Blackstone to double down on tech deals in Silicon Valley; clean energy to deliver attractive returns

Blackstone expands its tech team.

Good morning, Hubsters. MK Flynn here with the Wire.

Let’s start today with a scoop. Blackstone is doubling down on tech and assembling a deal team in Silicon Valley, Buyouts’ Kirk Falconer reported earlier this morning.

The seven-person group, part of Blackstone’s $127 billion corporate PE business, will be headed by senior managing director Sachin Bavishi, who is relocating to San Francisco from the firm’s New York headquarters.
Bavishi, who worked on Blackstone’s best-known tech investments – among them Ancestry, Bumble, Liftoff and Simpli.fi – joined in 2013 from Olympus Partners, where he was an associate. Before that, he worked as an investment banking analyst with Piper Jaffray.

“Blackstone’s launch of a Silicon Valley team comes as GPs brace for the impact of the tech wreck on Wall Street,” Kirk wrote. “Long viewed as overvalued, tech stocks have plummeted this year with rising economic uncertainty and volatility. In the first half, the Nasdaq Composite registered a drop of about 28 percent.”

“Private markets will ultimately follow the lead of public markets,” Bavishi said. “It creates an interesting environment for us, an environment that, for deploying capital, is more favorable than it was in 2021.”

Blackstone sees emerging opportunities as resulting from “dislocation,” Bavishi said. “We don’t think the tech sector is broken.” On the contrary, he said, there is a large population of category-leading software brands that will be more accessible than they were last year, when “euphoric valuation levels” were the norm.

Today’s environment is very different from the dot-com crash of roughly two decades ago, Blackstone dealmakers argue. Current multiples “are not much lower” relative to the period before last year, which was “an aberration,” Martin Brand, Blackstone’s head of North America private equity and global co-head of technology investing, told Kirk.

Blackstone’s tech deals have mostly been in the adtech, consumer internet, edtech and fintech sectors. The Silicon Valley team, Bavishi said, will “expand the aperture,” giving more emphasis to themes in spaces like customer engagement, e-commerce, sales management and supply chains.

Read the full story.

Attractive returns. Onsite solar energy production and the development of battery storage and electric vehicle charging systems at warehouses and other logistics locations could generate attractive returns, especially as the US government channels more federal funding towards renewables, NorthBridge Partners co-founder and managing partner Greg Lauze told PE Hub’s Obey Martin Manayiti.

Yesterday, the firm announced the launch of NetZero Logistics through a joint venture with Green Bridge Energy, a Raleigh, North Carolina-based provider of clean energy infrastructure in the commercial and industrial sectors.

“In general, we target a 16 [percent] to 18 percent gross IRR that is in line with our fund’s targeted returns,” Lauze said of the venture.
NetZero Logistics was formed to integrate solar, EV charging, battery storage and other related technologies that boost clean energy use by logistics real estate assets.

“These are very financially attractive deals,” Lauze said about renewables in the logistics sector. “They happen to add to net-zero goals and objectives, but they stand up on their own in terms of really attractive returns in this environment.”

For more, read the whole story.

Cross-border medical device deals. A European Union regulation for medical devices produced and sold in the bloc has boosted cross-border expansion opportunities for firms that have adapted to the new rules, Mark Braganza, managing director of Sun European Partners, told PE Hub Europe editor Craig McGlashan.

The Medical Device Regulation (MDR) came into force gradually from its publication in May 2017 and has applied fully since May 2021, Craig explained. From May 2024, all devices placed on the market must conform with the MDR and by May 2025, any devices still in the supply chain that have not reached a final user must be withdrawn.
By introducing greater levels of harmonization, the regulation has provided a little more stitching to the fractured European healthcare sector.

“The advantage that some product spaces have is that regulation can provide consistency and Europe, since the European Medical Agency’s founding, has gone through more and more harmonization of the standards,” Braganza said. “There have been some recent shifts in the medical device legislation in Europe that have slightly shifted the way that European regulators look at medical device regulation, which is great for those businesses that are well set up to do it and slightly more challenging for businesses that haven’t been ahead of it and seen it coming.

“But it does allow those products to be taken cross-border if you’re set up for it.”

Sun European Partners, based in London, is the European adviser to US-based Sun Capital Partners, which has offices in Boca Raton, Los Angeles and New York.

Read the rest of Craig’s interview with Braganza here.

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That’s all for now. Tune in tomorrow, when I’ll be back with more.

Until then, happy dealmaking,
MK