By Matteo Ravera It goes without saying that the goal of a Private Equity firm is to sell an asset it previously invested in, make a very high IRR and eventually collect its carried interest. But what happens if PE firms sell that asset to themselves? It can sound strange but that’s exactly the case … Continue reading Continuation funds: how PEs are selling to themselves
By Erlend Brevik, Fabian Zähringer, and Thor Arne Höfs Sovereign Wealth Funds (SWFs) are state-owned institutional investors that own, invest, and manage a variety of assets – such as stocks, bonds, real estate, or other alternative investments – to achieve national objectives. Overall, objectives of SWFs can be grouped in several different categories: 1. Capital … Continue reading Sovereign Wealth Funds Investing in Private Equity
Introduction The objective of this article is to offer a perspective on the evolution of search funds in Italy, using the experience of Guido Fileppo, one of the first Italian searchers, as an example. Moreover, it provides a framework to understand the impact that this instrument would have on Italian SMEs, which appear to be … Continue reading Search funds’ potential in Italy
With a market share of 40%, China has positioned itself among the most influential players in Venture Capital worldwide, second only to Silicon Valley’s 44% market share (The Diplomat). Its position as an important global player is emphasized by the fact that by October 2019 China alone had produced around 45% of all the unicorns … Continue reading Equity controls in China
Despite the uncertainty and macro-economic challenges connected to the pandemic, the appetite for M&A seems to have been increasing moving into Q4. M&A activities continued to show signs of recovery against previous quarters of decline, exceeding also the Q3 performance (see Q3 article). Deal Value and Count Q4 recorded the highest M&A aggregate deal value … Continue reading Q4 2020 EMEA PE-backed M&A Roundup
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
“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
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”?
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
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
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
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 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 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 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 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 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 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 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 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 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 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 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?
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.
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 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.
“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
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.
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.
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).
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.
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.
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 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.
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.
In 1949 Benjamin Graham published the first edition of “The Intelligent Investor”, an essay concerning the technicalities of financial investments, formalizing for the first time the basics of Value Investing. Graham’s bold and sometimes controversial mindset was very critical about Mr. Market (M.M). This “individual” is the personification of a market which provides investors with prices that should reflect the true value of the underlying business. If on the one hand M.M quotations look fair and rational, on the other hand it can happen that they are driven by the emotional sphere, so that prices result to be biased and distant from the fundamental value of the business in question. In such a contest, The Intelligent Investor is the one who knows when to trust M.M. and when to reach her conclusions independently, disregarding market’s excesses. Graham’s theories have sparked a debate at the preferability between value and growth stocks, and the empirical evidence has, in fact, confirmed the existence of a long-term value-growth spread called: “Value Premium”.
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.
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.
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.
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.