Chart of the Week: During a turnaround backed by KKR, Dollar General more than doubled EBITDA by pausing expansion and investing in existing stores. The transformation, which involved new leadership and a different approach to merchandising, increased same-store sales growth from +2% prior to the buyout to +9% during the turnaround. (Read More)
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Advent International is preparing to exit Evri, a UK-based logistics company, at a $2.5 billion valuation, according to The Times. Advent acquired a majority stake in the company in 2020 at a roughly $1.4 billion valuation. At the time, Evri had a 31% share of the UK eCommerce delivery market. It would be a solid exit for Advent, which likely also benefitted from a $962 million dividend payment that Evri issued to shareholders in 2022.
The shift to online shopping, accelerated by the COVID-19 pandemic, was a boon to Evri’s parcel delivery business the past few years. As a result, the company named several key executive appointments including Harvinder Atwal as Chief Data Officer in 2022 and David Saenz as Chief Growth Officer in 2023.
Advent has also guided the company to adopt more sustainable last-mile delivery methods. For example, more than one in three of Evri’s delivery vans are electric and the company delivered 160,000 parcels in London last year by bicycle.
L Catterton is part of a takeover bid for Tod’s, a luxury Italian shoemaker, that would value the company at $1.5 billion. Tod’s Founder and CEO Diego Della Valle has been trying to take the company private for several years, but has failed to garner the necessary board approval. “Leaving the stock exchange now … is the most appropriate strategic choice,” he said in a statement. (Source)
Meanwhile, EQT is helping another Founder-CEO take his company private. The buyout firm is part of a consortium placing a $1.6 billion takeover bid for French music company Believe. The company operates several brands in the licensing and distribution space. (Source)
The National Football League (NFL) may soon allow private equity firms to invest in teams. Several team owners are already affiliated with private equity, but firms are prohibited from making direct investments. NFL team valuations have skyrocketed in recent years, with the average team now worth $5.1 billion, according to Forbes. Permitting institutional investors would fuel continued growth in team valuations, which have outpriced even many high-net worth individuals. (Source)
Blue Owl Capital, a major player in private credit, reports that it originated 2x more loans in Q4 2023 vs. the same period a year prior. It’s a sign that private credit is still going strong, even in the face of expected interest rate cuts later this year. (Source)
Speaking of private credit, Ares Management just completed raising a $1.7 billion credit fund targeting investments in Australia. (Source)
AE Industrial Partners is opening a new office in Washington D.C. with an eye on investing in more government contractors. The office will be managed by former Airbus CEO Chris Emerson. (Source)
Investment bank Raymond James reports that private equity firms returned just 11% of their net asset value back to LPs in 2023, the smallest distribution since 2009. Exit activity fell to a 10-year low last year, preventing firms from being able to return capital to investors. PE firms are holding-out for interest rate cuts which are expected to increase company valuations, but LPs are growing impatient. (Source)
The deal drought has led several PE firms to restructure how they compensate employees. KKR, Apollo Global Management, and Carlyle will tie a greater percentage of employee compensation to exit outcomes, in an effort to incentivize more deal activity. (Source)
KKR reported better-than expected quarterly earnings last week. Net profit from asset sales were up +85% YoY and fee-related earnings were up +21%. It’s further evidence that the largest private equity firms continue to perform well amid an industry-wide downturn. (Source)
The Body Shop, a UK retailer that was acquired by buyout firm Aurelius in November, is reportedly heading toward a major restructuring, according to BBC. The beauty and personal care store, which has more than 200 stores in the UK, reported worse-than-expected holiday sales and has insufficient working capital. Aurelius has hired FRP Advisory to lead the restructuring. (Source)
The CEO Confidence Index improved for the fourth consecutive month heading into February, according to Chief Executive magazine. The indicator, which measures forward-looking business conditions, is at the same level as June 2023, and only surpassed by March 2022 before that. Nearly half of CEOs reported saying they believe business conditions will improve over the next 12 months, citing increased demand, lower interest rates, and greater political certainty. (Source)
CEO succession expert Jeffrey Cohn argues that public companies can learn a lot from how private equity structures boards of directors for their portfolio companies. “PE owners recognize the value of a more collaborative model in which directors – often former CEOs themselves – can work more closely with management to drive transformation and results more efficiently,” he says. “It’s almost taboo for public company directors to get closely involved with management during the strategy creation process.” (Source)
Altamont Capital Partners has hired Billy Medof as Operating Partner to work with the firm’s portfolio companies in the packaging industry. Previously, Medof was CEO of Procure Analytics, a group purchasing organization for more than 1,000 companies. Before that, he was President of Georgia Pacific’s corrugated packaging business. (Source)
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