LP-driven Consolidations - General Atlantic acquires Actis
Anjal Agrawal
M&A and Strategy at Virtusa || Ex-IB at Nomura (PPO) || IIM Shillong (17-19) || CA || Yes Bank FutureReady Scholar || Ex-JPM || Ex-Baker Tilly DHC || #ProudSINKWAD
“Diversification is a protection against ignorance. It makes very little sense for those who know what they’re doing.” – Warren Buffet
US-based General Atlantic added the UK-based sustainable infrastructure investor Actis to the platform to create a $96bn AUM diversified global investor. Actis will become the sustainable infrastructure arm within General Atlantic’s global investment platform.
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Understanding the General Atlantic Empire
General Atlantic was founded in 1980 as an investor making large minority investments in growth companies, with a focus on computer software and services. At the time, there were only two forms of private investments: venture capital and leveraged buyouts. The founding General Atlantic team found its sweet spot: identify the sectors likely to produce significant growth and the leading companies in those sectors, and partner with management to accelerate growth.
Who founded General Atlantic? Chuck Feeney, founder of The Atlantic Philanthropies, and co-founder of Duty-Free Shoppers, better known as “The man who gave it all away,” established General Atlantic in 1980 to invest in high-growth businesses, support visionary founders and fund the global charitable pursuits of the Atlantic Philanthropies, to which he has donated virtually all of his wealth.
Over time, General Atlantic broadened its global reach by first investing in Europe in the late 1980s and then entering the region in the late 1990s, opening offices in China and India in the early 2000s, Brazil in 2008, and Southeast Asia in 2011, Jakarta in 2019 and, most recently, Israel in April 2022.
Today, GA is a global growth equity platform, investing across six sectors – Climate, Consumer, Financial Services, Healthcare, Life Sciences and Technology. General Atlantic has deployed $60bn+ in global growth companies. In addition to its flagship growth equity strategy, the firm’s investing activities span credit and climate solutions.
Acquisition of Iron Park – Adding Credit to GA’s portfolio
Iron Park Capital is a global alternative investment manager with deep experience across public and private credit markets coupled with in-depth knowledge of capital markets. It was founded in 2019 by Tripp Smith, to invest and generate attractive returns across the capital structure for borrowers.
Establishing BeyondNetZero – Expanding GA’s portfolio to Climate Investments
In 2021, General Atlantic established its inaugural Climate growth fund, BeyondNetZero (“BnZ”). BnZ combined GA’s significant growth equity expertise, along with a new team of proven climate investors and industry executives, to create a unique capability to identify growth climate investment opportunities. Its first fund closed in late 2022 with $2.6bn in capital including $900m from GA’s flagship growth equity programme, while the remainder came from external investors
Investment Portfolio (225 companies globally) – Highlighting its Indian Portfolio
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Understanding Actis
Let us first understand about CDC Capital. CDC Capital was founded as part of the UK government's post-war colonial reconstruction and had operated as a developmental finance institution, largely issuing debt to the world's poorest countries. Over the years it has transformed itself to become a public-private partnership (PPP) dealing in private equity projects. CDC rebranded itself to British International Investment in 2021.
In 2004, CDC Capital went through a reorganisation to expand investment into the world’s poorest countries and separated into two new entities, splitting the investment management and asset holding functions. The new independent management company was called Actis and became a limited liability partnership between its management and staff, who together had majority control, and the Government. The Government sold a 60% stake in Actis to its managers, which included 13 individual partners and 12 overseas corporate partners, for only ￡373k. Actis was set up by the CDC to attract private capital to the emerging economies of Asia, Africa and Latin America.
In 2012, Britain sold its remaining 40% stake in Actis to its management team. A very cheap bargain for the Actis management team, as the government received only $13m (￡8m) in cash, in return for its stake as well as a share in future profits that could be worth more than $100m over time.
Actis ranked second behind Brookfield in the New Private Markets Impact50 List. It has 350+ investment professionals across 17 offices and $12.5bn of assets, backing structural themes that support growth in infrastructure across the energy transition, digital transition and supply chain transformation.
Investment Portfolio – Highlighting its Indian Portfolio
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Why did General Atlantic acquire Actis?
Actis will become the sustainable infrastructure arm within General Atlantic’s global investment platform. Actis will continue to be led by its Chairman and Senior Partner, Torbjorn Caesar, and will retain independence over its investment decisions and processes with its funds operating under the existing Actis brand.
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Other PE acquiring PE transactions
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LP-driven consolidation can be seen continuing as LPs benefit from having their investment managed by a new entity that is feasibly better equipped to pursue new investment on their behalf. While investors may be spared the tyranny of choice that comes with a saturated market, fewer players will be bad for competition and may eventually expose LPs to a higher fee burden and less diversification.
I hope this was an informative experience for you as it was for me. Until next time, thank you for your time. Please post your feedback and comments.
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Please find below all the information sources that have been instrumental to the above article, along with some additional reading materials. Gratitude to all the creators –
3.????? https://www.newprivatemarkets.com/general-atlantic-builds-impact-heavyweight-with-actis-acquisition/
7.????? https://www.act.is/2004/01/08/cdc-restructured-to-accelerate-investment-in-developing-economies/