PE HUB Wire Highlights, 5.10.18

(L-R) Eric Zinterhofer and Luisa Beltran and Jonathan Marino of peHUB. Photo by Marcus Kaiser for Buyouts Texas. Copyright: Thomson Reuters

Ex-Goldman PE executive forms independent sponsor; New Mountain to sell Alexander Mann for $1.1 bln; Area One Farms raising two funds

It’s Thursday, Hubsters. You’ve nearly made it to the end of the week.

Leverage is pretty easy right now, I’m told, but PE firms appear to be investing a large proportion of equity. Consider CommerceHub, the Albany, New York, fulfillment software provider. In March, GTCR and Sycamore Partners agreed to buy CommerceHub for $1.1 billion. The PE firms are equally splitting a $623 million cash equity investment in the company, S&P Global Ratings said. That’s 57 percent of the deal value.

Francisco Partners in April also announced plans to buy Verifone in a deal valued at $3.4 billion (or $2.6 billion without debt). The investor group includes British Columbia Investment Management Corp. Francisco is investing about $1.629 billion equity as part of the deal, according to an SEC filing. That comes to 48 percent of $3.4 billion or 60 percent of $2.6 billion. Both are still more than the usual 30 percent equity commitment typical of deals earlier this decade.

PitchBook has reported that equity contributions in 2017 remain high, averaging 56 percent of enterprise value year-to-date. High contributions may suggest that PE remains cautious, especially in today’s pricey climate, the data provider said. I reached out to GTCR, Sycamore and Francisco but have yet to hear back.

Two deals isn’t a trend, hubsters, but I wonder if PE firms are indeed being careful? And will this help once the bubble bursts? Email me your thoughts hubsters at [email protected]

Still dancing: PE firms have raised a record amount of cash in the past five years and deal prices remain high, but 92 percent of LPs expect to commit as much or more capital to the asset class as in 2017, according to Institutional Investor, which cites a Preqin survey. One third of investors will work with additional managers and plan to make bigger commitments, the story said.

Purring: Who are the big winners from Walmart’s $16 billion buy of a majority of FlipkartTiger Global’sventure capital arm is one of them. Tiger Global has made $3 billion on its $1 billion investment, Bloomberg is reporting.

Deals: New Mountain Capital has agreed to sell Alexander Mann Solutions to OMERS Private Equity for 820 million pounds ($1.1 billion). New Mountain acquired Alexander Mann in 2013, investing 260 million pounds. Read our brief here.


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