Kapnative Newsletter Edition 38
Blackstone Nears AUD 20 Billion Acquisition of Australian Data Centre Operator AirTrunk
Blackstone Inc is nearing the completion of a significant acquisition, poised to purchase Australian data centre operator AirTrunk for over AUD 20 billion ($13.5 billion), including debt. This transaction, reported by Bloomberg, is set to be one of the largest infrastructure deals this year. Blackstone emerged as the preferred buyer after outbidding competitors including a consortium featuring IFM Investors Pty, DigitalBridge Group Inc, Global Infrastructure Partners, and Silver Lake Management.
The acquisition discussions are in the advanced stages with Macquarie Group Ltd and PSP Investments, the current stakeholders in AirTrunk. Although the deal has not been finalized and could still see changes, the terms are expected to be agreed upon as early as this week. The parties involved have maintained confidentiality and declined to comment on ongoing negotiations.
Blackstone plans to secure the purchase with a financial package that includes a AUD 5.5 billion loan, alongside a AUD 7 billion funding arrangement underwritten by four banks. Discussions are also underway with private credit funds to provide at least AUD 1.5 billion in junior debt.
AirTrunk operates data centers in Australia, Singapore, Hong Kong, Japan, and Malaysia and was previously valued at around AUD 3 billion in a 2020 transaction led by Macquarie’s infrastructure arm. Macquarie has been investing in the company since 2019, with significant input from executives Ani Satchcroft and Ben Way. The acquisition highlights Blackstone’s strategic focus on expanding its infrastructure footprint across the rapidly growing digital landscape of the Asia-Pacific region.
HIG and CapVest Vie for UK Pharmacy Wholesaler AAH in ￡900m Deal
Private equity firms HIG and CapVest have entered the bidding to acquire AAH Pharmaceuticals, the UK's largest pharmacy wholesaler, currently valued at around ￡900 million. This development follows AAH's acquisition by German private equity firm Aurelius three years ago, as reported by the Financial Times.
AAH Pharmaceuticals, which boasts annual revenues of ￡3 billion, operates an extensive distribution network serving 14,000 pharmacies across the UK. The auction process, overseen by advisers from BNP Paribas, comes as Aurelius seeks an enterprise value of roughly 10 times the company’s expected earnings of about ￡90m for the year.
The first round of indicative bids is anticipated later in September, with Aurelius aiming for a robust valuation reflecting the strategic significance and profitability of AAH. The interest from HIG and CapVest underscores the competitive nature of the bidding process, with multiple private equity groups drawn to the company's strong market position and financial performance.
Aurelius, which specializes in turning around struggling businesses, acquired AAH from healthcare provider McKesson for ￡477m in late 2021, marking its largest acquisition. Despite earlier challenges, including the controversial handling of other businesses like The Body Shop, AAH has flourished under Aurelius’ stewardship. Since the acquisition, active customer accounts have surged by 60%, even amid intense competition from other major players like Phoenix and Alliance Healthcare.
The sale process is projected to conclude by the end of the year, although Aurelius has indicated that it might retain the business if offers fail to meet its expectations.
The ongoing auction highlights the dynamic and high-stakes nature of the pharmaceutical distribution market in the UK, with significant interest from global investment firms seeking to capitalize on the lucrative healthcare sector. Representatives from Aurelius, HIG, and CapVest have declined to comment on the proceedings.
Goldman Sachs’ Petershill Partners Sells 18% Stake in LMR Partners for Up to $258 Million, Validating Valuation Strategy
Goldman Sachs’ private equity firm Petershill Partners has successfully sold an 18% stake in hedge fund LMR Partners for up to $258 million, addressing concerns over asset valuation accuracy. The stake, originally valued at $195 million at the end of last year, was sold slightly above this valuation, with LMR Partners’ leadership paying an initial $107 million and committing to a subsequent $111 million payment. An additional $40 million may follow, contingent on performance.
Petershill, which Goldman Sachs majorly owns, was listed on the London Stock Exchange in 2021 amid a thriving IPO market, opening at 350p per share. Despite recent trading at a 40% discount to its book value—prompting market skepticism regarding potential sale prices for its stakes—this transaction underscores its capability to assess and realize the value of its investments accurately.
With shares closing up at 219.5p following the announcement, the transaction is seen positively by market analysts. Deutsche Bank’s David McCann suggested this sale validates Petershill’s valuation methods, especially given its portfolio’s composition of private market entities. Likewise, JP Morgan analysts noted the transaction underscores the inherent value in Petershill’s diverse holdings and pointed out the potential for increased returns amid consolidation trends in the private markets.
This strategic sale aligns with Petershill’s shifting focus from hedge funds to private market investments, which co-heads Ali Raissi-Dehkordy and Robert Hamilton Kelly believe offer more robust growth opportunities. This move is part of a broader strategy to optimize asset allocation and enhance shareholder value amidst evolving market conditions.