Last year was notoriously damaging to people’s way of life with lockdowns throughout the world greatly restricting mobility. Despite this, markets soared after the initial COVID-19 wave in March 2020 with the S&P 500 reaching record highs. Additionally, the number of private companies merging with ‘Special Purpose Acquisition Companies’ (SPACs) also rocketed with 248 SPAC … Continue reading A look inside SPACs and into the future
I had the pleasure to interview Dominique Vidal. He is an engineer by background who graduated from France’s CentraleSupélec in 1988. He began his career at Schlumberger, where he worked for ten years in product marketing and business development roles in the telecom and smart card industries. After that, Vidal became a partner at Banexi … Continue reading Virtual Coffee Break with Dominique Vidal, former entrepreneur, managing director at Yahoo! Europe, partner at Index Ventures and angel investor.
“This time around renewables is part of the recovery as a job creation strategy” – Pooja Goyal, Head of Renewable and Sustainable Energy, Carlyle Group Renewable energy has sparked a lot of interest in recent years. Due to the coronavirus pandemic, the energy transition has received even a further push, fastening the shift from fossil … Continue reading Private Equity investment shift from fossil fuels to renewable energy
Search funds are different from any other type of investment vehicles. They involve the acquisition of a small or medium enterprise by an entrepreneur, that may come from a diverse set of backgrounds from private equity to engineering, from investment banking to management consulting, backed in his search for a potential acquisition target by a … Continue reading A closer look at the financing structures of search funds
First and foremost, Private Debt is a form of financing for companies that need liquid assets. This form of financing can come across in a variety of forms; it includes any debt owned by or extended to privately held firms, but most generally it consists of non-bank institutions lending to private companies or buying loans … Continue reading The evolution of the Private Debt asset class: focus on private lending
Private equity has been widely accepted as the best-performing asset class over the past decade with returns in excess of 20%. PE falls within the category of alternative asset classes, which are investments that do not conform to the traditional asset classes of stocks, bonds, or certificates. Examples include among others hedge funds, PE, real … Continue reading Is PE the “ultimate asset class”?
Jean-Baptiste Charlet is Co-Head of Investment Banking France at Morgan Stanley. He has more than 25 years of experience in Finance. On behalf of BSPEC, the Bocconi student Private Equity Club, we would like to thank you for accepting our informal invitation to this "Coffee Break with". Could you please describe your academic background, and … Continue reading Coffee Break with Jean-Baptiste Charlet, Co-Head of Investment Banking France at Morgan Stanley
Emily Dickinson once wrote that “Fortune befriends the bold”. But can secondary buyouts (SBOs) be considered a bold decision? This flight is going to take you over the SBOs of today in the hopes of giving you a good understanding of the concept and performance drivers of these transactions. This being said and without further ado, enjoy … Continue reading A flight over the secondary buyouts of today
On behalf of BSPEC, I would like to thank you for accepting our informal invitation to this “Coffee Break with”. Would you present yourself with a brief overview of your professional and academic background? My name is Mansour Afshoon and I'm the Founder and Managing Director of Benelux Succession Capital. I studied Economics at the … Continue reading Coffee Break with Mansour Afshoon, founder of Benelux Succession Capital
Infrastructure private equity - overview The concept underlying infrastructure private equity is in no way different to any other type of private equity, with the general pattern being raising capital from investors, investing in assets, managing or restructuring said assets and finally selling for a profit. It comprises investments in essential utilities or services, as … Continue reading Infrastructure Private Equity: Asset class overview and the outlook post Covid
Search Funds are a niche asset class based on high-potential entrepreneurs who locate, acquire, manage, and grow a privately held company. The investment vehicle is managed by an entrepreneur, called “the searcher”, who collects funds to finance the search and the acquisition of a single company, where they will have the opportunity to become equity-owning … Continue reading Search Funds: an asset class that relies on small-scale human interaction
History Israel is home to one of the largest tech start-up ecosystems outside of Silicon Valley, making it an attractive region for VCs eager to find the next unicorn. After seeing the success of the VC ecosystem spinning up in the United States in the 90s, the government of Israel wanted to replicate that success … Continue reading Venture Capital in the “Holy Land” – An overview of VC in Israel
COVID-19 , halting economic activity on a global scale, also did not spare Italian Venture Capital. In the first half of 2020, as the pandemic spread throughout the Old Continent, VC investments in Italy fell to €240m (from €313m in H1 2019). Even though such an impact has been moderate if compared to the devastating … Continue reading Italian Venture Capital at the time of the pandemic – the cases of Tannico and Beintoo
Dean Rodrigues is Principal at Greenhill, a leading independent investment bank focused on providing financial advice on significant mergers, acquisitions, restructurings, financings and capital raising to corporations, partnerships, institutions and governments. Thank you for taking the time for this informal “Coffee Break with”. Please introduce yourself and tell us about your professional and academic background … Continue reading Coffee Break with Dean Rodrigues, Principal at Greenhill & Co.
He who pays the piper, calls the tune. But what if no one calls the piper? Well, not anymore. Even though major economies are still grappling with high uncertainty, trying to recover from the pandemic shock, it seems that M&A activity is substantially back in Q3 with global M&A deal value reaching all-time highs since … Continue reading Q3 2020 EMEA PE-backed M&A Roundup
By Matthäus Piatti Intro Corporations worldwide are still struggling with the ongoing Covid-19 crisis, lockdowns and economic slumps. The uncertainty and volatility that has come with the virus and the still significant lack of knowledge about its impact on society are gripping economies around the globe. As the world continues to wage war on the … Continue reading Q2 2020 EMEA PE-backed M&A Roundup
by Filippo Rosaschino On behalf of BSPEC, I would like to thank you for accepting our informal invitation to this “Coffee Break with”. Would you present yourself with a brief overview of your professional and academic background? Sure. I qualified as an accountant in 1985 and spent 26 years in banking. 10 years with the … Continue reading Coffee break with Bob Wigley from UK Finance
7 min read By Matteo Ferraguto and Markus Maier Private Equity funds have made a name for themselves in the world of finance for consistently producing high returns, often outperforming benchmarks such as public markets. But how has this been achieved? Over the years, many measures such as certain financial engineering techniques, cost cutting strategies, … Continue reading Operational improvements: Are Private Equity funds building better companies?
6 min read By Dorina Barna and Boris Mihaylov LBO stands for Leveraged Buyout and refers to the purchase of a company while using a significant amount of debt to finance the transaction. Usually, the assets of the company being acquired and sometimes those of the acquiring company are used as collateral for the financing. … Continue reading Capital Structure of an LBO
By Konstantin Barakos Introduction What is Leveraged Finance? It’s actually fairly straightforward – the answer is right there in the name! Leveraged finance describes a corporate acquisition financed through leverage. End of story; roll credits. Ok, since I brought up the term credits, I should mention that Leveraged Finance participants (i.e. issuers and investors) have … Continue reading Overview of the Leveraged Finance business
By Nikolas Huber and Luca Politi Introduction Almost everyone, even when only distantly connected to the topic of shares and stock, has heard about IPOs. Summarized an IPO is a process for a private company to become a public one. But not every private company that wants to become a public company fulfils the requirements … Continue reading Reverse Merger – A true alternative to an IPO?
By Florian Kramer & Konstantin Brandt Over the past two decades, the global payments industry has been subject to significant changes in both its underlying market drivers, and also in its competitive landscape. Driven by rising e-commerce volumes, an increasing demand for digital payment solutions and the trend towards cashless payment, global payments revenues experienced … Continue reading Riding the wave of consolidation: Private Equity and the Payment Industry
By Francisco Bolota, Maria Mikolajczyk Looking back at the PE industry in 2019, despite the worsening macroconditions, one can observe a definite strong deal activity. Although 57% of private equity fund General Partners (GPs)1 think the economy has reached a cyclical peak, they continued to make deals, find exits and raise even more capital than … Continue reading Private Equity 2020 Outlook: The start of a new decade
By Matteo Lana, Francesco Biondo and Antonio Gagliardi As economy insiders know: Q1 2020 will be remembered as one of the darkest periods in the history of capitalism. As Covid-19 spreads worldwide, countries established lockdowns which result in real economic slumps. Despite this, it is clear that as things stand we are not experiencing a … Continue reading Q1 2020 EMEA PE-backed M&A Roundup
By Stefan Larsen Loan sharks and bookies are famed for having little patience for outstanding debts – we learned this from Tony Soprano and almost every character portrayed by Joe Pesci. Ironically however, the script appears to have been flipped for their legal counterparts today. In the carnage that was March’s public markets, no sector … Continue reading Pocket Aces for (Distressed) PE?
By Adem Abbas and Fabrizio Coccaro Introduction Last year, many investors began noticing Latin America for their large private equity and venture capital deals, often backed by the SoftBank group. With 20% of Softbank’s fund portfolio invested into countries such as Mexico and Colombia due to their innovative start-ups in delivery and payments systems respectively, … Continue reading PE & VC Trends in LATAM
By Camilla Cameroni Pietro Masera is a director at Cerved since January 2013 and works in the structured finance division. Cerved S.p.A. is a group based in San Donato Milanese that deals with credit information (managing the risks and opportunities inherent to commercial relations), investors relations and also offers marketing solutions and credit management to … Continue reading Coffee Break with Cerved Director Pietro Masera
By Arun Maganti ESG (Environmental, Social, and Governance) investing has become much more prevalent as of late. Private equity firms, which have often been portrayed in a negative light due to aggressive leveraged buyouts and “vulture capitalism,” have recently been pushing for ethical investments. But is ESG investing genuine? Or is it instead an attempt … Continue reading ESG Investing: Will Private Equity Firms Refocus on Stakeholder Value?
By Davide Martellozzo I had the great pleasure of interviewing Massimiliano Manniello, Vice President at EQT Partners and Bocconi alumnus. Founded in 1994 by the holding company of the prominent Wallenberg family, and headquartered in Stockholm, EQT is a differentiated global investment organization investing in private capital, real assets and credit with over 700 employees in 15 … Continue reading Coffee Break with EQT Partners’ Massimiliano Manniello
By Thor Höfs and Jakob Jones With a market capitalization of over $52 billion and a prominent position in the American, British, and global pharmaceutical market, the Walgreens Boots Alliance is now at the center of what could be the largest leveraged buyout in history. The offer made by KKR on the 11th of November … Continue reading Walgreens-Boots LBO
By Matteo Lana Mr Colombo works at 17 Capital, an investment firm that operates both in the private equity secondary market and in structured finance for PE funds. To date, the firm has raised four funds, totaling €2.0 bn. 17 Capital serves customers in Europe and North America. Could you quickly provide us some color … Continue reading Coffee Break with 17 Capital’s Nicolò Colombo
By Boris Mihaylov and Konstantin Barakos The world of private equity requires funds to react immediately to potential purchase opportunities. But what if an attractive opportunity arises during the draw down period and the funds required exceed the sum of collected commitments? Bridge loans (appropriately labeled yet also known as equity bridge facilities or subscription … Continue reading Bridge Loans in Private Equity
By Leonardo Faleri I had the pleasure to interview Alberto Defazio, Bocconi alumnus and associate of Mandarin Capital Partners, an Italian Private Equity firm where, starting as an intern, he has been working since 2016. Founded by Alberto Forchielli in 2007, Mandarin Capital Partners is a Private Equity company headquartered in Milan with offices in … Continue reading Coffee Break with Mandarin Capital Partners’ Alberto Defazio
By Francesco Biondo The gig economy, which comprises all the businesses offering “on-demand” and temporary jobs for people to carry out according to their availability, has taken off. The concept is both simple and exceptional: online platforms match individuals willing to offer their time and expertise with consumers and employers in need of a specific … Continue reading Food delivery feeding friends and investors alike
By Guido Gandi VERTEQ Capital S.p.A. is a holding of private equity investments. It is sector agnostic with an opportunistic approach. It provides risk capital to top performing businesses and also selectively invests in special situations, real assets and renewable energy. The fund is managed by Ennio Valerio Boccardi, BS in Economics from Luiss University … Continue reading Coffee Break with VERTEQ Capital’s Founder and Managing Partner Ennio Valerio Boccardi
By Tom Cordes I had the pleasure to interview Dr. Alexander Dibelius, managing partner of CVC Capital Partners. Dr. Dibelius holds a Ph.D. in medicine and practiced as a heart surgeon for several years. After that, he transitioned to McKinsey where he quickly rose to the rank of partner. Beginning 1993 he joined Goldman Sachs … Continue reading Coffee Break with Alexander Dibelius, Managing Partner of CVC Capital Partners
By Maria Mikolajczyk and Alexander Jörgens Let’s rehash some key points: as discussed in Part I, the ship financing landscape has undergone drastic changes and has seen the exit of many traditional ship financing banks as well as the emergence of alternative capital providers. The existing financing gap can be reasonably expected to widen further … Continue reading Poseidon Principles: A new sustainable era in the shipping industry? Part II
By Alexander Jörgens and Maria Mikolajczyk Contrary to the mythic Greek portrayal, neither violent nor ill-tempered, the modern Poseidon will stand guard to keep maritime trade in a new sustainable order. As a consequence of new government regulations – IMO2020 – shipping will encounter a future of cleaner open waters. The chief objective of the … Continue reading Poseidon Principles: A new sustainable era in the shipping industry? Part I
By Fabian Zähringer First of all, I would like to thank you for taking the time to speak with me on behalf of BSPEC today. Maybe you can give our readers a quick introduction about yourself and your background? I have been managing director and shareholder of SHS Gesellschaft für Beteiligungsmanagement mbH in Tübingen since … Continue reading Coffee Break with Hubertus Leonhardt, Managing Partner at SHS Capital
By Nikolas Huber and Filippo Rosaschino Levels of dry powder within private equity have skyrocketed in recent years as a result of an increasingly saturated market for suitable investment opportunities. Private equity funds are now searching for new methods and structures to invest their large capital stockpiles. But what if a very pragmatic solution has … Continue reading Club Deals – Ancient construct or comeback story?
By Lorenzo Milesi On behalf of BSPEC (Bocconi Student Private Equity Club), thank you for accepting our invitation for this “Coffee Break with”. Would you like to briefly introduce yourself with an overview of your professional and academic background? My name is Sandeep Mirani, and I am currently a Principal in the Private Equity team … Continue reading Coffee Break with Neuberger Berman’s Sandeep Mirani
By Egée O'Neill and Fanni Varkoly In June 2016, the result of the Brexit referendum shocked the market: stocks plummeted, and the British pound dropped to a 31-year low. Three and a half years later, the UK's withdrawal has been delayed three times, and many buyers and sellers are apprehensively sitting on their hands waiting … Continue reading Brexit and the UK real estate market
By Ruslan Islamov Runa Capital is an international venture capital firm headquartered in Palo Alto, California, United States that invests in deep tech (AI, machine learning, middleware, open source), cloud business software, fintech, edutech and digital health startups at early stages. From 2010 through 2019, Runa Capital raised 3 funds and invested in over 60 … Continue reading Coffee Break with Runa Capital’s Konstantin Gnyp
By Francesco Marino and Giacomo Coriani Growth stage private equity is an asset class that stands at the intersection between venture capital and buyout deals. As opposed to venture capital, which targets start-ups that still have an undeveloped business model, growth equity backs companies in established markets with proven unit economics. On the other hand, … Continue reading Growth Investing: The Link between VC and PE
By Vittorio Lavioso and Alexandre Burtonboy Disclaimer: the purpose of this article is to provide the reader with a basic framework to understand what a LPA is and how it works. This article is in no way to be considered as a legal opinion on the matter. As with many things in life, the underlying … Continue reading The Limited Partnership and LP Agreement Explained
By Dorina Barna and Jakob René The Abraaj Group, a Dubai-based private equity firm, is a narrative of success turned dark comedy. Founded by Arif Naqvi, Abraaj became one of the most influential emerging-market buy-out firms after 16 years of operations with more than $14 billion in AUM. In 2018, with its reputation tattered, the … Continue reading The Abraaj Group Scandal
By Vivian Eberle and Matthäus Piatti Cannabis, pot, marijuana, weed… This recently legalized industry expands far beyond dried cannabis (known as the “flower”) rolled up in a joint. Products such as oils, edibles, pills, beverages, creams for medical and recreational purposes; technology ranging from POS data analytics to consumer generated SaaS companies; and innovation along … Continue reading Funding the Cannabis Industry
By Peter Maxwell and Štěpán Koníř MBI, MBO and BIMBO…No, this is not a fairy tale about the big-eared elephant and his siblings. In fact, these terms refer to a class of acquisitions with an active role of management; management buy-in (MBI), management buyout (MBO) and buy-in management buyout (BIMBO). While much has been said … Continue reading Management Buy-Ins (MBIs)
By Edouard Barret (This conversation was translated from French) Permira Advisers is an international investment firm founded in 1985 which operates in Europe, North America, and Asia, with 14 offices employing over 250 people worldwide. Permira cumulates over 30 years of backing growth, and currently has AUM of $7.5bn. Since 1985, their funds have secured … Continue reading Coffee Break with Permira Advisers’ Pierre Pozzo
By Charly Delanoë and Tom Cordes Let’s talk about personal finance. When asked to give a good reason to take on a personal loan, what’s the first thought that comes to mind? If you followed any 101 business class or if you balance your own check book, you should come up with a sensible answer. … Continue reading Dividend Recapitalization: A second helping of debt
By Margarida Veloso Global M&A deal value decreased 37% vs Q2 2019 and 24% YOY Global M&A deal value amounted to USD905bn during Q3 2019. This figure represents a 37% decrease in comparison to the previous quarter and a 24% decline YOY. The YTD value of M&A activity worldwide reached USD3,742bn, a 13% drop relative … Continue reading Q3 2019 EMEA PE-backed M&A Roundup
By: Ana Cosniceru and Salma Abdellaoui IPO is a term embedded in the finance lexicon that frequently appears when deliberating the business world in general. Conversations about private equity are no exception; the acronym will surely be alluded to as well. But what is it exactly? This term refers to the "Initial Public Offering" or … Continue reading IPO process for Private Equity
By Camilla Cameroni Oxy Capital is a Private Equity firm that was founded in Portugal in 2011 and employs a global workforce of more than 30 professionals. The Milan office was opened in 2014 and currently operates with a team of 12 professionals – of which include the 3 founding partners who have a cumulative … Continue reading COFFEE BREAK with VINCENZO GAZZANEO from OXY CAPITAL
By Eric Peghini On a cold, gusty Saturday afternoon, "Nation’s infrastructure is collapsing, MAGA!" This was not a poorly executed haiku but rather a tweet attributable to the one and only infallible D.J. Trump and, never mind your opinion of the POTUS, a rallying cry that the population could stand behind. Granted, one does not … Continue reading Infra Funds!
By Francesco Marino John Oliver, host of HBO’s “Last Week Tonight” has made a name for himself in late-night television. The British comedian has become a master pot stirrer through his brazen quips, witty antics and refusal to pull punches when addressing current events. This season, his satirical show put private equity under fire, specifically … Continue reading Mobile Home Profiteering – An Investigation
By Alessio Corcelli and Maurizio Parrella Consumer discretionary sector The recovery from the global financial crisis shed light on an evergreen, yet recently white hot, equity group: consumer discretionary. The consumer discretionary industry comprises all companies participating in the value chain to produce a good or provide a service which is deemed as non-essential by … Continue reading Consumer Discretionary: Another Fad?
By Gianluca Sonda Introduction Angel investing is a micro-finance practice which involves affluent individuals providing capital for business start-ups typically in exchange for convertible debt or ownership equity. The term “angel” was actually coined during the 70s describing the investors who financed the Broadway shows and other theatre productions back in the day. Angel investors … Continue reading Windfalls, Pitfalls and Angels
The Buy-and-Build (B&B) method has experienced burgeoning popularity over the last decade which continues into the present. From 20% in 2000, the share of PE deals with add-on acquisitions trended toward 53% in 2012.
Before the 70s, common stock was the only instrument available to GPs in PE and VC when investing in portfolio companies. This rigid capital structure limited minority investors by subordinating them and offering intermediate returns only in the form of dividends or share repurchases. Subsequently, the industry transformed...
A key trend in recent years is the convergence of private equity and shareholder activism. Activist investor tactics – taking a minority position in a public company and trying to achieve change through various means such as proxy contests or stockholder proposals – are increasingly employed by traditional private equity firms. This is a development driven by the need to escape competition via new investment approaches.
Industries with heavy assets requirements, or companies in unappealing areas receive little attention from sponsors. For companies that lack the appeal to raise a PE’s heart rate, the state may step in by offering financial backing. The government does this by creating funds of funds (FoFs) as well as becoming LPs for VC and PE funds. The funds set up by governments in this way are called government-sponsored funds (GSF) or government-sponsored venture capital (GVC)
The professional sports business is gaining both popularity and market value and many private equity experts and venture capitalists are taking the over. Investing in a sports franchise, though, cannot be considered canonical because its economics follow peculiar market drivers. Therefore, in order to evaluate whether sports investments hit like the home run derby or miss more than a hole-in-one contest, one must understand the fundamental traits and intricacies of the segment.
Back in the '80s, some ambitious entrepreneurs designed a miniature model of the typical private equity fund. Forget about pools of cream-of-the-crop professionals: search funds are a businessperson’s stepping stones to achieving their pipe dream position as a CEO. Although it sounds like a solo trip to success, these operating managers are backed by capital from a group of advising investors.
The PE industry has grown continuously over the past 5 years, making it one of the major topics of discussion in the marketplace. Is the PE industry able to maintain its current growth or is it approaching maturity? How will key PE players adjust to new market conditions? If you are interested in these topics, please join our panel “Private Equity Today: Hot or Overheating?” on May the 6th.
The rapid technological developments of the last decades have catalysed a development of a new industry: medtech. This exciting and growing extension of healthcare as we know it has presented an intangible benefit for us in the form of better health outcomes, but also tangible opportunities for entrepreneurs and investors to profit from this burgeoning, high-tech industry.
European PE M&A deal volume has been slightly declining coming into Q1 of 2019 and reported a decline of 8% from the Q1 2018 numbers. Nevertheless, the phenomenon of megadeals is still evident on a volume as well as value basis. The geographic composition of deals changed slightly due to macro-economic pressures.
“Everyone has access to information. We just know how to analyze it better.” This is the mantra of Billions protagonist Bobby Axelrod, a fictional hedge fund manager who’s ethically compromised fund breeds alpha like a wolf pack. Putting aside any insider trading and market manipulation though, is this also the mentality of the PE funds that acquire current portfolio companies from other PE funds?
“Ten years ago only a few private-equity houses had dedicated health-care teams,” says Dmitry Podpolny of McKinsey. “Today nearly everyone does.” According to PitchBook, 715 private equity deals in 2018 had closed as of mid-December for a combined value of $103.72 billions, which represent a considerable increase, in terms of overall monetary worth compared to 2017
EDreams flamed out shortly after its IPO, but it shouldn’t have been a surprise for those who had done their due diligence. A business that had grown at triple-digit rates during its early phase when backed by VC, and at a double-digit pace when owned by PE partners, was only growing at single-digit numbers after its merger with GO Voyages and Opodo. This is what the public was buying at the time of the IPO, even if was not priced like that: a slow growth business.
Many are familiar with the story of Bear Stearns’ monumental stock collapse and the sale of the investment bank to JP Morgan in 2008 at $2 per share – almost 1% of the original value of the year before. The notion of purchasing a competitor at such a discount is borderline unfathomable. Unfortunately, the takeover created such a substantial regulatory and legal liability over time that led Jamie Dimon to declare his regret of the acquisition. But is there a way to acquire a failing company cheaply and make a profit: can we buy extremely low and still sell high?
Colateralized Loan Obligations are becoming increasingly popular in the post-crisis era by enabling high yield investing at reduced risk levels. The beauty of the CLO is its malleability: like a bespoke suit, risk/return can be tailored for the squeamish or the aggressive investor. In this article, we explore the characteristics of this peculiar form of structured credit to discover the reasons for its surge and how these CLOs are used in the PE industry.
On Wednesday the 27th of February, Bain & Company published its annual Global Private Equity Report 2019, presenting the main events and trends of the industry in 2018 and giving insights into its future developments. The industry continued its strong growth in 2018, displayed by a high number of deals and a high total amount of invested capital invested in buyouts.
Over the last eleven years we’ve seen many private equity firms go public, among them major names in the industry such as Blackstone in 2007 and KKR in 2010. However, stocks of many PE firms that were listed are still trading below their IPO price. Why are PE firms still going public if their stocks don’t seem to outperform? And what are the possible reasons for such a below expectations stock performance after the IPO?
Venture capital and entrepreneurial hubs like Silicon Valley have been the birthplace of some of the world’s most famous and valuable firms. However, with the access to funding that Silicon Valley startups have, bidding competition and publicity frenzy drive the valuations of these companies higher, putting pressure on the returns of later stage VC investors. There are places beyond Silicon Valley that breed opportunities for Venture Capital firms, and some of the most entrepreneurially teeming areas are in places one wouldn’t first think of, and they may very well become the next chief centers for innovation.
With reputations and capital at stake, Private Equity and Venture Capital firms endeavor to make the best possible investment decisions. However, complete information is often impossible to obtain or takes too long to acquire resulting in opportunity costs from deferring investment. Given these structural challenges, how can decision making processes be structured to optimize outcomes?
In the first half of 2019, the Japanese car components manufacturer Calsonic Kansei Corporation, owned by the U.S. private equity firm KKR, expects to complete the acquisition of Magneti Marelli, an Italian-based high-tech car components manufacturer currently owned by Fiat Chrysler Automobiles. The transaction values Magneti Marelli at €6.2 bn, and it will create a giant in the OEM arena, becoming a supplier of both FCA and Nissan.
The American alternative investment firm Blackstone Group is raising a new real estate fund. The Blackstone Real Estate Partners (BREP) IX could be the biggest real estate fund ever with a volume of $18 billion adding to Blackstone’s massive existing real estate portfolio of $119 billion AUM.
Investors allocate capital with Private Equity Firms in order generate a high rate of return on their invested capital. However, when there are several investors and a separate manager, how much of the profits from investments are investors entitled to? PE firms address this issue by constructing unique and specific payout schemes, called distribution waterfalls, to attract and signal to various types of investors and to accumulate committed capital to enter investments. This article outlines the fee structuring of PE firms and explores the types of distribution waterfalls.
In the early 1980s there was a dramatic increase in private equity activity in the US when pension funds began to invest heavily in them following the clarification of the “prudent man” rule, declaring private equity a sufficiently safe investment. When the 90s tech frenzy came along, pension funds needed the extraordinary returns offered by VC firms to keep pension plans solvent as baby-boomers aged. However, due to structural problems, pension funds were fundamentally unattractive to VC firms as LPs, so they were going to need help to break in.
Financial sponsors tend to create value in LBO transactions in three different ways: operational improvements, debt expansion and multiple expansion.
We had the pleasure to end this academic year by interviewing Mr Lucio Di Ciaccio who undertook quite an amazing journey from Aerospace Engineering to The Carlyle Group, eventually joining SoftBank Vision Fund where he is currently working. #GetInspired
This spring, the Norwegian Finance Ministry decided not to allow the country’s Oil Fund to invest into unlisted equities. This decision sent shockwaves through the institutional investor landscape, because of the sheer size of Norway’s Oil Fund and its status as a model investor.
An emerging market economy (EME) is defined as an economy with low to medium per capita income, which will gradually converge to that of developed countries. Currently, the most prominent regions covering EMEs are Latin America (Brazil, Chile, Colombia, Mexico), Southeast Asia (China, India, Malaysia, Thailand), some countries of Eastern Europe (Hungary, Poland, Russia) and South Africa.
The traditional capital-raising process involves a number of players whose operations are strictly limited by a tightly regulated environment. The last three years have witnessed an increase of a new unconventional way to bypass regulatory restrictions: ICOs.
Artificial Intelligence (AI) is the science concerning the creation of intelligent robots and computer programs capable of learning and solving problems in a way that replicates the complex mechanisms used by the human mind itself. Examples of this sector include virtual voice assistants, image perception programs and pattern recognition.
Special Purpose Acquisition Companies (SPACs) are publicly-traded buyout companies that raise collective investment funds in the form of blind pool money, through an initial public offering (IPO), for the purpose of completing an acquisition (or merger) of an existing private company (target).
BSPEC had the pleasure to unofficially interview the managing director from an American global asset management firm, which is one of the largest credit investors in the world. The firm pursues a value-oriented and risk-controlled approach to investments in distressed debt, corporate debt, private equity, convertible securities, real estate and listed equities. As of December 31, 2016, the company manages more than $100 billion for its clients.
The NPL market is more than ever in the spotlight. Going from the definition to what is changing in the regulatory framework, this article tries to understand the potentiality of this market in terms of risk/return, what is changing and why some of the most important PE funds around the world are raising capital to be invested in this asset class.
No period in history better demonstrates the need for portfolio diversification than the late 90s Tech Bubble and the March 2000 crash. In the public markets and at the height of the bubble, speculators were in such a frenzy to get a hold of technology stocks that any newly listed stock with the word “tech” or “.com” in their name could shoot up over 100% in one day. Many of these companies had yet to properly develop their products and their financial health was often very uncertain, yet they commanded prices at very high price to earnings multiples. In private markets there was also a strong appetite among VC firms to invest in the technology sector and bring the burgeoning amount of tech startups to public markets in IPO exits.
With record amounts of capital raised, around 1200 companies backing (first semester of 2017) high levels of diversified sources of financing, 2017 has been an intense year for private equity in France. What is worth noting is the increased attractiveness of French targets among international investors. This is supported by the four times larger value of inbound private equity (PE) and venture capital (VC) investments in 2017 (graph 3). Also, it is noted that the value of French domestic PE and VC investments doubled in value in 2017.
The target, HSH Nordbank, is a German bank established in 2003 as a result of the merger between the Landesbanks of Hamburg and Schleswig-Holstein.
The bank is based out of the German port cities of Hamburg and Kiel and it is an important financing provider for corporate clients involved in the shipping, infrastructure & logistics, trade & food and industrial sectors. Besides offering traditional loans, the bank also offers a huge spectrum of other services including structured finance, risk and investment management solutions.
As of 31st Dec 2016, the bank reported total assets of EUR 84 billion and net income before taxes of EUR 121 million.
In July 2017, Private Equity companies CDH and Hillhouse completed the leveraged buyout of China's largest shoe retailer, Belle International for HK$53.1bn (US$6.8bn). It became the largest privatization deal on Hong Kong stock exchange.
KKR, a leading global investment firm acquired a 12.64% stake in Indosari, an Indonesian based consumer goods company, in October 2017. This deal marks the third such deal KKR has made in Indonesia in the preceding 18 months. KKR makes this investment in the wake of major macroeconomic positives for the Indonesian economy including a young and growing middle class, accelerated urbanization trends, and increasing consumption as a percentage of GDP.
On October 17th, 2017 it was announced that $104 millions were raised from a group of private equity firm by Vacasa LLC, an online vacation rental company set to expand internationally and challenge the biggest player of the sector, Airbnb.
The grim reality of venture capitalism is that most startups fail. Even with an innovative idea, a motivated team can easily fail to make a product or service that customers can find value in. Yet the romanticised stories of young and creative entrepreneurs building radically successful businesses from scratch persists.
The Harvard MBA indicator was started and maintained by Roy Soifer, consultant and former HBS student. It represents a long-term stock market indicator that evaluates the percentage of Harvard Business School graduates that accept "market sensitive" jobs in fields such as investment banking, securities sales & trading, private equity and venture capital. If more than 30% of a year's graduating class take jobs in these areas, the Harvard MBA Indicator creates a sell signal for stocks. Conversely, if less than 10% of graduates take jobs in this sector, it represents a long-term buy signal for stocks. In addition, it is also useful to analyse the attractiveness of jobs in finance. Indeed, during the last decade, the indicator has been heavily skewed towards jobs in sectors such as Venture Capital and Private Equity and, in particular after the crisis, Harvard MBA alumni have even further shunned IB and IM.
On October 14, 2016, SoftBank Group’s CEO and founder, tech-visionary and billionaire Masayoshi Son, announced the establishment of a record-breaking $100bn Private Equity tech investment fund. Along the way, he promised $50bn of investments and the creation of 50.000 new jobs in the U.S. to President Donald Trump. SoftBank Group and Saudi Arabia’s Public Investment Fund (PIF) committed to invest in the fund $25bn and $45bn, respectively. The remaining $30bn will come from major international investors such as Apple, Foxconn, Qualcomm, and Oracle’s founder Larry Ellison. A $15bn contribution will also come from Abu Dhabi’s sovereign wealth fund, Mubadala. The SoftBank conglomerate, already having operations in broadband, fixed-line telecommunications, internet, technology services, finance, media and marketing, semiconductor design, and other tech-related businesses, has also brought a team of professionals with Private Equity, Investment Banking and Consulting experience on board to manage the so-called Vision Fund. Indeed, financial analysts have recognized the Fund as a powerful financial tool for Son and SoftBank to drive technology development particularly in the U.S. and deliver on their long-term strategic vision.
he aim of this article is to briefly describe a principal transaction document for a Private Equity deal: the Sale and Purchase Contract. This is an extremely complex topic to which many articles would be needed to give a full understanding to the reader so rather the intention is to provide a brief introduction to an aspect which is irregularly discussed.
At the beginning of this academic year we had the pleasure to interview Edoardo Lanzavecchia. Since 2007, he has been a senior partner at Alpha, a pan-European mid-cap private equity firm with €2 billions under management. He is considered one of the veterans of the Italian Private Equity industry. In 1998 he founded and was head of The Carlyle Group in Italy, and then also founded Magenta SGR.
The European bond market is still under the effect of ECB’s quantitative easing lowering yields to sub-zero levels and, on the stock market side of things, valuations are at all times high making the quest for an index-beating return even harder. This translates many investors to allot their funds towards junk bonds.