Good morning, Hubsters. MK Flynn here with today’s Wire.
Move over DIY. Make room for DIFM. The good news for private equity investors in the growing “do-it-for-me” movement is that today’s consumers are willing to pay for services that yesterday’s do-it-yourselfers weren’t.
The DIFM trend is being “driven by younger homeowners and those choosing to age in place,” explains Huron Capital partner Brian Rassel. The movement is behind Huron’s new lawn care services platform, which will be formally announced any minute.
As PE Hub’s Aaron Weitzman reported a few hours ago, the Detroit private equity firm has acquired ExperiGreen Lawn Care, a Mishawaka, Indiana company providing a variety of services, including seeding and soil amendment, to residential customers.
“Lawn care is a fantastic opportunity for private equity, given the recurring nature of the revenue and the ability to positively transform companies through marketing sophistication and the integration of digital tools to support operations across routing, communications, quoting and payments, and more,” Rassel told Aaron.
Add-ons are expected. “The business is pursuing acquisitions and has been quite successful in acquiring smaller, complementary businesses over the past twelve months, including several acquisitions in 2022 already,” Rassel said. “Huron expects this trend to continue throughout our partnership.”
The DIFM movement is driving PE-backed deals throughout the home maintenance landscape, as PE Hub has been reporting all summer.
Check out Obey Martin Manayiti’s story on PE interest in pest control and home inspection services.
Also see Iris Dorbian’s story on PE investments in plumbing services.
European healthcare platform. Main Capital will use its recent investment, Dutch healthcare software provider Avinty, as a platform for organic growth and acquisitions, with a particular focus on expanding in northwest Europe, managing partner Charly Zwemstra told PE Hub Europe’s Nina Lindholm.
Oldenzaal-headquartered Avinty provides software to more than 400 customers in the Netherlands and Belgium with more than 65,000 healthcare professionals using it daily. Founded in 1994, the company was established by merging healthcare software providers Karify, Jouw Omgeving, Impulse, VIR e-care solutions, NederCare and AppNormal.
“We see [Avinty] as a new platform investment,” said Zwemstra. “We’re building a strong northwest European software business for healthcare.” That expansion will include growing in Belgium, Scandinavia and the DACH region.
For more, see Nina’s story.
Explosive growth in secondaries. Apollo Global Management recently moved into the secondaries market with full force following the launch of S3, its sponsor and secondaries solutions business. Scott Kleinman, the firm’s co-president, spoke to Madeleine Farman for Secondaries Investor about the drivers behind the Apollo’s entry into the secondaries market.
Formally launched on 4 August with a cornerstone commitment from the Abu Dhabi Investment Authority – bringing total new commitments to approximately $4 billion – the alternatives giant has been building out the platform over the past year or so, making high-profile hires from the likes of Goldman Sachs, BlackRock and Tikehau Capital.
At the time of the launch, the firm had already committed or deployed more than $13 billion across secondary and fund finance capital solutions transactions. Apollo anticipates substantial fundraising dedicated to S3 activities, particularly in equity secondaries, credit secondaries and fund finance.
“Secondaries is a space we’ve been exploring for several years, that has proved to be very interesting and dynamic,” Kleinman said. “The traditional LP secondaries – where an LP is selling older positions – is still a meaningful part of the industry, but it’s become just one piece of a much more diversified and dynamic ecosystem. GP solutions are now a meaningful part of the secondary market and come in all sorts of permutations – continuation vehicles and other things.
“Then you think about credit secondaries: [this] is a newer product [which came] out of the explosion of direct lending products and funds over the last five, six, seven years. CIOs now need to rebalance the debt side of their portfolio as well. With Apollo’s credit background [and] our knowledge of the leveraged loan market, our ability to be a meaningful player there is clear.
“Then, lastly, the fund finance business is a less well-known part of the market but really ties in all of these things we’re talking about – to the GP side as well as the LP side. A lot of times, these secondary trades would be better off being done in a leveraged structure or in some sort of a loan rather than an outright sale.
“[With] the scale and explosive growth of private markets over the last decade, it stands to reason the secondary market will continue to grow alongside that.”
The results are in. “Fundraising by private equity firms dipped in this year’s first half, as proliferating products in a crowded marketplace met with reduced supply due to over-allocated LPs,” Buyouts’ Kirk Falconer reports. “GPs may be experiencing longer fundraising timeline, delayed fund launches and related impacts.”
Download Buyouts’ H1 2022 fundraising report.
Peace, Love, and Understanding. Yup, I’ve got Elvis Costello lyrics playing in my head today. I’m seeing him perform tonight at Pier 17 in New York, and then I’m off to the Berkshire Mountains of Massachusetts, where I’ll be hearing some different tunes at Tanglewood, including a performance by Yo-Yo Ma and Emanuel Ax.
Aaron will write the Wire on Friday and Monday, and I’ll be back in the proverbial private equity saddle on Tuesday.
Happy dealmaking until then,