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EY to spend $1b expanding PE biz; family offices up allocation to PE; Bain Capital invests in sous vide

EY announces it will spend $1 billion over the next four years to expand its PE business; wealthy individuals increase allocation to private equity; Bain Capital takes minority stake in Cuisine Solutions.

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

More money. While there may be plenty of recessionary clouds on the horizon, private equity may provide a comparatively safe harbor to ride out the storm. Rich people see to think so anyway.  

“Family offices managing vast fortunes for wealthy individuals have increased their allocation to private equity from about 15 per cent in 2019 to a fifth last year — the largest gain for any asset class,” reports the Financial Times. “Many plan to keep putting more money into private companies over the next five years, according to a report by Swiss bank UBS.”

Pivotal time. I take it as a sign of health for the private equity industry that yesterday EY announced it will spend $1 billion over the next four years to expand its PE business. The investment will focus on building capabilities within value creation, portfolio transformation and transaction deal leadership services.

“The PE sector today plays an increasingly active role in the global economy,” the firm said in a statement. “PE firms currently manage more than US$5t in capital and own more than 20,000 businesses across the globe that are estimated to employ approximately 25m people. Most importantly, that footprint continues to grow – last year, PE deal activity exceeded US$1t for the first time ever, and AUM are expected to rise at a rate of roughly 15% over the next several years, as existing investors increase their allocations to PE, and new investors like family offices, high net worth individuals, and others invest in the asset class.”

The global professional services firm also said it has appointed Bridget Walsh as EY Global Private Equity Leader, effective 1 July. Walsh has worked with PE firms for 20 years and currently serves as EY EMEIA Managing Partner – Tax.

Walsh takes on the new position at “a pivotal time, not only for the EY business, but the private equity industry overall,” as she put it.  

She succeeds Bill Stoffel, who passed away in December after spending three decades at the firm building EY’s PE services.

Recession resiliency. “We like the fact that the food sector tends to be a necessity and stable,” said Bain Capital managing director Cristian Jitianu in an interview with PE Hub’s Obey Martin Manayiti. “We expect it to be more recession-resilient than most other consumer sectors.”

Bain Capital earlier this week took a minority stake in Cuisine Solutions, a Sterling, Virginia based maker of sous vide products, through a $250 million investment. 

“With the confluence of new capacity and new innovation, as well as some new customer conversations the company is having, significant growth opportunity has been created for the business that should allow it to scale rapidly in the next several years,” Jitianu said.

Read the full story for more on the deal.

That’s all for now. PE Hub’s Aaron Weitzman writes the Wire on Fridays, so I’ll see you Monday!

Until then,
MK