Silver Lake to Take Endeavor Group Private, Bain Weighs Sale of $5B Rocket Software

Private Equity Insights

Chart of the Week: There were 184 private equity buyouts in the tech sector last quarter compared to just 15 PE-backed exits. The data suggests that private equity firms are increasing their exposure to the tech sector while other investors are pulling back during interest rate hikes. For example, the number of VC-funded deals in the US declined by 42% from Q4 2020 to Q3 2023, compared to PE buyouts in the sector, which increased by 111% during the same period. Meanwhile, in the public markets, the price of the tech-heavy NASDAQ has declined by 12% YTD in 2023. (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)

Mega Deals

Silver Lake is preparing to take Endeavor Group Holdings private. The company is known for its talent brands WME and IMG, as well as its majority stake in TKO Group Holdings — which owns World Wrestling Entertainment (WWE) and Ultimate Fighting Championship (UFC). The company has a market cap of $10.9 billion, but the company’s directors have already said that any deal would not include its equity in TKO Group Holdings. The slimmed-down deal will likely go through as Silver Lake already controls 71% of the voting power. Labor strikes among writers and other Hollywood talent have negatively impacted Endeavor’s earnings recently; shares are currently priced 18% below the IPO price from 2021. (Source)

Bain Capital is considering selling Rocket Software, targeting a $5 billion valuation. The company provides IT modernization and automation software for enterprises such as Liberty Mutual Insurance, M&T Bank Corp, and Pernod Ricard SA. Bain acquired a majority stake in the company for $2 billion in 2018, and has pursued a growth-through-acquisition strategy — overseeing Rocket’s mergers with B.OS., Key Resources Inc., and ASG Technologies. (Source)

Silver Lake and Thoma Bravo are considering exiting software company SolarWinds Corp. The firms are in talks with financial consultants to prepare pitch documents for early-2024. Since the company’s IPO in 2018, SolarWinds' stock has declined about 44%, and currently has a market cap of $1.6 billion. SolarWinds provides software that helps companies manage their IT infrastructure. The company was embroiled in a massive cyber-attack linked to Russian hackers in 2020. (Source)

Blackstone has agreed to acquire a pair of privately-run hospitals in India — Care Hospitals and Kims Health — for approximately $1.4 billion. The multilayered deal has Blackstone acquiring a 75% stake in Care Hospitals from TPG, and Care in-turn taking a majority stake in Kims Health. The combined company will operate 23 hospitals, with over 4,000 beds, across 11 cities in India. (Source)

Blue Owl Capital has agreed to acquire the life-sciences investment team from Cowen Investment Management, deepening its presence in the healthcare sector. The acquisition includes the seven-member Cowen Healthcare team and $1 billion of capital, which they will now manage under the new name, Blue Owl Healthcare Opportunities. (Source)

Everstone Capital is planning to exit Singaporean healthcare services firm Everlife Holdings for about $1 billion. The firm has appointed BDA Partners for the sale process. Everlife provides products and solutions to clinical and scientific labs in South and Southeast Asia. Interested parties are expected to submit non-binding offers by mid-November, with the hope of finalizing a deal by the first half of 2024. (Source)

Other Deals

Nexus Capital Management has agreed to acquire a 65% stake in DTC-darling Dollar Shave Club from Unilever for an undisclosed amount. Unilever paid $1 billion to acquire the brand in 2016. (Source)

 Law firm Allen & Overy is selling its risk management platform, called Aosphere, to private equity firms Inflection and Endicott Capital. (Source)

HarbourView Equity Partners has acquired the music rights to Fleetwood Mac from the estate of Christine McVie. (Source)

Fox Sports host Colin Cowherd has reportedly drawn private equity interest in his growing podcast network called The Volume. (Source)

Fortress Investment Group is trying to take over retail landlord Whitestone REIT. The company currently has a valuation of $459 million. (Source)

Industry News

Charles Schwab and Fidelity are helping KKR tap into the $178 trillion of capital that’s tied up in individual wealth. The wealth management firms are raising funds from high-net worth clientele who want to invest savings in alternative assets. Financial advisors from both firms say there is growing interest among the retiring baby boomer generation to tap into private equity investments, which are usually funded by pension funds and other institutional investors. (Bloomberg) 

H.I.G. Capital is suing Audax Group, accusing them of falsifying the financials of software company Mobileum during its sale. H.I.G. claims that Audax committed a "massive, systemic fraud" when selling a majority stake of Mobileum for $915 million. Allegedly, Audax and Mobileum misrepresented revenue and profit figures during the 2021 sales process. H.I.G. believes they overpaid by hundreds of millions due to these deceitful practices and is seeking at least $250 million in damages. Audax denies these allegations, suggesting any issues with Mobileum are now H.I.G.'s responsibility. (Wall Street Journal)

Brookfield is preparing to increase its exposure to private equity and real estate in the Middle East region. The firm, which already invests in the Middle East through its global buyout funds, is now considering raising capital for a dedicated Middle Eastern fund. Brookfield is particularly interested in business services, financial infrastructure, and healthcare, in the region. (CNBC) 

Private equity firms are rethinking taking some portfolio companies public after disappointing IPOs the past few months. There was hope that Birkenstock and ARM would be bellwethers for an IPO recovery in early-2024, but now investors think it may take longer. For example, KKR-backed Brightspring Health Services is now contemplating delaying its $1 billion listing. (Forbes)

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