Chart of the Week: In a new research report, Value Add examines how AI is being used for private equity value creation — from operational efficiency to commercial excellence and risk management. One of our key findings? AI could deliver a $406 billion impact to the US private equity industry by 2030. (Read More)
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Blackstone and Permira inch closer to finalizing a buyout deal for Adevinta. The European online classifieds company would be valued at approximately $15 billion in the deal. Although the acquisition price would be a 34% premium to Adevinta’s closing price on September 21, there is already some drama brewing that the company’s directors feel the business is worth more money. However, Blackstone and Permira said their offer is best and final. Although conversations are ongoing, a deal is still expected to close by Q2 2024. (Source)
Kim Kardashian and Jay Sammons’ buyout firm SKKY Partners has agreed to acquire a minority stake luxury condiment-maker Truff. The company was founded in 2017 by Nick Ajluni and Nick Guillen as a DTC brand, but it has since expanded into distribution with Target and Whole Foods. The investment is a hint at the type of investment SKKY is expected to pursue — consumer-centric brands that tap into social media audiences with effective viral marketing. SKKY Managing Director David Brisske will join the company’s board. (Source)
Ardian has agreed to acquire data center company Verne Global for $575 million. The Icelandic data center firm is being sold by Digital 9 Infrastructure, who acquired the company for $320 million in 2021. D9 has fallen under financial hardship this year and was pressured by shareholders to sell Verne Global as well as other assets. Ardian is expected to do a full strategic review of Verne Global before deciding whether to pivot the company away from its existing five-year plan which has it investing $484 million to expand its data center capacity in Iceland. (Source)
Pharmaceutical giant Bayer is exploring a company breakup that would spin-off multiple business units. One option being discussed would split the consumer health and crop-science operations into two separate companies. Bayer’s stock price has been in a long-term decline since 2015, and more recently the company has suffered a series of courtroom and drug development setbacks. Bill Anderson, who took over as CEO in June, is under immense pressure to turn around the company. Private equity firms are expected to begin circling the conglomeration to see if there are any potential deals to be had in the spin-offs. (Source)
EQT has agreed to acquire a majority stake in software company HRBrain. The Tokyo-based company specializes in developing software solutions for HR professionals. It’s a relatively small deal for a buyout firm — HRBrain is believed to have a valuation of less than $200 million. But, a growing trend in private equity is firms wading deeper into startup territory to fill the gap left by cautious venture capital investors. (Source)
PE-backed executives sense that private equity sponsors are growing impatient due to lack of deal activity. 90% of PE-backed CFOs say they fear for their jobs, up from 66% in 2019, according to a new survey from CFO consultancy Accordion. What’s more, there’s a big discrepancy between what PE-backed CFOs so their priorities are versus sponsors. CFOs in portfolio companies say their top two priorities going into 2024 are technology enablement and cost reduction, whereas sponsors say their top priorities are accounting and M&A. (Accordion)
Goldman Sachs predicts that the decade-ahead in private equity will be known for its focus on operational efficiency. Margin expansion and digital transformation are expected to be the two biggest focus areas for private equity and their operating partners, according to the financial firm. Goldman points out that revenue growth and margin expansion accounted for half of value creation in PE-backed companies between 2008-2021, up from about 35% between 2000-2007. (Goldman Sachs)
Private equity firms are holding on to portfolio companies for longer than ever before, according to new Preqin data reported on by the Wall Street Journal. The average holding period of a PE-backed company is now up to 7.1 years. As the cost of capital has increased, dealmaking has turned sluggish, and buyout firms are expected to shift their efforts to traditional value creation in portfolio companies. (Wall Street Journal)
Blackstone CEO Steve Schwarzman said his firm is starting to ramp-up deal making going into 2024, with a preference for real estate. “It has been somewhat dreary for a year,” he told Bloomberg, “[but] these types of cycles always end and things return to normal.” Schwarzman thinks rate hikes will slow or even reverse in Europe, which has led to his team eyeing deals involving student housing, warehouses, data centers and other types of infrastructure real estate. (Bloomberg)
Blackstone is spinning-off a part of its portfolio operations group into a standalone brand agency called FundamentalCo. The new company will be led by Blackstone operating partner Jonny Bauer. J.Crew’s former President, Jenna Lyons, is also joining the agency, which will take on clients outside of Blackstone’s own portfolio. (AdAge)
Bloomberg reports that private equity investments made during the run-up to the 2020-2022 bubble could become known as the “lost vintages.” As buyout firms raced to deploy capital before interest rate hikes, valuations grew very frothy, and now firms are stuck holding companies at lower valuations than they acquired them for. (Bloomberg)
Former NBCUniversal Chief Executive Jeff Shell is reportedly joining RedBird Capital Partners to lead the firm’s investments in sports and entertainment.
Blackstone Managing Director Jonny Bauer is breaking-off to start his own brand agency called FundamentalCo. Former J.Crew President Jenna Lyons is joining the agency as executive creative director.
John Stegeman is joining Clayton, Dubilier, & Rice as an operating advisor in the firm’s industrials group. Stegeman has over 30+ years of experience in the industrial distribution space, and was most recently CEO of White Cap (formerly known as HD Supply’s Construction & Industrial business).