Good morning, Hubsters. MK Flynn here with today’s Wire.
Buyouts’ Chris Witkowsky is attending a conference this morning, so we swapped days. He’ll write tomorrow’s Wire.
It’s a jam-packed morning.
There’s a flurry of deal announcements coming into my inbox, involving warehouse operations, robotics and edtech. Details below.
We’ve got an interesting interview about investing in central and eastern Europe (CEE).
And we’ve got a look at one firm’s private credit strategy.
But first, an update on Clearlake’s attempt to buy philanthropy software developer Blackbaud.
On Monday, Blackbaud rejected the offer, as I reported in the Wire.
Now Clearlake Capital has filed a response with the SEC, saying, in part:
We are disappointed that the Board has rejected our highly attractive acquisition proposal of $71.00 per share, which represents a 57.7% premium to the Company’s unaffected trading price of $45.01 per share on October 3, 2022 (the day prior to the filing of a Schedule 13D by us), and a 25.9% premium to the 30-day VWAP of the Company’s common stock of $56.31 as of March 24, 2023. We would also note that, had the Company traded in line with the Bessemer Emerging Cloud Index from October 3, 2022, to present, it would currently trade at a hypothetical undisturbed price of $45.77 per share, and our proposal represents a premium of 55.0% to such price.
As the Company’s largest stockholder, holding approximately two times the number of shares held by the next largest stockholder and approximately nine times the number of shares held by the Company’s directors and officers, we are aware of the Company’s results to date and its plan to execute on the longer-term investments required to compete in an increasingly challenging macro and industry environment. Many enterprise software companies have a challenging path forward in the current environment, and we believe the Company’s current challenges would be best addressed by exploring strategic alternatives via a formal process to maximize stockholder value. We have been a long-term stockholder of the Company over the past three years and have formed our current view over time.
There’s more to the filing, which you can read here.
Clearlake reiterated its all-cash offer to acquire the outstanding shares of Blackbaud for $71 per share.
We’ll be watching this one closely.
Now for some fresh deal news:
EQT just announced its acquisition of Lazer Logistics, an Alpharetta, Georgia-based provider of yard management and trailer spotting services (which involves the coordinated movement of trailers around warehousing operations), from Harvest Partners.
Lazer oversees the largest fleet of electric trailer spotting vehicles in North America, according to the company. EQT plans to accelerate the electrification of Lazer’s vehicle fleet, a transition buoyed by demand from customers looking to decarbonize their supply chains.
EQT has developed expertise in electric vehicles through its investments in school transportation provider First Student and EV charging platforms Instavolt and Voltera.
Sverica Capital Management has made a strategic investment in Hirebotics, a Nashville-based provider of a product that combines welding equipment and a robotic arm with software to help address a shortage of welding technicians.
Sverica’s strategic investment is intended to facilitate Hirebotics’ realization of its full potential within the welding automation market and expansion into new markets.
JMI Equity has made a $90 million strategic growth investment in Coursedog, a New York-based software developer that aims to help higher education institutions optimize curriculum planning, course scheduling, event management and catalog management.
“Coursedog provides an exceptional product for higher education institutions, helping them modernize their academic operations,” said Peter Arrowsmith, managing general Partner at JMI.
Today, PE Hub Europe editor Craig McGlashan takes an in-depth look at private equity investing in central and eastern Europe. Craig spoke with Michal Rybovič, partner at Sandberg Capital, headquartered in Bratislava, Slovakia.
As the CEE region left decades of communist rule in the 1990s, new companies began to form. “These businesses are now 30 years old,” said Rybovič. “From a private equity perspective, that’s a big wave and a lot of opportunities.”
Private equity can offer these companies not just capital but assistance with a range of business needs, said Rybovič. “Because of communism and the centrally managed economy, we missed two generations of managers” with experience in marketing, communications and other skills, he said. “Now, we have 50-year-old managers with experience.”
That group is part of one wave – older companies with strong economic fundamentals – while a second wave features newer companies, with founders aged 30-35, which have featured in some of Sandberg’s most recent deals.
Enterprise software and IT outsourcing are among the most interesting sectors to Sandberg. The investment equation of some of those businesses has changed during the last few tumultuous years.
In Serbia, for instance, businesses have benefited from nearshoring in the wake of covid, including Quantox Technology, in which Sandberg invested via its second fund. The company provides local IT specialists to countries such as the US. The fact that two of the biggest providers of such services, Russia and Ukraine, have been at war for over a year, has helped such companies in Serbia win business.
In a tough fundraising market, private credit seems to be thriving as LPs seek refuge from uncertainty and volatility caused by high inflation and interest rate hikes, Buyouts’ Kirk Falconer writes. For investors, the asset class is attractive due to characteristics like floating rates. As central banks lift interest rates to battle inflation, private debt rates rise in tandem.
Ares Management, one of the market’s top private debt investors, unveiled a second Pathfinder offering geared to asset-based opportunities, Kirk reports.
Ares Pathfinder II Fund is expected to reach a size of $5 billion, according to a report by New Mexico State Investment Council. A first closing is anticipated “on or around” March 2023.
Ares declined to comment.
Ares’ Pathfinder funds, managed by the alternative credit team of Ares Credit Group, aim to generate income and long-term capital appreciation through flexible investing in the complex world of asset-based opportunities.
The focus is on collateralized investments in large, diversified portfolios of assets that generate predictable and contractual cashflows across market cycles. These are mostly directly originated opportunities in sectors that are “often overlooked or misunderstood,” the NMSIC report said.
Asset exposures can range from loans/leases to receivables to royalties/fees with the common feature being that investments are collateralized through contracts and/or physical assets, the report said. Investments are typically collateralized by pools of underlying assets, such as autos, shipping containers, receivables, supermarkets and rental units.
That wraps up today’s newsletter. Chris will be on duty tomorrow, then PE Hub’s Obey Martin Manayiti on Friday with a roundup of our coverage on Women’s History Month. And I’ll be back on Monday.
Until then, happy dealmaking,