The Private Equity Newsletter 18th April
Raw Selection
De-risking executive search for your Private Equity firm and Portfolio Companies
What is going on in the Private Equity world this week...
KKR’s new leaders plan to double earnings over five years
US private equity giant KKR’s co-CEOs are aiming to double earnings over the next five years, as founders Henry Kravis and George Roberts prepare to hand over control of the firm, according to a report by the Wall Street Journal.
Under CEOs, Joseph Bae and Scott Nuttall, who?took the reins?from Kravis and his cousin Roberts in late 2021, KKR has already doubled its assets to more than $500 billion over the past two years.
The private equity behemoth, which started as a private partnership and is now a public company, has more than 35 investing strategies, up from six at the time of the 2008-09 financial crisis.
Kravis and Roberts, both 79 years old, have agreed to give up the super-voting stock through which they control the firm at the end of 2026, relinquishing their remaining power to be the final decision-makers when it comes to matters such as compensation. They will each still own about 10% of the firm.
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Pacific Avenue Capital completes resin production carve-out
Pacific Avenue Capital Partners, a Los Angeles-based private investment firm, has formed Resin Solutions, which has agreed on a carve-out of three product lines developed by Cray Valley, TotalEnergies' resin production affiliate.
Pacific Avenue Capital specializes in M&A, corporate divestitures, and other complex situations in mid-market companies. The investment is being deployed via Pacific Avenue Fund I, L.P.
The carve-out deal, covers includes four production sites in the US, one production site in Italy, and global customer relationships across diversified end markets.?
The three acquired product lines - PolyBD?, Wingtack?, and Dymalink? - are market leaders in functional additives. Specifically, PolyBD? is used as a polyol for polyurethane in high-performance adhesives, sealants, and aerospace propellants. Wingtack? is a tackifying resin used in various applications including packaging, tapes & labels, tires, construction sealants, and coatings. Dymalink? is a crosslinking co-agent used in golf balls, transmission belts, and other applications.?
Resin Solutions, headquartered in Exton, Pennsylvania, will be an industry-leading specialty functional additives producer.
The transaction, which is expected to close later this year, marks the second investment out of Pacific Avenue Fund I, L.P., the first being Sunrich Products, a carve-out of SunOpta and an industry-leading integrated provider of farm-to-product sunflower seeds and other snacks.?
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Blackstone closes latest real estate fund
Blackstone has closed its latest global real estate fund, Blackstone Real Estate Partners X, with $30.4 billion of capital commitments — the largest real estate or private equity drawdown fund ever raised.?
The private equity giant’s three opportunistic real estate strategies - Global, Asia, and Europe - now have $50 billion of capital commitments.
Blackstone - the world’s largest alternative investment firm with $951 billion AUM - has delivered a 16% net IRR on over $100 billion of committed capital in the BREP global funds over more than 30 years.
As macro trends evolve, Blackstone Real Estate shifted its portfolio away from assets facing headwinds such as traditional offices and malls. It is now around 80% concentrated in logistics, rental housing, hospitality, lab office, and data centers. Blackstone Real Estate Partners X – which is 48% bigger than the asset management giant's previous real estate fund, which closed in 2019 – is positioned to capitalize on high conviction opportunities thanks to its scale and discretionary capital.?
McKinsey has published their Global Private Markets Review, 'Private markets turn down the volume.'
According to their latest Global Private Markets Review, private markets faced a year of two halves in 2022, with buoyancy in the first half and plummeting deal volumes, declining performance, and falling valuations in the second.
The report explains, and goes into depth, about how private markets have experienced a period of growth and strong performance since the Global Financial Crisis. Low-interest rates, high credit availability, and rising valuations have contributed to this trend. Even during the COVID-19 pandemic in 2020, private markets rebounded strongly in the second half of the year. In 2021, private markets continued to perform well, with fundraising and deal flow reaching new records.
However, in the first half of 2022, central banks responded to rising inflation by raising interest rates, causing public market valuations to drop. Banks began to pull back, which led to a decline in private market deal volume, performance, and valuations, especially in certain sectors. Despite this decline, private markets outperformed public markets, which led to private market allocations increasing in institutional portfolios.
As a result of the denominator effect, many limited partners (LPs) have pulled back from smaller and newer funds, causing fundraising to decline. However, LPs have not yet abandoned commitment plans entirely or sold portfolios, as they did during the previous financial crisis.
The Private Equity channel and Podcast?houses our podcast recordings, PE and Portfolio advice, plus recent case studies conducted on new talent and their firm
We keep you updated on our latest podcast stars and the hot topics of Private Equity.?You can watch our podcast recordings over on our YouTube channel or tune in?on Spotify, Apple Podcasts,?and Google podcasts.
Keep?informed about what we are doing?through our LinkedIn page or change your thinking and gain some knowledge by getting stuck into an advice episode on the Private Equity channel, hosted by Alex Rawlings.?
In this episode, we welcome Chris Ayala from Drum Capital who discusses the Building Products sector, Tips for PE-Backed execs, and how investors can better engage with their portfolios.
What You Will Learn:
??Tips For Effective Communication in Private Equity
领英推荐
??The Psychology of Exiting a Business
??Business Operations in Private Equity
Catch up on the links below to tune in...
We are always looking for people in the Private Equity space who have great conversations, can provide an interesting perspective, and are on top of their game.
If this sounds like you, give Alex Rawlings our podcast host, a message either on?LinkedIn?or drop him an email at [email protected]
How the Private Equity Healthcare Services Landscape Looked in 2022
Historically, Private Equity investment in healthcare services has focused on consolidating medical specialties such as dentistry, dermatology, and vision, with returns driven primarily by multiples arbitrage, financial leverage, and the development of ancillary business lines.
The healthcare services sector has shown resiliency in 2022, with record-setting levels of deal activity continuing well into the year. This has resulted in the second-largest year on record for healthcare services Private Equity activity, particularly in the lower middle-market space.
PE investors are continuing to develop industry-focused specialization strategies, resulting in the creation of more than 300 healthcare-focused private equity funds for the second year in a row.
While labor shortages, wage inflation, and changes in reimbursement rates are affecting healthcare organizations, healthcare industry-focused funds have enough dry powder to fuel healthy levels of buy-out activity in 2023. As new platform healthcare service deals are completed, this will drive further consolidation in the sector and push additional add-on deal activity. Contracting multiples could provide an opportunity for investors to jump in with all equity deals, particularly in the add-on space.
To secure talent for your healthcare services portfolio company, please reach out to Raw Selection, an executive search firm working with Lower and Middle market PE firms across Europe and North America to secure C-Suite executives.
For further information reach out to our Founder and Managing Partner, Alex Rawlings.
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We specialize in executive search, working exclusively with lower and middle-market Private Equity firms and their Portfolio Companies across Europe and North America.
We support Private Equity firms to secure talent for their investment and operations teams and to identify proven senior executives for their Portfolio Companies.
When it comes to recruiting senior executive talent for your business, our approach is one of meticulous search and due diligence.
So much so, we de-risk recruitment for all our retained clients. We are so confident in our approach that we are prepared to offer a money-back guarantee on our services.
Interested? Get in contact here.