West Corp, an Omaha-based provider of telephone answering services, for USD 1.988 bil in cash, in a leveraged buyout transaction. Originally, in April 2017, Apollo was rumored to be planning to acquire the entire share capital of West Corp.
The following charts reflect transactions involving U.S.-based financial sponsors. The categories include seeking buyers, announced deals, closed transactions. The source for the data is Thomson One, a product of Thomson Reuters Markets. Please contact Paul Centopani at [email protected] with questions or comments.
Target Name Target City Target State Target Full Business Description Target Advisors
Synopsis
05/08/17 Anaheim Equestrian Center
Anaheim California Anaheim Equestrian Center, located in Anaheim, California, is a provider of animal production support services. The Company was founded in 1999.
- US - In May 2017, Anaheim Equestrian Center, an Anaheim- based provider of animal production support services, announced that it was seeking a buyer for the company.
ENERGY AND POWER
Date Announced
Target Name Target City Target State Target Full Business Description Target Advisors
Synopsis
05/10/17 Pasadena Refining System Inc
Pasadena Texas Pasadena Refining System Inc, located in Pasadena, Texas, provides crude oil refining services.
- US - In May 2017, Petroleo Brasileiro SA Petrobras announced that it was seeking a buyer for its Pasadena Refining System Inc unit, a Pasadena-based petroleum refinery operator.
FINANCIALS
Date Announced
Target Name Target City Target State Target Full Business Description Target Advisors
Synopsis
05/09/17 AmTr Finl Svcs Inc-Svc & Fee
- New York The Service & fee business of AmTrust Financial Services Inc, located in New York.
- US - In May 2017, AmTrust Financial Services Inc, a New York-based provider of insurance services, announced that it was seeking a buyer for an undisclosed majority ownership interest in its service & fee business. Terms were not disclosed but, according to sources close to the situation, the deal was valued at an estimated USD 1 bil.
HIGH TECHNOLOGY
Date Announced
Target Name Target City Target State Target Full Business Description Target Advisors
Synopsis
05/15/17 Ticketfly Inc San Francisco California Ticketfly Inc, located in San Francisco, California, developer of social ticketing platform that provides online ticketing and marketing services. The Company was founded in 2008.
- US - In May 2017, Pandora Media Inc announced that it was seeking a buyer for its Ticketfly Inc unit, a San Francisco-based software publisher.
www.buyoutsnews.com May 29, 2017 | BUYOUTS | 31
MARKET INTELLIGENCE
CONSUMER PRODUCTS AND SERVICES
Rank Date Target Name Target Short Business Description
Acquiror Full Name Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/10/17 Taylor Made Golf Co Inc
Mnfr,wholesale golf equipment
KPS Capital Partners LP
KPS Capital Partners LP
425.000 US - KPS Capital Partners LP definitively agreed to acquire Taylor Made Golf Co Inc (Taylor Made), a Carlsbad- based manufacturer of sporting and athletic goods, from adidas AG, for a total USD 425 mil, in a leveraged buyout transaction. The consideration was to consist of USD 212.5 mil in cash and USD 212.5 mil in a secured note. Originally, in May 2016, adidas AG announced that it was seeking a buyer for its golf division.
05/08/17 Medical Solutions LLC
Pvd healthcare staffing svcs
TPG Growth LLC TPG Capital LP
- US - TPG Growth LLC, a unit of TPG Capital LP, agreed to acquire an undisclosed majority interest in Medical Solutions LLC, an Omaha-based provider of executive search services, in a leveraged buyout transaction. Terms were not disclosed, but according to sources close to the situation, the deal was valued at an estimated a total USD 500 mil.
ENERGY AND POWER
Rank Date Target Name Target Short Business Description
Acquiror Full Name Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/09/17 Noble Water Technologies Inc
Water Supply and Irrigation Systems
Evoqua Water Technologies LLC
AEA Investors LP
- US - Evoqua Water Technologies LLC, a unit of AEA Investors LP, definitively agreed to acquire Noble Water Technologies Inc, a Dallas- based provider of purity water equipment, systems and service, service deionization and resin regeneration. Terms were not disclosed.
05/11/17 Engie E&P International SA
Crude Petroleum and Natural Gas Extraction
Neptune Oil & Gas Ltd
The Carlyle Group LP
3900.000 FRANCE - Neptune Oil & Gas Ltd (Neptune Oil & Gas) of the UK, jointly-owned by Carlyle International Energy Partners LP, a unit of The Carlyle Group LP, and CVC Capital Partners VI, a unit of CVC Capital Partners Ltd, planned to acquire a 70% interest in Engie E&P International SA (E&P International), a Courbevoie- based producer of crude petroleum and natural gas, from Engie SA, for EUR 3.589 bil (USD 3.9 bil). Originally, in October 2016, Neptune Oil & Gas was rumored to be planning to acquire E&P International.
FINANCIALS
Rank Date Target Name Target Short Business Description
Acquiror Full Name Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/09/17 Equinoxe Alternative Investment Services
Pvd invest mgmt svcs
Equinoxe Alternative Investment Services SPV
Apex Fund Services(US)Inc
- BERMUDA - Equinoxe Alternative Investment Services SPV of the US, a special purpose acquisition vehicle formed by Apex Fund Services (US) Inc (Apex) and Genstar Capital LLC (Genstar), definitively agreed to acquire an undisclosed majority interest in Equinoxe Alternative Investment Services, a Hamilton-based intermediator, from Estancia Capital Management LLC, in a leveraged buyout transaction. Concurrently, Genstar definitively agreed to acquire an undisclosed minority stake in Apex, from FTV Management Co LP, in a privately negotiated transaction.
05/08/17 OneDigital Health & Benefits
Insurance Agencies and Brokerages
New Mountain Capital LLC
New Mountain Capital LLC
560.000 US - New Mountain Capital LLC agreed to acquire OneDigital Health & Benefits, an Atlanta- based insurance agency, from Fidelity National Financial Ventures LLC, owned by Fidelity National Financial Inc, for USD 560 mil in cash, in a leveraged buyout transaction.
HEALTHCARE
Rank Date Target Name Target Short Business Description
Acquiror Full Name Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/04/2017 North American Cannabis Holdings Inc
Pharmaceutical Preparation Manufacturing
American Cannabis Innovations Conglomerated
Amer Cannabis Innovations
- US - American Cannabis Innovations Conglomerated (ACI) signed a Letter of Intent {LoI} to acquire an undisclosed majority interest in North American Cannabis Holdings Inc, a Dallas-based manufacturer of pharmaceutical preparation, in a leveraged buyout transaction. Concurrently, ACI signed a Letter of Intent {LoI} to acquire an undisclosed majority interest in Puration Inc.
- US - American Cannabis Innovations Conglomerated (ACI) signed a Letter of Intent {LoI} to acquire an undisclosed majority interest in Puration Inc, a Brenham- based manufacturer of medicinals and botanicals, in a leveraged buyout transaction. Concurrently, ACI signed a Letter of Intent {LoI} to acquire an undisclosed majority interest in North American Cannabis Holdings Inc.
www.buyoutsnews.com32 | BUYOUTS | May 29, 2017
MARKET INTELLIGENCE
HEALTHCARE
Rank Date Target Name Target Short Business Description
Acquiror Full Name Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/09/2017 Surgery Partners Inc
Own, op hospitals
Bain Capital Private Equity LP
Bain Capital LP
502.66 US - Bain Capital Private Equity LP, a unit of Bain Capital LP, agreed to acquire a 54.407% interest in Surgery Partners Inc, a Nashville- based owner and operator of hospitals, from HIG Capital LLC, for USD 19 in cash per share, or total value of USD 502.657 mil, in a leveraged buyout transaction.
05/09/2017 MedicaMetrix Inc Surgical and Medical Instrument Manufacturing
Cardiff International Inc
Cardiff International Inc
6.00 US - Cardiff International Inc signed a Letter of Intent {LoI} to merge with MedicaMetrix Inc, a Lowell- based manufacturer of medical instruments, for an estimated USD 6 mil, in a stock swap transaction.
05/09/2017 National Surgical Hospitals Inc
Pvd healthcare svcs
Surgery Partners Inc HIG Capital LLC
760.00 US - Surgery Partners Inc, a unit of HIG Capital LLC, definitively agreed to acquire the entire share capital of National Surgical Hospitals Inc (NHS), a Chicago-based provider of healthcare services, from Irving Place Capital Inc (Irving), for an estimated USD 760 mil. Originally, in December 2016, Irving was rumored to be seeking a buyer for NHS.
05/05/2017 VWR Corp Medical, Dental, and Hospital Equipment and Supplies Merchant Wholesalers
Avantor Performance Materials Holdings LLC
New Mountain Capital LLC
6,567.87 US - Avantor Performance Materials Holdings LLC, a unit of New Mountain Capital LLC (New Mountain Capital), definitively agreed to acquire the entire share capital of VWR Corp (VWR), a Radnor-based medical equipment and supplies merchant wholesaler, from VWR International LLC, ultimately owned by Madison Dearborn Partners LLC, for USD 33.25 in cash per share, or a total of USD 4.446 bil in cash. Originally, New Mountain Capital was rumored to be planning to acquire VWR.
HIGH TECHNOLOGY
Rank Date Target Name Target Short Business Description
Acquiror Full Name Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/09/17 Space Time Research Pty Ltd
Software Publishers
Wingarc1st Inc The Carlyle Group LP
- AUSTRALIA - Wingarc1st Inc of Japan, a unit of Carlyle Japan Partners III LP, agreed to acquire Space Time Research Pty Ltd, a Camberwell-based software publisher.
05/04/17 Lexmark International Inc-Enterprise Software Business
Software Publishers
Thoma Bravo LLC Thoma Bravo LLC
1350.000 US - Thoma Bravo LLC (Thoma Bravo) definitively agreed to acquire enterprise software business of Lexmark International Inc (Lexmark), a Lexington-based provider of printing and imaging products, software, solutions and services, owned by Ninestar Holdings Co Ltd, for an estimated USD 1.35 bil in cash, in a leveraged buyout transaction. Originally, in April 2017, Thoma Bravo was rumored to be planning to acquire the software division of Lexmark.
05/15/17 Statistica Inc Provide information tech svcs
TIBCO Software Inc Vista Equity Partners LLC
- US - TIBCO Software Inc, a unit of Vista Equity Partners LLC, planned to acquire Statistica Inc, a Rockville- based reproducer of software.
INDUSTRIALS
Rank Date Target Name Target Short Business Description
Acquiror Full Name Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/04/17 GAL Manufacturing Corp
Elevator and Moving Stairway Manufacturing
Golden Gate Capital Inc
Golden Gate Capital Inc
- US - Golden Gate Capital Inc definitively agreed to acquire an undisclosed majority interest in GAL Manufacturing Corp, a Bronx- based manufacturer and wholesaler of elevator components and systems elevators, in a leveraged buyout transaction. Terms were not disclosed. The transaction was to include GAL Canada Elevator Products Corp and Hollister-Whitney Elevator Corp.
MATERIALS
Rank Date Target Name Target Short Business Description
Acquiror Full Name Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/08/17 Caldic BV Mnfr,wholesale chemicals
Goldman Sachs Private Equity Group
Goldman Sachs Group Inc
- NETHERLANDS - Goldman Sachs Private Equity Group of the US, a unit of Goldman Sachs Asset Management LP, planned to acquire Caldic BV, a Rotterdam-based manufacturer of chemical products, in a leveraged buyout transaction.
www.buyoutsnews.com May 29, 2017 | BUYOUTS | 33
MARKET INTELLIGENCE
Closed LBOs By U.S. Sponsors (May 4, 2017 - May 17, 2017)CONSUMER PRODUCTS AND SERVICES
- US - WIRB-Copernicus Group (WCG), a unit of Arsenal Capital Partners LP, acquired MedAvante Inc, a Hamilton- based provider of business support services. Concurrently, WCG acquired ProPhase LLC, a New York- based provider of ambulatory health care services. Terms of the transaction were not disclosed.
05/10/17 Maryland Aerospace Inc
Research and Development in The Physical, Engineering and Lifesciences (Except Biotechnology)
Adcole Corp Artemis Capital Partners LP
- US - Adcole Corp, a unit of Artemis Capital Partners LP, amerged with Maryland Aerospace Inc, a Crofton- based provider of research and development services.
MEDIA AND ENTERTAINMENT
Rank Date Target Name Target Short Business Description
Acquiror Full Name Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/10/17 inVentiv Health Inc
Administrative Management and General Management Consulting Services
INC Research Holdings Inc
Avista Capital Holdings LP
4279.603 US - INC Research Holdings Inc, a unit of Avista Capital Holdings LP, definitively agreed to acquire the entire share capital of inVentiv Health Inc, a Burlington- based provider of marketing consulting services, from Advent International Corp, ultimately owned by Thomas H Lee Co and Thomas H Lee Partners LP, ultimately owned by Thomas H Lee Co, for an estimated USD 2.182 bil, in a stock swap transaction. The shares were valued at closing stock price of USD 43.65 on 9 May 2017, the last full trading day prior to the announcement.
05/10/17 Dominion Enterprises Inc
Pvd online mktg svcs
Dominion Enterprises Inc SPV
Eurazeo SA 680.000 US - Dominion Enterprises Inc SPV of France, a special purpose acquisition vehicle formed by Eurazeo SA and West Street Capital Partners VII LP, definitively agreed to acquire Dominion Enterprises Inc, a Norfolk-based provider of online marketing and advertising services, from Landmark Media Enterprises LLC, for USD 680 mil in cash, in a leveraged buyout transaction.
05/17/17 Fairfax Media Ltd Publish newspapers, periodicals
Hellman & Friedman LLC
Hellman & Friedman LLC
2207.413 AUSTRALIA - Hellman & Friedman LLC of the US planned to launch a challenging offer to acquire the entire share capital of Fairfax Media Ltd (Fairfax), a Pyrmont, New South Wales- based newspaper publisher, for an estimated AUD 1.25 (USD 0.928) in cash per share, or a total value of AUD 2. 874 bil (USD 2.134 bil), in a leveraged buyout transaction, via unsolicited offer. Originally, an investor group, comprised of Ontario Teachers' Pension Plan and TPG Capital LP planned to launch a tender offer to acquire the entre share capital of Fairfax.
05/08/17 Intertur Hotels Group SA
Hotels (Except Casino Hotels) and Motels
Investor Group Investor Group
- SPAIN - An investor group, comprised of Mar Hispana Apartamentos SL, a unit of Feel Hotels Group SL, KKR & Co LP and Dunas Capital Gestao de Activos Sociedade Gestora deFundos de Investimento Mobiliario SA planned to acquire Intertur Hotels Group SA, a Palma De Mallorca-based hotel operator.
05/07/17 Fairfax Media Ltd Publish newspapers, periodicals
Investor Group Investor Group
2111.461 AUSTRALIA - An investor group, comprised of Ontario Teachers' Pension Plan and TPG Capital LP planned to launch a tender offer to acquire the entire share capital of Fairfax Media Ltd (Fairfax), a Pyrmont-based newspaper publisher, for a sweetened AUD 1.2 (USD 0.887) cash in per share or a total value of AUD 2.759 bil (USD 2. 039 bil) in a leveraged buyout transaction, via an unsolicited offer, via scheme of arrangement. Originally, the investor group offered AUD 0.95 (USD 0.705) in cash per share. Concurrently, Fairfax planned to spinoff its newspaper publishing business of to its shareholders. The business were to include Australian Community Media, New Zealand Media, Macquarie Media and Stan. Subsequently, Hellman & Friedman LLC of the US planned to launch a challenging offer to acquire the entire share capital of Fairfax.
www.buyoutsnews.com34 | BUYOUTS | May 29, 2017
MARKET INTELLIGENCE
FINANCIALS
Date Effective/Unconditional
Target Name Target Short Business Description
Acquiror Full Name
Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/12/17 Preferred Guardian Insurance
Insurance Agencies and Brokerages
AssuredPartners Inc
GTCR LLC - FLASH: US - AssuredPartners Inc, a unit of GTCR LLC, acquired Preferred Guardian Insurance, insurance agency.
05/16/17 USI Insurance Services LLC
Pvd insurance brokerage svcs
USI Insurance Services LLC SPV
KKR & Co LP 4300 US - USI Insurance Services LLC SPV, jointly owned by KKR & Co LP (KKR) (50%) and Caisse de depot et placement du Quebec (CDPQ) (50%), acquired USI Insurance Services LLC (USI), a Valhalla-based provider of insurance services, from USI Holdings Corp, ultimately owned by Onex Corp (Onex), for USD 4.3 bil, in a leveraged buyout transaction. On completion, KKR and CDPQ are each to own 50% interest in USI, respectively. Originally, in January 2017, Onex was rumored to be seeking a buyer for its USI Insurance Services LLC unit. Goldman Sachs Private Equity, Clayton Dubilier & Rice LLC, Blackstone Group LP, KKR & Co and Caisse de depot et placement du Quebec were rumored as potential bidders.
- US - Flagstar Bancorp Inc, Troy,Michigan, a unit of Matlin Patterson Global Advisers LLC, acquired certain assets of Opes Advisors Inc, a Palo Alto- based investment advisor.
HEALTHCARE
Date Effective/Unconditional
Target Name Target Short Business Description
Acquiror Full Name
Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/09/17 ProPhase LLC Provide medical,health svcs
WIRB-Copernicus Group
Arsenal Capital Partners LP
- US - WIRB-Copernicus Group (WCG), a unit of Arsenal Capital Partners LP, acquired ProPhase LLC, a New York- based provider of ambulatory health care services. Concurrently, WCG acquired MedAvante Inc, a Hamilton- based provider of business support services. Terms of the transaction were not disclosed.
05/08/17 Vistar Technologies LLC
Medical, Dental, and Hospital Equipment and Supplies Merchant Wholesalers
symplr CapStreet Group LLC
- US - symplr, a unit of CapStreet Group LLC, acquired Vistar Technologies LLC, a Toledo-based medical equipment and supplies merchant wholesaler.
05/17/17 Bentec Medical Inc
Surgical and Medical Instrument Manufacturing
Investor Group Investor Group - FLASH: US - An investor group, comprised of Greyrock Capital Group and Hermitage Equity Partners LLC acquired Bentec Medical Inc, a Woodland-based manufacturer of medical instruments.
05/08/17 American Eagle Instruments Inc
Medical, Dental, and Hospital Equipment and Supplies Merchant Wholesalers
Young Innovations Inc
Linden LLC - US - Young Innovations Inc, a unit of Linden LLC, acquired American Eagle Instruments Inc, a Missoula-based medical equipment and supplies merchant wholesaler. Terms were not disclosed.
05/16/17 ProEx Physical Therapy
Offices Of All Other Miscellaneous Health Practitioners
Professional Physical Therapy
Thomas H Lee Co
- FLASH: US - Professional Physical Therapy, a unit of Thomas H Lee Partners LP, acquired the entire share capital of ProEx Physical Therapy, a Portsmouth-based health practitioner's office operator.
05/17/17 Columbus Medical Equipment Inc
Surgical and Medical Instrument Manufacturing
National Seating & Mobility Inc
Wellspring Capital Mgmt LLC
- US - National Seating & Mobility Inc, a unit of Wellspring Capital Management LLC, acquired Columbus Medical Equipment Inc, a Columbus-based manufacturer of medical instruments.
HIGH TECHNOLOGY
Date Effective/Unconditional
Target Name Target Short Business Description
Acquiror Full Name
Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/15/17 Concurrent Computer Corp-Concurrent Real-Time Business
Software Publishers
Battery Ventures LP
Battery Ventures LP
35 US - Battery Ventures LP acquired time business of Concurrent Computer Corp- Concurrent Real, a Duluth- based software publisher, ultimately owned by Applera Corp, for a total USD 35 mil, in a leveraged buyout transaction.
www.buyoutsnews.com May 29, 2017 | BUYOUTS | 35
MARKET INTELLIGENCE
HIGH TECHNOLOGY
Date Effective/Unconditional
Target Name Target Short Business Description
Acquiror Full Name
Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/15/17 Prestige Data Centre Solutions Ltd
Provide information tech svcs
Park Place Technologies Inc
GTCR LLC - UK - Park Place Technologies Inc of the US, a unit of GTCR LLC, acquired Prestige Data Centre Solutions Ltd, a Bromsgrove-based provider of information technology services. Terms were not disclosed.
HGGC LLC HGGC LLC - US - HGGC LLC acquired Etouches Inc, a Norwalk-based software publisher, in a leveraged buyout transaction.
05/09/17 Unigma LLC Software Publishers
Kaseya Inc Insight Venture Partners LLC
- US - Kaseya Inc, a unit of Insight Venture Partners LLC, acquired Unigma LLC, a Waltham-based software publisher.
05/17/17 iHomefinder Inc Software Publishers
Community Investors Inc
K1 Investment Management LLC
- FLASH: US - Community Investors Inc, a unit of K1 Investment Management LLC, acquired iHomefinder Inc, a Berkeley-based software publisher.
05/11/17 TurboAppeal Services LLC
Other Software Paradigm Tax Group
The Riverside Co
- US - Paradigm Tax Group, a unit of The Riverside Co, acquired TurboAppeal Services LLC, a Chicago-based software publisher.
05/16/17 Apprise Software Inc
Software Publishers
Aptean Inc Vista Equity Partners LLC
- FLASH: US - Aptean Inc, a unit of Vista Equity Partners LLC, acquired Apprise Software Inc, a Bethlehem- based software publisher.
INDUSTRIALS
Date Effective/Unconditional
Target Name Target Short Business Description
Acquiror Full Name
Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/15/17 Industrial Parts Holding SASU
Industrial Supplies Merchant Wholesalers
Advent International Corp
Advent International Corp
- FRANCE - Advent International Corp of the US acquired an undisclosed majority interest in Industrial Parts Holding SASU, a Paris-based industrial supplies merchant wholesaler, from PAI Partners SAS, in a leveraged buyout transaction.
05/08/17 Schafer Corp Provide object analysis svcs
Belcan LLC AE Industrial Partners LLC
- US - Belcan LLC, a unit of AE Industrial Partners LLC, acquired Schafer Corp, an Arlington-based space research establishment, from Metalmark Capital Holdings LLC, ultimately owned by Citigroup Inc. Terms were not disclosed.
05/11/17 Apollo Video Technology LLC
Vehicular Lighting Equipment Manufacturing
Luminator Technology Group LLC
Audax Group LP - US - Luminator Technology Group LLC, a unit of Audax Group LP, acquired Apollo Video Technology LLC, a Bothell-based manufacturer and wholesaler of transit bus mobile video surveillance equipment.
05/12/17 AmaWaterways LLC
Inland Water Passenger Transportation
Certares LP Certares LP - US - Certares LP acquired a 50% interest in AmaWaterways LLC, a Calabasas-based provider of inland water passenger transportation services, in a leveraged buyout transaction.
- US - CWD LLC SPV, jointly owned by Harvest Partners LP and AP Emissions Technologies LLC, merged with CWD LLC, a City Of Industry-based manufacturer of motor vehicle brake systems, in a leveraged buyout transaction. Terms were not disclosed.
05/12/17 Oracle Elevator Co
Pvd elevator maintenance svcs
Investor Group Investor Group - US - An investor group, comprised of Longview Asset Management LLC and L Squared Capital Partners acquired Oracle Elevator Co, a Fort Lauderdale-based building equipment contractor, from PNC Equity Partners II LP, ultimately owned by Incline Equity Partners.
05/05/17 Vanzandt Controls LLC
Industrial Machinery and Equipment Merchant Wholesalers
Investor Group Investor Group - US - An investor group, comprised of OFS Energy Fund, Larry Richards and Dave Latch acquired Vanzandt Controls LLC, a Midland-based industrial machinery and equipment merchant wholesaler, in a leveraged buyout transaction.
www.buyoutsnews.com36 | BUYOUTS | May 29, 2017
MARKET INTELLIGENCE
INDUSTRIALS
Date Effective/Unconditional
Target Name Target Short Business Description
Acquiror Full Name
Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/08/17 Calsonic Kansei Corp
Mnfr, whl industry machine
CK Holdings Co Ltd
KKR & Co LP 4172.449 JAPAN - CK Holdings, a unit of KKR CK Investment LP, ultimately owned by KKR & Co LP, acquired the entire share capital, or 267.858 mil ordinary shares, in Calsonic Kansei Corp (Calsonic Kansei), a Saitama-Shi, Saitama-based manufacturer and wholesaler of industrial machine, for JPY 1,290 (USD 11.404) in cash per share plus JPY 570 (USD 5.039) in special cash dividends per share, or a total value of JPY 498.215 bil (USD 4.404 bil), via an auction and tender offer transaction. The offer was conditioned upon at least 66. 667% interest, or 178.572 mil Calsonic Kansei shares being tendered. CK Holdings received an irrevocable undertaking of 41.501% stake, or 111.164 mil Calsonic Kansei ordinary shares, from Nissan Motor Co Ltd (Nissan Motor). Calsonic Kansei was delisted from Tokyo Stock Exchange. Originally in May 2016, Nissan Motor was rumored to be seeking a buyer for a 41.494% stake, or 111. 163 mil ordinary shares, in Calsonic Kansei. In June 2016, Kohlberg Kravis Roberts, Bain Capital and MBK Partners were named as potential bidders.
05/11/17 TestEquity Inc Instruments and Related Products Manufacturing For Measuring, Displaying, Controlling Variables
LKCM Headwater Investments
LKCM Headwater Investments
- US - LKCM Headwater Investments acquired an undisclosed majority interest in TestEquity Inc, a Moorpark- based manufacturer and wholesaler of measurement equipment and temperature- controlled test chambers, from First Atlantic Capital Ltd, in a leveraged buyout transaction. Terms were not disclosed.
05/12/17 Action Paving Inc Commercial and Institutional Building Construction
Montlake Capital LLC
Montlake Capital LLC
- US - Montlake Capital LLC acquired Action Paving Inc, a Brush Prairie-based commercial and industrial construction company, in a leveraged buyout transaction.
05/04/17 Dallas Aeronautical Services
Other Support Activities For Air Transportation
West Star Aviation Inc
Norwest Equity Partners
- US - West Star Aviation Inc, a unit of Norwest Equity Partners, acquired Dallas Aeronautical Services, a Cedar Hill-based provider of air transportation repair services.
05/06/17 West Coast Stainless Products Inc
Pump and Pumping Equipment Manufacturing
Speyside Equity Fund I LP
Speyside Equity LLC
- US - Speyside Equity Fund I LP (Speyside), a unit of Speyside Equity LLC, acquired West Coast Stainless Products Inc, a Vernon-based manufacturer of pumps and pumping equipment, in a leveraged buyout transaction. Concurrently, Speyside acquired Ashland Foundry & Machine Works Inc and Dynatek Machine Inc.
05/06/17 Dynatek Machine Inc
Pump and Pumping Equipment Manufacturing
Speyside Equity Fund I LP
Speyside Equity LLC
- US - Speyside Equity Fund I LP (Speyside), a unit of Speyside Equity LLC, acquired Dynatek Machine Inc, a Huntington Park-based manufacturer of pumps and pumping equipment, in a leveraged buyout transaction. Concurrently, Speyside acquired Ashland Foundry & Machine Works Inc and West Coast Stainless Products Inc.
05/09/17 Extra Express Inc General Warehousing and Storage
St George Logistics
Wind Point Partners
- US - St George Logistics, a unit of Wind Point Partners, acquired Extra Express Inc, a Brea-based provider of warehousing and related delivery services, from Dicom Express Inc, ultimately owned by Wind Point Partners, in an internal reorganization.
MATERIALS
Date Effective/Unconditional
Target Name Target Short Business Description
Acquiror Full Name
Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/09/17 Custom Composites LLC
All Other Plastics Product Manufacturing
McClarin Plastics LLC
Blackford Capital LLC
- US - McClarin Plastics LLC, a unit of Amtech LLC, acquired Custom Composites LLC, an Oklahoma City-based manufacturer of plastics products. Terms of the transaction were not disclosed.
05/09/17 Pexco LLC Mnfr plastic profile products
Kohlberg & Co LLC
Kohlberg & Co LLC
- US - Kohlberg & Co LLC acquired Pexco LLC, an Alpharetta-based manufacturer of plastics products, from Odyssey Investment Partners LLC, in a leveraged buyout transaction.
05/16/17 Pearlman Group Other Chemical and Allied Products Merchant Wholesalers
The Stephens Group LLC
The Stephens Group LLC
- US - The Stephens Group LLC acquired Pearlman Group, a Norcross-based chemical and allied products merchant wholesaler, in a leveraged buyout transaction.
www.buyoutsnews.com May 29, 2017 | BUYOUTS | 37
MARKET INTELLIGENCE
RECENT TRANSACTIONSNon-Control Deals, U.S. Sponsors (May 4, 2017 - May 17, 2017)CONSUMER PRODUCTS AND SERVICES
Rank Date
Target Name Target Short Business Description
Target Advisers
Acquiror Full Name
Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/09/17 LeadingResponse LLC
Pvd lead generation svcs
Lincoln International
ICV Partners LLC
ICV Partners LLC - US - ICV Partners LLC acquired an undisclosed minority stake in LeadingResponse LLC, a Tampa- based provider of business support services, a unit of Huron Capital Partners LLC, in a privately negotiated transaction.
05/04/17 Vivet Therapeutics SAS
Research and Development in Biotechnology
- Investor Group
Investor Group 40.836 FRANCE - An investor group, comprised of Kurma Life Sciences Partners SA, Massachusetts Eye & EarInfirmary, Columbus Venture Partners SGEIC SA, HealthCap VII LP, a unit of HealthCap AB, Centro de Investigacion Medica Aplicada, Novartis Venture Fund AG, a unit of Novartis AG, Roche Venture Fund and Ysios Capital Partners SGECR SA acquired an undisclosed minority stake in Vivet Therapeutics SAS, a Paris- based provider of biotechnology research and development services, for a total EUR 37.5 mil (USD 40. 836 mil), in a privately negotiated transaction.
05/09/17 Broadway Technology Inc
Pvd software consulting svcs
Signal Hill Capital Group LLC
Long Ridge Equity Partners LLC
Long Ridge Equity Partners LLC
42 US - Long Ridge Equity Partners LLC acquired an undisclosed minority stake in Broadway Technology Inc, a New York-based software publisher, for a total USD 42 mil, in a privately negotiated transaction.
MEDIA AND ENTERTAINMENT
Date Effective/Unconditional
Target Name Target Short Business Description
Acquiror Full Name
Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/05/17 ValuDirect LLC Advertising Material Distribution Services
MailSouth Inc Court Square Capital Partners
- US - MailSouth Inc, a unit of Court Square Capital Partners LP, acquired ValuDirect LLC, an Albany-based provider of mail advertising services.
REAL ESTATE
Date Effective/Unconditional
Target Name Target Short Business Description
Acquiror Full Name
Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/11/17 125 South Wacker Drive, Chicago
Own,operate office building
125 South Wacker Drive, Chicago SPV
125 S Wacker Drive, Chicago
145 US - 125 South Wacker Drive, Chicago SPV of Canada acquired 125 South Wacker Drive, a Chicago-based lessor of nonresidential buildings, for a total USD 145 mil, in a leveraged buyout transaction.
RETAIL
Date Effective/Unconditional
Target Name Target Short Business Description
Acquiror Full Name
Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/04/17 Matilda Jane LLC Children'S and Infants' Clothing Stores
Webster Capital Management LLC
Webster Capital Management LLC
- US - Webster Capital Management LLC acquired Matilda Jane LLC, a Fort Wayne-based girl's and women's clothing retailer, from CID Capital, in a leveraged buyout transaction.
www.buyoutsnews.com38 | BUYOUTS | May 29, 2017
MARKET INTELLIGENCE
CONSUMER STAPLES
Rank Date
Target Name Target Short Business Description
Target Advisers
Acquiror Full Name
Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/10/17 Dodla Dairy Ltd Produce,wholesale milk
- The Rise Fund TPG Capital LP 50 INDIA - The Rise Fund of the US, a unit of TPG Growth Fund, acquired a 23% stake in Dodla Dairy Ltd, a Hyderabad- based manufacturer of dry dairy products, from Proterra Investment Partners LP, for a total INR 3.234 bil (USD 50 mil). Originally, Proterra Investment Partners LP was rumored to be seeking a buyer for a 23% stake in Dodla Dairy Ltd.
ENERGY AND POWER
Rank Date
Target Name Target Short Business Description
Target Advisers
Acquiror Full Name
Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/16/17 Neptune Research Inc
Oil and Gas Pipeline and Related Structures Construction
- Palm Beach Capital Fund IV LP
Palm Beach Capital Partners
- FLASH: US - Palm Beach Capital Fund IV LP, a unit of Palm Beach Capital Partners LLC, acquired an undisclosed minority stake in Neptune Research Inc, a West Palm Beach-based provider of oil and gas pipeline construction services.
FINANCIALS
Rank Date
Target Name Target Short Business Description
Target Advisers
Acquiror Full Name
Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/09/17 Apex Fund Services(US)Inc
Open-End Investment Funds
Macquarie Bank
Genstar Capital LLC
Genstar Capital LLC
- US - Genstar Capital LLC (Genstar) definitively agreed to acquire an undisclosed minority stake in Apex Fund Services (US) Inc (Apex), a Red Bank-based open-end investment fund, from FTV Management Co LP, in a privately negotiated transaction. Concurrently, Equinoxe Alternative Investment Services SPV of the US, a special purpose acquisition vehicle formed by Apex and Genstar, definitively agreed to acquire an undisclosed majority interest in Equinoxe Alternative Investment Services, a Hamilton-based intermediator, from Estancia Capital Management LLC, in a leveraged buyout transaction.
HEALTHCARE
Rank Date
Target Name Target Short Business Description
Target Advisers
Acquiror Full Name
Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/10/17 Canadian Orthodontic Partners
Dental Laboratories - Sheridan Capital Partners
Sheridan Capital Partners
- CANADA - Sheridan Capital Partners of the US acquired an undisclosed minority stake in Canadian Orthodontic Partners, a Toronto-based dental laboratory operator, in a privately negotiated transaction. Terms were not disclosed.
HIGH TECHNOLOGY
Rank Date
Target Name Target Short Business Description
Target Advisers
Acquiror Full Name
Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/17/17 Information Builders Inc
Dvlp bus intelligence software
- Goldman Sachs Private Capital Investing
Goldman Sachs Group Inc
- FLASH :US - Goldman Sachs Private Capital Investing, a unit of Goldman Sachs Private Equity Group, planned to acquire an undisclosed minority stake in Information Builders Inc, a New York- based software publisher, in a privately negotiated transaction.
05/09/17 Macstadium Inc Data Processing, Hosting, and Related Services
DH Capital LLC
Investor Group
Investor Group - US - An investor group, comprised of Noro Mosely Partners and Summit Partners LP acquired an undisclosed minority stake in Macstadium Inc, an Atlanta-based provider of data processing and hosting services, in a privately negotiated transaction.
05/08/17 Smule Inc Dvlp music making applications
- Investor Group
Investor Group 54 US - An investor group, comprised of Adams Street Partners LLC, Bessemer Venture Partners LP, Franklin Resources Inc, FLOODGATE Fund LP, Shasta Ventures and Tencent Holdings Ltd acquired an undisclosed minority stake in Smule Inc, a San Francisco- based software publisher, for a total USD 54 mil, in a privately negotiated transaction.
www.buyoutsnews.com May 29, 2017 | BUYOUTS | 39
MARKET INTELLIGENCE
HIGH TECHNOLOGY
Rank Date
Target Name Target Short Business Description
Target Advisers
Acquiror Full Name
Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/08/17 Flex Logix Technologies Inc
Semiconductor and Related Device Manufacturing
- Investor Group
Investor Group 5 US - An investor group, comprised of LUX Capital Group LLC and Eclipse Ventures LLC acquired an undisclosed minority stake in Flex Logix Technologies Inc, a Mountain View-based manufacturer of semiconductors and related device, for a total USD 5 mil, in a privately negotiated transaction.
05/09/17 LLamasoft Inc Dvlp supply chain software
- TPG Capital LP
TPG Capital LP - US - TPG Capital LP agreed to acquire an undisclosed minority stake in LLamasoft Inc, an Ann Arbor-based software publisher, in a privately negotiated transaction.
05/16/17 Zapproved Inc Software Publishers - Vista Equity Partners LLC
Vista Equity Partners LLC
- FLASH: US - Vista Equity Partners LLC acquired an undisclosed minority stake in Zapproved Inc, a Portland- based software publisher.
INDUSTRIALS
Rank Date
Target Name Target Short Business Description
Target Advisers
Acquiror Full Name
Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/16/17 Fairhaven Partners LLC
Engineering Services
- O2 Investment Partners LLC
O2 Investment Partners LLC
- US - O2 Investment Partners LLC acquired an undisclosed minority stake in Fairhaven Partners LLC, an Atlanta- based provider of engineering services, in a privately negotiated transaction. Terms were not disclosed.
MEDIA AND ENTERTAINMENT
Rank Date
Target Name Target Short Business Description
Target Advisers
Acquiror Full Name
Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/16/17 Vivid Seats LLC All Other Amusement and Recreation Industries
Morgan Stanley William Blair & Co
GTCR LLC GTCR LLC - US - GTCR LLC definitively agreed to acquire an undisclosed minority stake in Vivid Seats LLC, a Chicago- based provider of recreation services, a unit of Vista Equity Partners LLC, in a privately negotiated transaction.
05/10/17 VIP Cinema Holdings Inc
Motion Picture Theaters (Except Drive-Ins)
- HIG Capital LLC
HIG Capital LLC - US - HIG Capital LLC acquired an undisclosed minority stake in VIP Cinema Holdings Inc, a New Albany-based motion picture theater operator, in a privately negotiated transaction.
05/08/17 Kobalt Music Group Ltd
Music Publishers - Investor Group
Investor Group 75 US - An investor group, comprised of Balderton Capital Management(UK)LLP, Hearst Entertainment Inc and MSD Capital LP acquired an undisclosed minority stake in Kobalt Music Group Ltd, a New York-based music publisher, a unit of Kobalt Music Group Ltd, for USD 75 mil.
05/04/17 Hoteles City Express SA de CV
Own,operate hotels - Jaguar Growth Partners LLC
Jaguar Growth Partners LLC
- MEXICO - Jaguar Growth Partners LLC of the US acquired a 9.7% stake or 37. 326 mil ordinary shares in Hoteles City Express SA de CV, a Mexico-based hotel operator, in a privately negotiated transaction.
05/08/17 Pandora Media Inc
Own,op Internet radio station
Centerview Partners LLC Morgan Stanley
KKR & Co LP KKR & Co LP 150 US - KKR & Co LP agreed to acquire an undisclosed minority stake in Pandora Media Inc, an Oakland-based radio network, for USD 150 mil, in a privately negotiated transaction.
REAL ESTATE
Rank Date
Target Name Target Short Business Description
Target Advisers
Acquiror Full Name
Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/09/17 Signature Global (India) Pvt Ltd
Land Subdivision KPMG Yes Securities (India) Ltd
Kohlberg Kravis Roberts & Co LP
KKR & Co LP 31.084 INDIA - Kohlberg Kravis Roberts & Co LP of the US, a unit of KKR & Co LP, acquired an undisclosed minority stake in Signature Global (India) Pvt Ltd, a Gurgaon-based provider of land subdivision services, a unit of SMC Global Securities Ltd, for a total INR 2 bil (USD 31.084 mil), in a privately negotiated transaction.
www.buyoutsnews.com40 | BUYOUTS | May 29, 2017
MARKET INTELLIGENCE
EXITSU.S. Sponsor Sales Via M&A (May 4, 2017 - May 17, 2017)CONSUMER PRODUCTS AND SERVICES
Date Effective
Target Name Target Ultimate Parent Acquiror Full Name
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/09/2017 LeadingResponse LLC
Huron Capital Partners LLC
ICV Partners LLC
- US - ICV Partners LLC acquired an undisclosed minority stake in LeadingResponse LLC, a Tampa- based provider of business support services, a unit of Huron Capital Partners LLC, in a privately negotiated transaction.
FINANCIALS
Date Effective
Target Name Target Ultimate Parent Acquiror Full Name
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/11/2017 Hilb Group of Texas LLC
BHMS Investments LP Higginbotham & Associates LLC
- US - Higginbotham & Associates LLC acquired an undisclosed minority stake in Hilb Group of Texas LLC, a San Antonio-based insurance agency, in a privately negotiated transaction.
05/17/2017 Capital First Ltd Warburg Pincus LLC GIC Pte Ltd - INDIA - The Singaporean state- owned GIC Pte Ltd raised its stake to 13.906% from 4.975%, by acquiring an 8.932% stake or 8.701 mil ordinary shares in Capital First Ltd, a Mumbai-based provider of sales financing services, a unit of Cloverdell Investment Ltd, owned by Warburg Pincus Private Equity XI LP, in a privately negotiated transaction.
HEALTHCARE
Date Effective
Target Name Target Ultimate Parent Acquiror Full Name
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/09/2017 Champion Manufacturing Inc
Levine Leichtman Capital
Undisclosed Acquiror
- US - Levine Leichtman Capital Partners Inc divested Champion Manufacturing Inc, an Elkhart-based manufacturer of medical seating products, to an undisclosed acquiror.
05/09/2017 Nuelle Inc New Enterprise Associates
Aytu BioScience Inc
- US - Aytu BioScience Inc, a unit of Ampio Pharmaceuticals Inc, acquired Nuelle Inc, a Mountain View-based manufacturer of surgical appliance and supplies, from New Enterprise Associates Inc.
Creditors - US - LensAR Inc (LensAR), an Orlando-based manufactures and develops eye lens treatment apparatus, completed its debt restructuring transaction with Creditors (CRs). CRs received common stock in exchange for outstanding debt. On completion, CRs held an undisclosed interest in the restructured LensAR. The book value of the existing debt that was exchanged under the terms of the offer was USD 60 mil.
INDUSTRIALS
Date Effective
Target Name Target Ultimate Parent Acquiror Full Name
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/08/2017 Schafer Corp Citigroup Inc Belcan LLC - US - Belcan LLC, a unit of AE Industrial Partners LLC, acquired Schafer Corp, an Arlington-based space research establishment, from Metalmark Capital Holdings LLC, ultimately owned by Citigroup Inc. Terms were not disclosed.
05/11/2017 TestEquity Inc First Atlantic Capital Ltd
LKCM Headwater Investments
- US - LKCM Headwater Investments acquired an undisclosed majority interest in TestEquity Inc, a Moorpark- based manufacturer and wholesaler of measurement equipment and temperature- controlled test chambers, from First Atlantic Capital Ltd, in a leveraged buyout transaction. Terms were not disclosed.
RETAIL
Rank Date
Target Name Target Short Business Description
Target Advisers
Acquiror Full Name
Acquiror Ultimate Parent
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/11/17 Sun Basket Inc Food Service Contractors
- Investor Group
Investor Group 9.2 US - An investor group, comprised of Baseline Ventures LLC, Founders Capital Corp and Unilever Ventures Ltd acquired an undisclosed minority stake in Sun Basket Inc, a San Francisco-based food service contractor, for USD 9.2 mil, in a privately negotiated transaction.
www.buyoutsnews.com May 29, 2017 | BUYOUTS | 41
MARKET INTELLIGENCE
U.S. Sponsor Sales Via IPOs (May 4, 2017 - May 17, 2017)IPO Date Company Name Company Industry IPO Size ($Mil) Post Offer Value ($ Mil) IPO Price IPO Shares (Mil) Company Ticker Firm(s) Invested in Company
05/11/17 Gardner Denver Holdings Inc
Industrials 826.000 3900.000 20.000 41.300 GDI KKR & Co
05/11/17 Solaris Oilfield Infrastructure Inc
Energy and Power 121.200 12.000 10.100 SOI Yorktown Partners
INDUSTRIALS
Date Effective
Target Name Target Ultimate Parent Acquiror Full Name
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/12/2017 Oracle Elevator Co Incline Equity Partners Investor Group
- US - An investor group, comprised of Longview Asset Management LLC and L Squared Capital Partners acquired Oracle Elevator Co, a Fort Lauderdale-based building equipment contractor, from PNC Equity Partners II LP, ultimately owned by Incline Equity Partners.
05/09/2017 Extra Express Inc Wind Point Partners St George Logistics
- US - St George Logistics, a unit of Wind Point Partners, acquired Extra Express Inc, a Brea-based provider of warehousing and related delivery services, from Dicom Express Inc, ultimately owned by Wind Point Partners, in an internal reorganization.
MATERIALS
Date Effective
Target Name Target Ultimate Parent Acquiror Full Name
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/09/2017 Pexco LLC Odyssey Invest Partners LLC
Kohlberg & Co LLC
- US - Kohlberg & Co LLC acquired Pexco LLC, an Alpharetta-based manufacturer of plastics products, from Odyssey Investment Partners LLC, in a leveraged buyout transaction.
05/16/2017 Pearlman Group The Stephens Group LLC
The Stephens Group LLC
- US - The Stephens Group LLC acquired Pearlman Group, a Norcross-based chemical and allied products merchant wholesaler, in a leveraged buyout transaction.
MEDIA AND ENTERTAINMENT
Date Effective
Target Name Target Ultimate Parent Acquiror Full Name
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/08/2017 Brand Addition Ltd HIG Capital LLC Elysian Capital LLP
- UK - Elysian Capital LLP acquired Brand Addition Ltd, a Manchester-based provider of advertising services, from HIG Milan UK Bidco Ltd, owned by HIG Europe Capital Partners LP, in a leveraged buyout transaction. Terms were not disclosed. Originally HIG Milan UK Bidco Ltd acquired Brand Addition Ltd
REAL ESTATE
Date Effective
Target Name Target Ultimate Parent Acquiror Full Name
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/16/2017 Blue Vista Capital Management LLC-Student Housing Properties(4)
Blue Vista Capital Mgmt LLC
Waypoint Campus Housing LLC
102.000 US - Waypoint Campus Housing LLC, a unit of Waypoint Residential LLC, acquired 4 student housing properties of Blue Vista Capital Management LLC, a Chicago-based financial sponsor, for a total USD 102 mil.
RETAIL
Date Effective
Target Name Target Ultimate Parent Acquiror Full Name
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/04/2017 Matilda Jane LLC CID Capital Webster Capital Management LLC
- US - Webster Capital Management LLC acquired Matilda Jane LLC, a Fort Wayne-based girl's and women's clothing retailer, from CID Capital, in a leveraged buyout transaction.
TELECOMMUNICATIONS
Date Effective
Target Name Target Ultimate Parent Acquiror Full Name
Ranking Value inc. Net Debt of Target ($Mil)
Synopsis
05/16/2017 Hargray Communications Group
Quadrangle Group LLC The Pritzker Organization LLC
- US - The Pritzker Organization LLC acquired Hargray Communications Group, a Hilton Head Island-based wired telecommunications carrier, from Quadrangle Group LLC.
www.buyoutsnews.com42 | BUYOUTS | May 29, 2017
INSIGHT: LBO Activity in Business Services
The following tables reflect closed LBO deals by U.S. buyout firms in the Business Services industry. The source for the data is Thomson One, a product of Thomson Reuters. Please contact Paul Centopani at [email protected] with questions or comments.
Consumer Products and Services
High Technology
Media and Entertainment
Industrials
Retail
Financials
Number of Deals by U.S. Sponsors, 2007 - 2017
Deal Volume by U.S. Sponsors, 2007 - 2017 (US$B)
LBO Deals in Business Services (2007 - 2017)
There were 15,995 transactions worldwide by U.S.-based buyout firms with a total disclosed valuation of about $1.8 trillion from January 1, 2007 through May 14, 2017. From this tally, Business Services was responsible for 2,542 transactions and those with reported financial details combined for about $220.2 billion.
Within the Business Services sector, Consumer Products and Services was the leading industry, accounting for 1183 of the 2,542 transactions (46.5 percent) from 2007 to 2017. Placing second was High Technology with 968 deals (38.1 percent), while Media and Entertainment came in third with 193 deals (7.6 percent).
Sector Number of Deals PercentConsumer Products and Services 1183 46.8%High Technology 968 38.3%Media and Entertainment 193 7.6%Industrials 143 5.7%Financials 29 1.1%Retail 13 0.5%Total 2,529 100.0%
Most Active Financial Advisors on Business Services Deals with LBO Backers (2007 to 2017)* Rank Advisor Name Value ($ Mil) Market Share (%) Number of Deals
1 Goldman Sachs & Co 95,321.8 43.3 56
2 Bank of America Merrill Lynch 80,083.4 36.4 49
3 Barclays 76,940.4 34.9 40
4 Citi 70,971.4 32.2 40
5 Credit Suisse 70,389.4 32.0 54
6 Deutsche Bank 67,367.4 30.6 30
7 Morgan Stanley 61,819.4 28.1 50
8 JP Morgan 59,614.5 27.1 36
9 Evercore Partners 43,024.9 19.5 29
10 HSBC Holdings PLC 30,454.6 13.8 9
Subtotal with Financial Advisor 213,456.0 96.9 1,105
Subtotal without Financial Advisor 6,780.9 3.1 1,436
Industry Total 220,236.8 100.0 2,541
Ten Largest M&A Exits By U.S.-Based LBO Sponsors in Business Services (2007 to 2017)Date Effective/Unconditional
Target Ultimate Parent Target Name Business Description Value ($mln) Website Acquirer(s)
12/14/15 Silver Lake Management LLC Interactive Data Corp Other Internet and Online Services NEC 5,267.200 www.interactivedata.com Intercontinental Exchange Inc
10/18/12 Hellman & Friedman LLC Getty Images Inc Digital Imaging Services 3,300.000 www.gettyimages.com An investor group, led by Carlyle Group and the management of Getty Images Inc
03/11/08 Hellman & Friedman LLC DoubleClick Inc Internet Marketing Services 3,100.000 www.doubleclick.com Google Inc
04/08/16 Veritas Capital Partners LP Truven Health Analytics Inc Medical/Health 2,600.000 www.truvenhealth.com IBM Watson Group
10/21/16 Vestar Capital Partners Inc Press Ganey Holdings Inc Consulting Services 2,296.340 www.pressganey.com EQT VII Ltd
09/01/15 New Mountain Capital LLC SNL Financial LC Financial Services,0ther 2,225.000 www.snl.com McGraw Hill Financial Inc
12/30/10 Welsh Carson Anderson & Stowe US Oncology Inc Pure & Contract Biotechnology Research 2,160.000 www.usoncology.com McKesson Corp
11/30/15 Providence Equity Partners LLC SRA International Inc Data communications systems management
2,115.120 www.sra.com Computer Sciences Corp
06/24/15 TPG Capital LP Envision Pharmaceutical Services LLC
Pharmaceutical Services 2,011.480 www.envisionrx.com Rite Aid Corp
Ten Largest LBO Deals By U.S.-Based Sponsors in Business Services (2007 to 2017)Date Effective/Unconditional
Target Name Website Value ($Mil) Business Description Acquirer(s) Acquirer Ultimate Parent
09/24/07 First Data Corp www.firstdatacorp.com 27,031.687 Pvd payment processing svcs
Kohlberg Kravis Roberts & Co LP
Kohlberg Kravis Roberts & Co
05/02/16 The ADT Corp www.adt.com 12,269.379 Provide security systems services
Apollo Global Management LLC
Apollo Global Management LLC
07/15/16 Qihoo 360 Technology Co Ltd
www.360.com 10,307.087 Internet Service Provider{ISP}
Investor Group An investor group, including Shanghai Huasheng Lingfei Private Equity Fund Investment, Jiangsu Huatai Ruilian M&A Fund, New China Capital International Management Ltd, and Sequoia Capital
01/26/07 ARAMARK Corp www.aramark.com 8,216.973 Pvd mgmt svc Investor Group A management-led investor group, including ARAMARK Corp's CEO Joseph Neubauer, GS Capital Partners, Thomas H Lee Partners, JP Morgan Partners and Warburg Pincus
Investor Group An investor group led by The Carlyle Group and GIC PTE Ltd
03/03/16 Solera Holdings Inc www.solerainc.com 5,966.713 Pvd data processing svcs
Summertime Holding Corp
Vista Equity Partners LLC
02/26/10 IMS Health Inc www.imshealth.com 5,081.150 Pvd market intelligence svcs
Investor Group An investor group of TPG Capital LP and Canada Pension Plan Investment Board of Canada
11/09/07 Ceridian Corp www.ceridian.com 5,026.833 Pvd payroll svcs Investor Group An investor group of Thomas H Lee Partners and Fidelity National Financial
05/01/17 Aon Hewitt-Benefits Admin & HR
- 4,800.000 Human Resources and Executive Search Consulting Services
Blackstone Group LP
Blackstone Group LP
11/03/16 Rackspace Hosting Inc www.rackspace.com 4,128.067 Provide web hosting services
Rackspace Hosting Inc SPV
Apollo Global Management LLC
* Includes deals that used more than one advisor. In these cases, each advisor was given full credit for the transaction.Source: Thomson One, a product of Thomson Reuters
www.buyoutsnews.com44 | BUYOUTS | May 29, 2017
ON THE MOVE
PRIVATE EQUITY FIRMS
Bridge Growth Partners named Randy L . Cowen to its technology advisory board. Cowen is a former global head of technology and operations, chief infor-mation officer and co-chief administra-tive officer at Goldman Sachs.
C D IB C a pit a l Inte r nat iona l hired two managing directors, Hamilton Tang and Yinghai Xie, in Hong Kong and Shanghai, respectively. CDIB also named Sandy Ng senior vice president in the investment and portfolio man-agement team out of Shanghai. Tang is former group CEO of Simon Murray & Co, while Xie was a partner of SMC. Ng was previously a principal of SMC. CDIB Capital is the PE arm of China Develop-ment Financial Holding Corp.
Cairngorm Capital: Neil McGill was named an investment director. He joins from BDO, where he was head of the M&A advisory practice in Scotland.
Frazier Healthcare Par tners: René Lerer joined as a senior adviser to the firm’s growth buyout team. Lerer, a phy-sician, is president of GuideWell Mutual Holding and Florida Blue.
GPB Capital hired Craig Goos as a managing partner and chief operating officer. Goos previously was a manag-
ing director of alternative investments at UBS Wealth Management.
Hancock Capital Management added six investment professionals to its lev-eraged senior loan platform: Eric Bar-ton, Jeff Bottcher, Ryan Reko, Patrick Kilrea, Brian Cihlar and Conner Moriarty.
High Road Capital Par tners named Nicholas W. Martino a partner and Eojin Lee vice president. Martino had been group president at ITW while Lee was a vice president at D Cubed Group and a fo mer associate at Audax Group.
Thomas H. Lee Partners LP: Gregory Maxon joins as a managing director and head of capital markets. Maxon previ-ously served in the leveraged-finance group at .JP Morgan Securities LLC.
M ave n C a p i t a l P a r t n e r s : M a r t i n Clark, James Darlington and Jeremy Thompson joined as investment manag-ers responsible for transacting new NPIF equity investments. Maven tapped Niko-la Clarke to provide portfolio support to NPIF investee businesses.
Moonlake Capital: Philip Wack, a for-mer director at KKR, launched Moon-lake, according to Private Equity News. Moonlake, London, will target middle-market companies between 250 million and 300 million euros in the industrial and consumer services sectors in the U.K. and German-speaking Europe, the
story said. Wack left KKR in April along with other senior executives includ-ing Haroun van Hövell, the firm’s head of energy for Europe, the Middle East and Africa, Private Equity News said.
Onex Corp tapped Laurence Gold-berg a managing director, based in the New York office and responsible for lead-ing tech investments. Goldberg previous-ly was global head of tech, media and telecom investment banking at Barclays.
P e a k E q u i t y P a r t ne r s h i red J us -tin Reger as a principal in its Radnor, Pennsylvania, headquarters to focus on investments in enterprise software companies. Reger joined PeakEquity from LLR Partners, where for nine years he led the enterprise application soft-ware practice. Reger previously worked at Citigroup, advising PE firms on LBOs.
P e r e l l a W e i n b e r g P a r t -ners named Cor y Hill a managing director in its advisory business. Hill previously was a director in Bank of America Merrill Lynch’s global invest-ment banking unit, focused on M&A, leveraged recaps and financings.
P o l a r i s P a r t n e r s : J o s h M a n d e l -Brehm is joining the firm as an entre-preneur-in-residence. Mandel-Brehm previously held business development and strategy positions at Biogen.
Silver f leet Capital made four new hires: Johan Boork, Jan Kux, Guntram Kieferle and Constance d’Avout.
Sofinnova Partners named Graziano Seghezzi a managing partner. Seghezzi joined the venture firm in 2001.
YFM Equity Par tners hired James Savage as portfolio director to focus on managing the firm’s growth and buyout investments on the team led by David Bell. Savage joins from Barclays’s Prin-cipal Investments team, where he was a vice president.
Z Capital appointed Gianni Russello a managing director. Russello is a former managing director in the restructuring and special-situations advisory invest-ment banking group at Oppenheimer & Co.
Aris Hatch, a managing director who focused on HarbourVest Partners’ sepa-rate-accounts business, has joined GCM Grosvenor.
Hatch joined Chicago-based GCM Gros-venor in early May as a managing direc-tor working on business development, according to a person with knowledge of the situation.
At HarbourVest, she worked on the client-services team and led the Custom Solutions group responsible for separate-ly managed accounts across strategies, Hatch’s LinkedIn profile shows.
Whether HarbourVest will appoint a
direct successor to Hatch is unclear. The Custom Solutions group is being managed by a six-member team, a person with knowledge of the group said.
Each of the Custom Solutions group’s clients has a dedicated account team that includes members of the investments, operations and client-services teams, the person said.
From 2004 to 2008 Hatch was a vice president and chief administrative offi-cer at Rock Maple Funds. She worked more than four years at Advent Interna-tional, her LinkedIn profile said. —Chris Witkowsky
HarbourVest’s Hatch joins GCM
ON THE MOVEwww.buyoutsnews.com May 29, 2017 | BUYOUTS | 45
PORTFOLIO COMPANIES
A l i o n S c i e n c e a n d Te c h n o l o -gy: The Veritas Capital portfolio com-pany named Steve Schorer president and CEO. Bahman Atefi, who served as president and CEO since 2002, becomes vice chairman.
A nsira, owned by Ad vent Inter-national, named Jim Warner chair -man. Warner currently is a principal at Third Floor Enterprises. Ansira also added Dan Springer, an operating part-ner at Advent, to the board. Ansira is the St. Louis tech-enabled marketing-solutions provider.
Apex International Energy appoint-ed Willis “Trey” Gilmore vice president of corporate reservoir engineering in Houston and Raed Saba deputy gen-eral manager and exploration manager in Cairo. Apex, an oil-and-gas explora-tion and production company focused on Egypt, is backed by Warburg Pincus.
G5, the Bend, Oregon, marketing company for the property management sector, hired Lisa Calvert as chief peo-ple officer. Calvert previously worked at Getty Images. G5 is backed by Peak-Equity Partners.
G r a n d R a p i d s O p h t h a l m o l o -g y: The Sterling Par tners portfol io company named Bill Hughson CEO. Hughson was previously president and CEO of IntegraMed Fertility.
24 Hour Fitness USA named Chris Roussos CEO. Roussos was previously CEO of Epic Health Services. 24 Hour Fit-ness is owned by AEA Investors, Ontario Teachers’ Pension Plan and Fitness Cap-ital Partners.
SERVICE PROVIDERS
Alvarez & Marsal: Joining the trans-action advisory group’s U.S. practice as managing directors are Peter Gougou-sis and Jeffrey Jones. Gougousis returns
to A&M after co-founding the f irm’s financial industry group in 2009, while Jones previously worked as a manag-ing director in global capital markets at Donnelly Financial Solutions.
Deutsche Bank hired Bruce Har t-ing as a managing director in its finan-cial-institutions group. Harting will join the bank’s New York off ice this summer as head of banks investment-banking coverage. He joins from Credit Suisse, where he was most recently a managing director in the financial-ser-vices coverage group.
E n s e r v c o n a m e d I a n D i c k i n -son president, CEO and a director. Dickinson succeeds Rick Kasch, who is retiring from those positions. Dickinson is a former partner with Caddis Capital Investments.
Hamilton Lane added three execu-tives in Europe. Carolin Blank joined as a principal on the European-based relationship-management team; Ahmed Khalil becomes a vice president, also in relationship management, and Lali Sichinava becomes a vice president on the business-development team.
H o u l i h a n L o key h i r ed H e a t h e r Smith as a managing director and head of structured equity in the capital mar-kets group. Smith joined the investment bank from Sagent Advisors, where she led the private f inancing solutions group. She previously worked in the private placement groups at Deutsche Bank and Greentech Capital.
JEGI hired Kathleen Thomas as a managing director. She will focus on expanding the investment bank’s offer-ings across B2B media and events M&A. Prior to JEGI, Thomas was a managing partner at Drake Star Partners (formerly Redwood Capital). Earlier, she’d led the media and marketing services practice at Berkery Noyes for 12 years.
S u n T r u s t R o b i n s o n H u m -phrey hired Youssef Squali as managing director and senior analyst covering the internet and digital media sector. Squali previously was managing director and global head of internet research at Can-tor Fitzgerald.
LIMITED PARTNERS
Public Sector Pension Investment Board opened a London off ice as its European hub. The team will focus on investments in private equity, private debt, infrastructure and real estate asset classes in Europe. The Europe team con-sists of 28 professionals.
PROMOTIONSInsignia Capital Group promoted Tif-
fany Obenchain to managing director.
JPMorgan Chase named its regional head of diversified industries and ener-gy, Ker win Clayton, and its Southeast Asia banking head, Rohit Chatterji, co-heads of Asia-Pacific M&A, according to an internal memo seen by IFR.
KAP Group, a provider of fundraising and investor-relations advisory services for the PE industry, promoted Erin Roed-er to principal. Prior to joining KAP, Roeder was a vice president at Metro-polit an Real E s t ate Equit y Manage -ment (now part of Carlyle Group).
P o s t C a p i t a l P a r t n e r s p r omot-ed Christopher Cheang to director and business-development head. Prior to joining Post Capital in 2009, Cheang worked at Cabot China Ltd, a joint ven-ture of Cabot Corp.
Silicon Valley Bank: Michael Desche-neaux was promoted to president. He had been CFO of SVB Financial Group. Daniel Beck, former CFO of Bank of the West, becomes SVB Financial Group’s CFO.
CORRECTIONAn article in Buyouts of May 15 misstated the deal value of TSYS’s acquisition of TransFirst. TSYS acquired TransFirst for $2.35 billion.
www.buyoutsnews.com46 | BUYOUTS | May 29, 2017
BUYOUTS BEAT
PE firms fire 58 pct of port-folio CEOs within two years of a deal: survey
Private equity firms aren’t afraid to oust portfolio company CEOs who aren’t up to muster.
In fact, nearly three of five (58 percent) of portfolio CEOs will be replaced within two years of an acquisition, and 73 percent of CEOs will likely be sent packing during a fund’s investment cycle, a survey from AlixPartners said.
The biggest reason: lack of fit with the portfolio company’s new direction. Failure to deliver results in line with expecta-tions was another reason, the
consultant said.“It’s a lack of due diligence
on the CEO,” said Ted Bililies, a managing director of AlixPart-ners. PE firms “often do due diligence on all aspects of a company except the leadership. Then they realize they have a problem.”
Careful vettingPE firms need to vet CEO can-
didates thoroughly to draw out deficiencies, Bililies said. This can be done before a deal closes, immediately after, or even six months into an investment.
AlixPartners, along with Vardis, produced “Annual Pri-vate Equity Survey: Replacing a
Portfolio Company CEO Comes at a High Cost,” which looked at the relationship between portfolio company CEOs and PE owners.
Earlier this year, AlixPart-ners surveyed 104 respondents across PE; 38 percent were PE investors and 62 percent portfolio-company executives. Portfolio CEOs made the sur-vey’s largest group, 42 percent, while PE managing directors comprised 24 percent.
Nearly three-fourths (73 per-cent) of PE executives said the most important fact they con-sider when hiring a CEO is their record of success, AlixPartners said. Some 55 percent said they scrutinized whether the candi-dates faced strategic challenges similar to those at the portfo-
lio company. People-leadership skills came in third with 48 percent of respondents.
The survey also looked at dis-agreements between PE firms and portfolio CEOs. Seventy-eight percent of PE investors picked “pace of change” as the biggest trouble spot between PE owners and portfolio CEOs.
Bililies said “pace of change” typically refers to large corpo-rate CEOs who are often unused to the pressure and demands of the middle market and answer-ing to a PE firm. “It’s a complete-ly different role than they are used to having,” he said. CEOs from large corporations often “don’t have the infrastructure and support that they’re used to” when they switch to a port-folio company. —By Luisa Beltran
1Why did you go public? Why now?
Going public was a great branding event as it speaks to the institutional quality of our business, the industry we play in and the clients we serve. It also cements our independence and gives us additional [tools] in terms of hiring, recruiting and retaining talent.
It allows everyone in the firm to have a sense of ownership. Prior to the IPO we had about 100 employee shareholders; now, almost everyone — [about] 300
people — are employee share-holders. ... [Our culture is] a cul-ture of teamwork, and the equity piece is really important to that.
We don’t think of ourselves as a private equity investment firm in the same way you might think about the existing public GPs. ... We don’t have a high percentage of revenues coming from incentive fees or carried interest, which can sometimes create a level of volatility or unpredictability. We believe our business is more stable and more predictable.
2How has the approach to PE changed over the years?
One classic pitfall some par-ticipants in this asset class have faced is: As the number of pri-vate equity funds around the world grew, their portfolios got more and more diverse. In some cases, that meant that portfolios were overly diversified. It’s very difficult to pick top-quartile managers year after year, sector after sector. As a result, portfolios became almost index-like, but without the low fee structure of an index. And some inves-tors wound up with many more
relationships than they could manage. In part because of this, institutions today tend to concen-trate relationships to fewer firms who can do more.
3So how does data come into play in this strategy?
Data helps investors construct portfolios based on risk and return measures and other fac-tors beyond just aiming to pick the best managers. ... As data con-tinues to improve, [to] be more available, [to] be demanded by LPs, you’ll see a significant move towards ‘bigger, faster, cheaper’ in private equity. ... Company-lev-el data around the portfolio com-panies in PE funds: How are they doing? Revenue, capital struc-ture, cash flows and, of course, valuations — data on those met-rics. And then fund-level data: When is the fund drawing capi-tal, charging fees, returning capi-tal, incurring deal fees and other fees, carried interest, etc.? How does it work towards the hurdle rate and preferred return and then, ultimately, how does it roll up in the net experience for LPs?
4In order to access more data, have GPs become more trans-
parent?Private equity is a bit in the
Stone Age when it comes to data. It’s getting better — slowly, but it is getting better. And as it gets better, GPs are more willing to share information and they have systems in place for that informa-tion to be gathered and shared in a reliable manner. We believe we are playing a part to bring greater transparency to the pri-vate markets.
5How does data enhance the skillset needed to pick the
best managers?[Picking] managers requires
a lot of experience, a balance of data and analytical tools, togeth-er with assessments of people. It involves understanding the life cycles of PE funds and being able to extrapolate what’s likely to happen. … You’re using histori-cal performance data that shows where managers were good his-torically, but you have to make a forward-looking decision. You have to look at psychology, orga-nizational dynamics, the maturi-ty of the organization, macro and industry dynamics, etc. You have to be able to understand if a GP is talking about doing something different from what they’ve done well historically.
Edited for clarity by Chris Witkowsky
FIVE QUESTIONS WITH
HARTLEY ROGERS, Chairman, Hamilton Lane
BACK TO SCHOOL
www.buyoutsnews.com May 29, 2017 | BUYOUTS | 47
BUYOUTS BEATIPO REGISTRATIONS BY SELECT PRIVATE EQUITY H-BACKED COMPANIES IN 2016-2017 YTD
Filing Date
Name Industry Exchange Where Issue Will Be Listed
Current Amt Filed - sum of all Mkts ($M)
Investors Bookrunner(s)
04/13/2017 Tapstone Energy Inc Energy and Power NYSE - Blackstone Group Merrill Lynch Pierce Fenner & SmithCitigroup Global Markets Inc
03/23/2017 WidOpenWest Inc Media and Entertainment
12/28/2016 AppDynamics Inc High Technology NASDQ 132.000 General Atlantic Morgan Stanley & Co; Goldman Sachs & Co
08/30/2016 Genesys Industries Inc Consumer Products and Services
NASDQ .300 Hellman & Friedman -
07/01/2016 Yeti Holdings Inc Consumer Products and Services
NYSE 100.000 Cortec Group Bank of America Merrill Lynch; Morgan Stanley & Co; Robert W Baird & Co Inc; Piper Jaffray Cos; William Blair & Co; KeyBanc Capital Markets Inc; SunTrust Robinson Humphrey; Wells Fargo Securities LLC; Raymond James & Associates Inc; Stifel Nicolaus & Co Inc; Academy Securities Inc; Jefferies LLC
06/02/2016 Blue Coat Systems Inc High Technology NYSE - Bain Capital Morgan Stanley & Co; JP Morgan Securities Inc; Credit Suisse Securities (USA) LLC; Goldman Sachs & Co; Jefferies & Co Inc; UBS Securities Inc; RBC Capital Markets; Wells Fargo Securities LLC; Cowen & Co; Pacific Crest Securities Inc; Piper Jaffray Inc; William Blair & Co
Source: Thomson One
“Fund Lab is really born out of my personal experience in the private equity space,” said Brandon Labrum, formerly of Sterling Partners. “Most PR firms aren’t necessarily built to serve the needs of investment funds. They don’t know the space well enough to provide targeted media activities.”
During three years lead-ing business development at Sterling, Labrum realized how much PE has proliferated in the past decade: “Now you have thousands and thousands of firms,” with an industry pres-ence in “every decent-sized city around the country. Historically, those firms have underinvested in branding and marketing.” But with competition fierce for deal flow and LP dollars, “firms have started to spend more money on how they look and how they sound and, lately, what news and stories they share with the marketplace.”
That last topic is of greatest interest to Labrum, who says “the most underutilized assets in that world are your most recently completed transac-tions.” Firms “often get the deal done and move on and start searching for the next one,” when there’s still juice to be squeezed, publicity-wise, from the last transaction, he said. And touting success can lead to deal flow down the line.
Labrum said a typical PR firm types up a press release, sends it over the wires and crosses its fingers that somebody will pick it up. More effective is focusing “on communicating to your net-work [and] the industry vertical where you completed the deal.”
Toward that end, Fund Lab offers tailored e-mail blasts directed at relevant outlets, such as M&A trade publications, and connects to clients’ CRMs to get the word out within specific industries. For a given transac-tion, “We go deep into that ver-tical to make sure owners and operators see the deal.”
The firm also takes a differ-ent approach to billing, offering services on a per-transaction basis, instead of a bucket of ser-vices under a monthly retainer. Clients can allocate the cost of transaction marketing against their due-diligence budgets, rather than as a GP expense at the fund level, saving some management fees.
“The biggest pain point in the M&A industry in general has been and will continue to be deal flow,” said Labrum. Firms are trying exotic solu-tions, like hiring data-mining consultants, when they could be exploiting something that’s already theirs, “this piece of news that they’re not doing any-thing with. There are hundreds of deals that happen every year and go completely unnoticed in the marketplace.”
At an international private equity conference in Washington in May, speakers sounded the alarm about the twin challenges of rising populism and new technology reducing employment opportunities, especially in emerging economies.
Europe must have an interest in the economic development of Africa, said one speaker at the IFC EMPEA Global Private Equity conference. Otherwise, the refugee crisis the region already is dealing with will grow, the speaker said.
“If developed countries don’t f ind a way to address Africa’s fundamental and demographic problems, the game in Europe will be up. No way populism, anti-immigration could protect in Europe what could come from Africa in the form of people, migrants, terrorism,” said Vali Nasr, dean of the Paul H. Nitze School of Advanced International Studies, Johns Hopkins University.
In Africa, new technology is not really the problem because labor is so cheap. The issue is investing in job creation, Nasr said.
Europe’s involvement in helping grow African economies “may get the interna-tional community mind focused on how to create jobs in Africa,” Nasr said.
Developed nat ions haven’t paid enough attention to the losers of global-ization and emerging technology, said Heidi Crebo-Rediker, chief executive of International Capital Strategies and a senior fellow at the Council on Foreign Relations.
There’s been a “lack of an ability to make policy adjustments in places that are wealthy and have institutions in place and education systems in place,” Crebo-Rediker said.
In the gilded hallways and ballrooms of the Ritz-Carlton in leafy northwest Washington, investors, academics and
politicians from around the globe shared concerns about an increasingly insular world.
This rising tide threatens to derail the intricate system of global trade forged over decades. That in turn puts so much else at risk in the markets that were the focus of the conference: emerging economies.
The state of the world today is con-cerning for private equity, which thrives on the ability to grow companies out of their home markets. The global supply chain depends on the easy flow of capi-tal, goods and people and is threatened by changing dynamics in developed countries.
Concern mingled with optimism at the conference. Private equity is thriv-ing. The asset class has raised so much money it can’t spend it all. At the end of last year, global private equity had about $1.5 trillion of uncalled capital. That total amount eclipsed deal activities last year. A portion of that capital flows into emerging markets.
And the spigot doesn’t appear to be shutting off. At the conference, Abdiel Santiago, chief executive and chief investment officer of Fondo de Ahorro de Panama, said Panama’s sovereign fund is considering carving out an allocation to alternatives, including PE.
Fondo de Ahorro de Panama has about $1.4 billion in assets and is funded by revenue from the Panama Canal. It’s invested in equities and fixed income, but the investment team is weighing adding alternatives.
There's a strange dynamic in today's market — fear and optimism; hope and uncertainty; a lot of money and nervous investors. Investors are increasingly challenged in trying to find the right balance.
Weighing risk in an increasingly insular world
“We knew what we didn’t know, but unfortunatelywe didn’t know what we knew.”
Now in its tenth year, PartnerConnect Midwest has become the premier event for PE networking in the Midwest. Since its inception, PCMW has hosted more than 3,000 LPs and GPs for targeted networking and industry education and is known as the region’s only “can’t miss” PE event. The event features ExecConnect, a one-on-one private meetings program between LPs and GPs who match based on mutual investment interests. See you in Chicago!
VISIT PARTNERCONNECTEVENTS.COM/PCMW2017/ FOR MORE INFORMATION
JUNE 26- 28, 2017 • INTERCONTINENTAL, CHICAGO
MISSING OUT?Some LPs frustrated by deal
allocation around sponsor-backed SPACs
28
www.buyoutsnews.com May 29, 2017 • Issue 12
Jerome Greene, pioneer in raising capital for PE, dies 8
CalPERS OKs $1.68 bln budget, excludes PE expenses 12
Tecum Capital partners with Pennsylvania family office 14
Rubenstein: All Carlyle funds will hit their hard caps 16
Northeast Dermatology Associates explores a sale 22
BUYOUTS Vol. 30, No. 12, M
ay 29, 2017 M
issing Out? LPs Scrutinize SPACs
Looking to broaden your network of LPs? Or maybe you want access to top quartile emerging PE and VC fund managers? Join us for Emerging Manager Connect East and forge new, high-quality connections in the
private market space. We’ll have scores of GPs as well as 100+ institutional investors on-site for targeted, efficient networking you can’t afford to miss. Don’t let your next deal pass you by.
p a r t n e r c o n n e c t e v e n t s . c o m / e m c e a s t 2 0 1 7
