General Atlantic Acquires Joe & The Juice, Bain to Exit Varsity Brands, Pension Fund Blocks Origin Energy Takeover
Private equity news the week of November 13th.
Recent Insights
Chart of the Week: In a new series profiling private equity operating groups, Value Add examines the path to managing director at KKR Capstone. There are 55 managing directors in KKR’s private equity practice, of which 11 work in the Capstone group. The path to becoming a managing director in KKR Capstone is fairly straightforward – albeit challenging. The firm shows a clear preference for former management consultants — especially those from McKinsey. Out of 11 managing directors in KKR Capstone, 10 have consulting backgrounds, with six of those 10 hailing from McKinsey. This differs from other large buyout firms, such as Blackstone, which prefers operating partners with executive-level industry experience. (Read More)
More Insights
- Private Equity Firms Keep Buying Tech Companies — and They’re Not Selling (Read More)
- Private Equity Case Study: Burger King (Read More)
- A Key Indicator That Private Equity Exits Will Heat-Up in Early-2024 (Read More)
Deal News
General Atlantic Acquires Majority Stake in Joe & the Juice: General Atlantic has agreed to acquire a controlling stake in Joe & the Juice. The deal involves buying out the stake held by Swedish firm Valedo Partners. Joe & the Juice, known for its smoothies and sandwiches targeted at young professionals, is valued at about $600 million, including debt. General Atlantic, which already held a 30% stake, will now increase its share to between 80% and 90%. General Atlantic plans to boost Joe & the Juice's digital operations, which currently account for 30% of global sales, aiming to increase this to at least 50%. The firm also intends to support the brand's international growth, targeting long-term double-digit store growth. (Source)
Bain Capital Exploring Sale or IPO of Varsity Brands: Bain Capital is considering a sale or initial public offering of Varsity Brands, potentially valuing the sports uniforms and school yearbooks maker at over $6 billion. Varsity Brands, consisting of BSN SPORTS and Varsity Spirit, was acquired by Bain in 2018 for around $2.5 billion. The company generates over $400 million in EBITDA. Since 2018, Varsity Brands has made several operational improvements, including raising significant capital and launching new programs to strengthen its competitive positioning. In 2020, Varsity Brands raised approximately $185M in new capital, which included a $150 million capital raise from existing and new institutional investors and an additional $35M through the recapitalization of its headquarters in Dallas, Texas. In 2023, Joe Raines was appointed as the new Chief Supply Chain Officer at Varsity Brands, bringing nearly 20 years of experience in supply chain leadership. (Source)
Australian Pension Fund Rejects Origin Energy Takeover: AustralianSuper, Australia's largest pension fund and the primary investor in Origin Energy Ltd, has rejected a proposal to join Brookfield Asset Management and EIG Global Energy Partners in their A$19.4 billion ($12.4 billion) takeover bid for Origin. The fund, holding 15.3% of Origin's shares, believes the offer undervalues the utility's long-term potential and prefers to support Origin's transition to cleaner energy independently. Brookfield aims to invest A$30 billion over 10 years in Origin's clean energy shift, but AustralianSuper remains uninterested in co-investing or engaging in discussions with the consortium, despite a scheduled shareholder vote on November 23. (Source)
Permira and Blackstone Advance in Adevinta Buyout: A consortium led by Permira and Blackstone is advancing in negotiations to acquire Adevinta ASA, a major European online classifieds company, in what could be one of the largest buyouts of the year. The talks, nearing an advanced stage, suggest a potential deal valuing Adevinta at over $12 billion. Although the talks were momentarily uncertain due to market volatility and geopolitical tensions, they have since resumed. Adevinta's significant shareholders, including eBay Inc. and Schibsted ASA, support the transaction. The consortium, which also involves the Abu Dhabi Investment Authority, is considering private credit financing for the takeover, potentially setting up Europe's largest direct-lending deal. (Source)
Industry News
To retain talent amid a prolonged deal slump, private equity firms are enhancing employee benefits, with higher base salaries, more paid time-offs, gym discounts, and travel insurance. A Preqin report, surveying 84 private capital firms, indicates significant salary increases, especially for junior and mid-level staff, with mid-level professionals receiving an average 10% hike in 2023. Additionally, non-salary benefits like student loan repayments and car insurance assistance have been introduced. Personal time-offs and vacations have also increased across various levels. This trend comes as global deal values decline and fundraising faces challenges due to economic uncertainty and geopolitical tensions. (Bloomberg)
The insurance industry is increasingly using automation to enhance operational efficiency, mainly due to the influence of private equity investment. This trend, driven by the need for cost-effective operations amid rising capital costs, is leading firms to adopt technologies that streamline insurance transactions and overall business processes. (Insurance Business Mag)
A recent study emphasizes the importance of specialization and diversification levels in a PE fund. The study found that specialized funds focusing on specific geographies or sectors yield higher returns but also carry higher risks. Larger deals typically have lower returns but are less risky. The research also highlights that early deals in a fund tend to have higher returns and risk, while later deals are less volatile. These findings suggest that investors should carefully consider a fund's approach to specialization and diversification when choosing a PE manager. (Advisor Perspectives)
French private equity firm PAI Partners raised €7.1 billion ($7.6 billion) for its eighth fund, surpassing its €7 billion target and marking a significant increase from its previous €5.1 billion fund in 2018. This fund, one of the largest European fundraisings this year, aims to invest in "real-economy" companies in Europe and North America. Despite a challenging fundraising environment, PAI attracted substantial capital from new investors, particularly in North America and the Middle East, and saw strong participation from existing investors. The fund, which has already invested about 35% of its capital, focuses on sectors like food and consumer products, leveraging PAI’s expertise in traditional sectors and corporate carve-outs. (PAI Partners)
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