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Audax, HarbourVest and Genstar ranked as the top three most active private equity firms in 2019, based on the volume of completed deals in the U.S., according to PitchBook. Three companies tied for fourth place: Abry, Carlyle and Shore Capital.
Where were these PE firms looking for deals? Eight of the firms on our list name the software and technology sector among their top investment targets, and seven put healthcare companies on their priority list. Financial services and consumer services are each named by five of the firms as industries they focus on, with four naming business services companies. Fundraising from investors in 2019 led to two notable fund launches earlier in 2020: KKR’s $1.3 billion KKR Global Impact Fund and HarbourVest’s $2.6 billion HarbourVest Fund XI.
Here are Mergers & Acquisitions’ profiles of the top 10 firms.
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KKR (NYSE: KKR) has raised $1.3 billion for its global impact fund. The fund is “dedicated to investment opportunities in companies whose core business models provide commercial solutions to an environmental or social challenge,” the firm says. The fund will target companies in the lower middle-market that contribute towards the United Nations Sustainable Development Goals. Among the themes that the fund will focus on include: climate change, clean water, workforce development, waste, mobility, sustainability and infrastructure improvements. “We are thrilled to see our investors’ shared enthusiasm for the tremendous opportunity we see ahead for KKR Global Impact and will build on this to help set the new standard across investing, value creation and measuring success in the space,” says Alisa Amarosa Wood, KKR partner and head of KKR’s private market products group. Investment firms are raising funds that focus on climate change. For example, BlackRock has raised $1 billion to invest in wind, solar and battery-storage projects. Renewable energy is becoming “one of the most active sectors in infrastructure,” David Giordano, global head of BlackRock renewable power, told Bloomberg News. It comes, he said, “as global power generation shifts from two-thirds fossil fuels to two-thirds renewables over the next few decades.”
Large global Fortune 500 manufacturers are focusing on their core competencies and looking to divest non-core assets, resulting in acquisition opportunities for private equity firms. Manufacturers are continuously evaluating their lines of businesses and in recent years have been selling non-core assets to focus on bottom-line growth and profitability. A 2018 Ernst & Young study, How Can Divesting Fuel Your Future Growth, noted that nearly nine out of 10 companies planned to divest assets in the next two years, up from roughly four out of 10 a year earlier. Corporate decision makers say shifts in global tax policy, new technologies and other industry trends amplify the need to sell non-core assets and reroute capital to other business areas. This trend has been a boon for private equity firms in the sector like KPS Capital Partners. “Very large global Fortune 500 corporates are focusing on their core competencies,” says Michael Psaros, KPS co-founder. “The public stock market and activists are really pushing them to divest non-core business lines and they are listening.” Most of his firm’s investments have been complex carve-outs from corporate manufacturers executed on a global basis. In 2019, KPS acquired Howden, a provider of industrial gas handling products and services, from Colfax Corp. (NYSE: CFX), a welding and valves manufacturer, for $1.8 billion, including $1.66 billion in cash consideration. Read our full coverage: 5 trends driving manufacturing M&A.
The U.K.’s antitrust authority cleared Google’s (Nasdaq: GOOG) $2.6 billion takeover of Looker Data Sciences Inc., joining U.S. regulators in declining to open an in-depth review. The purchase was not likely to weaken competition as Google would not be inclined to stymie its rivals, the Competition and Markets Authority said. Google announced in June that it planned to buy California-based Looker to boost its cloud offering, which lags behind Amazon.com Inc. (Nasdaq: AMZN) and Microsoft Corp. (Nasdaq: MSFT). Read the full story by Bloomberg News: Google’s $2.6 Billion Looker deal cleared by U.K. regulator.
Genstar-backed energy data analytics company Enverus has acquired oil and gas technology firm RS Energy Group from Warburg Pincus. Goldman Sachs (NYSE: GS), Simpson Thacher, Weil, Gotshal & Manges LLP, Ropes & Gray LLP and Irell & Manella LLP advised Enverus. Credit Suisse, Jefferies and Kirkland & Ellis advised RS Energy.
Apax Partners is buying early childhood education provider Cadence Education from Morgan Stanley Capital Partners. William Blair, Lazard Middle Market and Debevoise & Plimpton LLP are advising Morgan Stanley. Simpson Thacher & Bartlett LLP is advising Apax.
CenterOak Partners-backed Service Champions has acquired Bell Brothers Plumbing Heating and Air, a provider of residential air conditioning and plumbing services. Greenberg Glusker Fields Claman & Machtinger LLP advised Bell Brothers, while Gibson, Dunn & Crutcher LLP advised CenterOak.
Goldman Sachs Merchant Banking and Eurazeo-backed Trader Interactive has purchased commercial trucking and equipment companies NextTruck, Rock & Dirt, Tradequip and Trade-A-Plane from the Cosby Harrison Co.
Investcorp has acquired seafood distributor Fortune Fish & Gourmet. Houlihan Lokey (NYSE: HLI) advised Fortune.
Corridor Capital-backed Nationwide Property & Appraisal Services LLC has bought appraisal management company Olde City Lending Solutions. Berkery Noyes advised Olde City.
MiddleGround Capital has acquired Banner Service Corp. from Centerfield. The target produces cold finished, straightened, ground, and polished metal bar products.
Windjammer Capital Investors has acquired Compex Legal Services, a provider of outsourced medical records retrieval and litigation support services.
Private equity deal value increased by 3 percent in 2019, despite a 6 percent drop in fundraising, according to EY’s PE Pulse report. Average fund sizes increased by 32 percent in 2019 to $846 million, helped along by new investors in the space such as family offices. PE exits increased by 2 percent.
Philip Lo has joined alternative investment firm GPI Capital as a managing director, investor relations and business development. He was most recently with Siris Capital.
John Magee has been named CEO at Aurora Capital Partners-backed VLS Recover Services. Magee was previously with Worldwide Logistics.
Artificial intelligence in healthcare saw about $4 billion in funding across 367 deals in 2019, according to data and research firm CB Insights. Amazon.com Inc. (Nasdaq; AMZN) is no exception. The tech conglomerate is using its recent deals for Health Navigator and PillPack to launch new software services in healthcare. Health Navigator works with companies like Microsoft Corp. (Nasdaq: MSFT) in offering services such as remote diagnoses, and with triage to help patients figure out whether to stay at home, see a doctor or go straight to the emergency room. Read our full coverage: How Amazon is using M&A to revolutionize healthcare.
Pushed by a groundbreaking California law mandating it, more companies are putting women on their public corporate boards. The law faces pressure in court and may not stand, but its rippling effect has already started to increase the visibility and awareness of the important benefits of board diversity. Investors are taking notice and trying to get ahead of the curve. According to a study published by MSCI in March 2018, having three or more women on a company’s board of directors translates to a 1.2 percent median productivity above competitors. Read the full guest article by Venable’s Belinda Martinez Vega: Why businesses are adding women to their boards.
If there’s anything M&A professionals dislike, it’s uncertainty. And heading into 2020, there’s more than enough uncertainty to go around, including questions about the economy, international trade, impeachment, domestic politics and more. The funny thing is, the lack of clarity may actually make the first half of the year a great time for M&A, as dealmakers push to close transactions before the looming uncertainty of Election Day and its outcome. We conducted interviews with 8 investment bankers and other M&A advisors. Some said the first half of the year will be robust, while others said the uncertainty may have a negative impact throughout 2020. Read the full story, What’s ahead for M&A in 2020? We ask 8 advisors.
Mergers & Acquisitions has named the 2020 Most Influential Women in Mid-Market M&A. This marks the fifth year we have produced the list, which recognizes female leaders with significant influence inside their companies and in the wider dealmaking world. It’s been gratifying to watch the project evolve over the years – and become more influential itself. This year, we received more nominations than ever before. As a result, we expanded the number honored to 42 in 2020, up from 36 in 2019. Many dealmakers are new to our list, including Rockwood Equity Partners’ Kate Faust, William Blair’s Shay Brokemond and Avante Capital Partners’ Ivelisse Simon. Read our full coverage of all the champions of change on our list, including Q&As with each individual.
To celebrate deals, dealmakers and dealmaking firms, Mergers & Acquisitions produces three special reports every year: the M&A Mid-Market Awards; the Rising Stars of Private Equity; and the Most Influenital Women in Mid-Market M&A. For an overview of what we’re looking for in each project, including timelines, see Special reports overview: M&A Mid-Market Awards, Rising Stars, Most Influential Women.
ACG New York is hosting the 12th annual healthcare conference and bourbon tasting at the Metropolitan Club in New York on Feb. 27.
ACG Raleigh Durham’s 18th annual capital conference is being from March 31-April 1 at the Raleigh Marriott Crabtree Hotel in Raleigh, North Carolina.
InterGrowth 2020 is taking place at the Aria Resort & Casino in Las Vegas from April 20-22.
Source: The Latest