North American M&A picks up after weak opening; US funds line up UK take-privates

Good morning Hubsters, Craig McGlashan here filling in on the Wire.

We’ve got some add-on activity to report for you this morning, but before we get to that, we take a look at a couple of reports that augur well for the private equity industry. First, S&P Global Market Intelligence found that despite a weak first quarter overall for North American M&A, last month showed signs of a return to form. Then, a new report from BlackRock Alternatives suggests that investors are keen to increase their private market allocations.

We then look at a recent glut of US private equity firms attempting to take UK companies private, before we turn to a couple of add-ons involving Revelstoke Capital Partners and Allied Industrial Partners.

Comeback

After a slow start to the year in M&A, activity in North America picked up in March – helped by several bumper private equity deals, according to new research from S&P Global Market Intelligence.

Some $136.7 billion of M&A deals were signed in March, up from $64.9 billion in February and a 10.8 percent increase from March last year, according to the data. It was the first month to enjoy year-on-year growth since January 2022.

Some of the biggest private equity contributions to the March figure came from Silver Lake and Canada Pension Plan Investment Board agreeing to buy Qualtrics International for around $12.5 billion and Apollo Global Management and the Abu Dhabi Investment Authority announcing an $8.1 billion deal for Univar Solutions.

For the quarter overall, though, the total value of North American M&A was $253.1 billion, according to the report. That was a decline of 44.7 percent year-on-year, or down 58.2 percent on the first quarter of 2021.

There was also positive news for the private equity outlook from BlackRock Alternatives, which released its first Global Private Markets Survey.

Among the key takeaways from the report were that investors plan to increase their allocations to most private assets this year. Respondents saw infrastructure, real estate debt, niche real estate and mature private companies as among the biggest investment opportunities, although liquidity concerns were the main barrier to investing in private markets.

“While the recent banking turmoil has raised new concerns among investors, the conversations I’ve had suggest that clients are focused on navigating the current cycle with caution and care, albeit with an eye towards capturing opportunities,” said Edwin Conway, global head of BlackRock Alternatives, in the report. “Even amid heightened volatility and uncertainty, investing in areas such as renewable energy, mature private companies and direct lending – venture and middle market debt in particular – can provide a ballast to portfolios.”

UK visit
Several US private equity companies are looking to the UK for take-privates right now.
Over on PE Hub Europe today, we covered the board of ecommerce company THG – formerly known as The Hut Group – announcing that it was “in receipt of a highly preliminary and non-binding indicative proposal from Apollo Global Management”.

There was no info on the size of the bid, but THG’s share price jumped from about 70p to 95p when the board made the announcement on Monday morning. The share price had dropped to 88.53p at the time of writing, giving it a market cap of about £1.15 billion ($1.43 billion). THG only listed back in September 2020, when its IPO raised £1.88 billion.

THG released its preliminary results for the year ending 31 December on Tuesday morning. Gross revenue was £2.2 billion, up 2.7 percent year-on-year and up 38.8 percent on two years ago. Adjusted EBITDA was £64.1 million, down from £161.3 million in the previous year.

Apollo must now make a firm intention or drop its interest by the close of the market on May 15th.

Jefferies International is acting exclusively for THG.

This is the latest in a flurry of take-private attempts for UK companies. Yesterday, we covered another move by Apollo – which is putting its new London office to good use – this time for engineering firm John Wood Group. The two companies have entered talks.

Other UK take-private attempts by private equity companies include Blackstone looking to buy Industrials REIT, and Providence Equity Partners and Searchlight Capital Partners entering talks with conference organizer Hyve Group. Network International, a payments company headquartered in Dubai but listed in London, is also the subject of an offer from CVC Capital and Francisco Partners.

I’ll be writing a feature on why we’re seeing such a glut of take-privates – and whether the trend will continue. If you’d like to contribute, drop me a note at craig.m@pei.group or reach me on LinkedIn here.

Add-on and on
Deals-wise this morning, there’s plenty of add-on activity. Here’s two that caught my eye.
ClareMedica Health Partners, a primary care services provider for Medicare Advantage patients, completed the acquisition of Plaza Medical Centers, which operates in the same sector. Both companies have several locations in Florida.

ClareMedica has been a portfolio company of Denver, Colorado-based private equity firm Revelstoke Capital Partners since February 2022.

On the move
Switching sectors, and CES Power, a provider of mobile power generation, distribution and temperature control equipment, announced today that it has acquired Echo Technologies Services, a telecoms company working in Wi-Fi, live streaming and CCTV for musical festivals and live sports.

Memphis, Tennessee-headquartered CES Power is backed by Allied Industrial Partners, a lower and middle market private equity firm headquartered in Houston, Texas. Echo Technologies is headquartered in Kennesaw, Georgia.

That’s all from me – Chris Witkowsky will be on Wire duty tomorrow.

Cheers,

Craig