Tech visionary and billionaire Masayoshi Son, head of the Japanese multinational telecommunications and Internet corporation SoftBank Group, has announced his company is creating a $100bn Private Equity fund devoted to tech investments – the largest of its kind so far. With high-profile investors joining the effort, the fund already has a first deal lined up: A 25% stake in chip designer ARM Holdings is set to change hands.
Heinz-Kraft’s bid of $143 billion for Unilever was set to become the largest ever acquisition in the Consumer Products industry. The acquisition would have been the next step of 3G capital’s strategy to sway the industry subsequent to the acquisition of Heinz in 2013 and Kraft in 2015 and branch out into other industries. This article intends to understand why such a bid was made and what made Unilever a potential target? We will answer this question by introducing the main players in the bid, summarising the timeline of the bid and listing the pros and cons that Unilever has as a target.
Buy-and-build strategies are acquiring an increasing role in the private equity market, principally in Italy where they accounted for 25%, on average, of private equity investments made between 2011 and 2015.
On October 3rd 2016, Onex Corporation (“Onex”), one of the oldest and most successful private equity firms founded in Toronto, CA, and Baring Private Equity Asia (“Baring Asia”), a well-established independent and alternative asset management firm in Asia, concluded the two months’ negation for the acquisition of the Intellectual Property and Science division of Thomson Reuters, the world’s leading source of news and information for professional markets.
The complexity of LBO transactions determines the necessity of multiple players, each one of which carries out a specific role. The main players of an LBO transaction are financial sponsors, investment banks, banks, institutional lenders and target management.
The second edition of the Italian Private Equity Conference took place in Milan on 22nd September and it became one of the most important events of the year for the industry, attracting more than 70 LPs, 70 GPs, and 50 CxOs. The ITPEC gathered all the titans of the private equity sector and provided a very fruitful environment for discussions, networking opportunities and the exchange of ideas. More importantly, the value of the event was determined not only by its important guest list, but also by the 10 panels, which provided an insight into a number of interesting topics, ranging from Italian PE performance to CEOs’ perspectives.
The Venture Capital (VC) industry in 2015 has deployed a total of USD 78 billion in the US (according to PitchBook), marking the second highest full year total amount invested in the last 20 years.
Financial sponsors tend to create value in LBO transactions in three different ways: Operational improvements, Debt and Multiple Expansion. The first two forms assume improvements of the target financial and operational performance. The last value creation option refers to the sponsor features instead of the target. Indeed, it does not modify the financial and operational performance of the target and comes from sponsors’ broader knowledge and expertise. The literature tends to focus on the first to ways since future valuations are too uncertain. Indeed, even sponsors' financial models tend to concentrate on value enhancement coming from developments in the target operations and a better capital structure.
The conventional LBO transaction includes several steps, starting with "The Sourcing" and continuing with "The Screening". During the Screening, financial sponsors make research on potential targets trying to understand the one that deserves the investment. The goal is to find the ideal candidate.
The seven publicly listed U.S. alternative asset managers are facing a complex decision: how to put their cash to use. The news is that, in addition to the usual buyout picking process, some firms are now considering investing in their own stock through a buyback. With global markets flailing, the share prices of the big buyout firms have underperformed the S&P over the past 12 months by 31%. Indeed, while the S&P 500 declined 13% since its May 2015 peak, Blackstone fell 43%, Carlyle 61%, Apollo 39%, KKR 45% and Fortress 47% in the same timeframe. The repurchase plans of KKR, Apollo, Carlyle, and Fortress total more than $1bn, while Blackstone and Oaktree decided to avoid the stock buyback for now.
Over the last few years, investors and business got accustomed to see China as a major foreign investment destination but now the situation seems to be turning around. In 2015, the level of Chinese outbound investment almost reached the amount of inbound foreign investments ($118bn compared with $126.3bn).
Starting from last year, capital allocation schemes that are hybrids of direct investment and limited partnership, namely “Shadow Capital”, have become increasingly appealing among participants of the Private Equity industry. This way of investing allows the Limited Partners to employ their resources benefiting from the expertise and experience of PE funds and to gain a direct foothold in the private firms’ capital. Most notably, Shadow Capital accounted for 25.6% of total capital committed in PE investments in 2015, surging from the 17.5% average it accounted for in the period 2009-2014 (see table below).
On January 5th, Catterton, the leading consumer-focused private equity firm, together with LVMH and Groupe Arnault, respectively, the largest luxury conglomerate in the world and the family holding company of the founder, announced they have entered into an agreement to merge part of their business to create a new entity, named L Catterton.