Good morning, Hubsters. MK Flynn here with the Wire.
There’s a surprising amount of general business news this morning, two days before Thanksgiving.
In M&A news, there’s a financial services deal. French bank Société Générale and US investment company AllianceBernstein just announced they are merging their equities research and cash equities businesses and forming a joint venture, which will be based in London and led by Robert van Brugge, the current CEO of AllianceBernstein’s research group.
Other headlines that caught my eye: FTX is heading to bankruptcy court today to explain the cryptocurrency platform’s collapse and the steps its new management is taking to secure customer funds; Elon Musk reportedly just laid off some more workers after cutting Twitter’s staff of 7,500 people roughly in half earlier in the month; more details are emerging about Bob Iger’s return to helm Disney; and a rail strike seems more likely this morning than it did yesterday morning, once again underscoring the fragility of the global supply chain just in time for the winter holidays.
Slow down. On the private equity deal front, however, things are quiet.
We’re hearing activity may continue to slow down through the end of the year, with many investment bankers planning to take winter vacations for the first time in years!
Look for a pickup in deal activity when everyone’s back in mid-January, sources tell me.
Energy boost. One sector that’s been unusually active in dealmaking this year is energy. PE Hub reporter Obey Martin Manayiti has covered the beat extensively since he joined our team in March.
Oil and gas private equity investors are seeing a resurgence, as rising prices – driven by the Russian invasion of Ukraine – have changed the equation for the sector after a decade of underinvestment, Obey wrote in an in-depth feature we published earlier in the month.
It’s a remarkable moment for PE investors in energy.
“This is our 25th year in business, and the last time we saw opportunities with the same kind of risk-adjusted returns were back in the late 1990s to 2001,” Wil VanLoh, founder and CEO of Quantum Energy Partners, told Obey.
Beyond traditional sources of energy, alternative energy sources are also seeing increased interest from private equity. That’s thanks in part to the Inflation Reduction Act, which was signed in August and includes $400 billion targeting renewables.
“We have never had stimulus anything close to this size,” said Doug Kimmelman, founder and senior partner at Energy Capital Partners.
These forces are working in tandem to create what could be historic opportunities for energy PE investors, on both sides of the sector. While traditional energy investors are looking for ways to cash in on the upheaval, those supporting energy transition may have to tread lightly in a tougher environment. Where it all plays out will determine which firms will lead the strategy in the future.
Infrastructure opportunity. This week on PE Hub, we’re featuring Obey’s look at Ara Partners’ debut infrastructure investment, which focuses on renewable fuel logistics.
Hoping to leverage the move toward a low-carbon economy, Ara is looking for opportunities in the renewable fuels space. The firm’s strategy involves acquiring existing in-the-ground infrastructure that is essential for the growth of low-carbon fuels, partner George Yong told Obey.
“This decarbonization movement is truly the biggest generational opportunity for the infrastructure asset class that will be in front of us over the next couple of decades,” Yong said.
Recently, the Houston- and Boston-based PE firm acquired Lincoln Terminal Holdings, a provider of renewable fuel logistics and infrastructure, based in Greenville, South Carolina.
With a focus in the Southeast and Mid-Atlantic regions, Lincoln owns and operates five strategic rail transloading and storage facilities.
Yong said the expectation is that the firm expand the infrastructure offering and position Ara as a “one-stop shop that can handle both the private equity opportunity that decarbonization brings and also the massive infrastructure opportunity that it brings.”
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Asking for a friend. A dear friend of mine who’s a marketing specialist working in the world of children’s publishing asked me recently if I knew of any private equity firms that invest in nonprofits. The question struck me as a bit of an oxymoron, but then I thought, maybe with the move toward more impact investing, PE firms are taking more interest in the nonprofit world.
And indeed, yesterday, Canadian PE firm Beringer Capital announced an investment in Fort Myers, Florida-based VeraData, a fundraising platform for not-for-profit organizations in the US.
“We’re excited to partner with VeraData, a company that has disrupted the NFP market with its state-of-the-art analytical capabilities, industry expertise, and extremely capable team,” said Gil Ozir, a managing partner at Beringer Capital, in a statement. “What’s more, we are highly gratified to be partners in a business that helps charitable missions achieve their worthwhile causes by driving acquisition and retention of passionate donors at a level of scale and efficiency that, historically, only the largest and most sophisticated commercial enterprises have been able to achieve.”
If you’re doing any PE deals in the nonprofit world, I’d love to hear about it. Send me email at email@example.com
Scheduling note: That’s it from me this week. Tomorrow, Buyouts’ Chris Witkowsky will write Wednesday Wire, and then the US team will be off to celebrate Thanksgiving.
On Thursday and Friday, we’ve got a special holiday treat for our US audience. Craig McGlashan will do double-duty, writing the Wire for us as well as PE Hub Europe’s daily Dealflow newsletter. It’s a good opportunity to take a taste of PE Hub Europe, which we’ve offering complimentary access to for a limited time. Sign in or register to start reading today!
I’ll see you back here on the Wire on Monday.
Among the many things I am thankful for this year are my colleagues throughout PEI Group and all of you, dear readers.