Almost through another week of lock down. Any updates on PE activity from your perspective? What’s going on out there?
We are hearing about a few deal processes being prepared by bankers, likely to hit the markets over the next few weeks, after this initial shock wears off. One thing I noticed in my personal life — seems like store shelves, at least for most food items, are back to being stocked. Wonder if that means the panic buying phase of this crisis is fading? (Paper products is still a different story) …
A few things …
Back by popular demand, reporters and editors at PE Hub and Buyouts got together over video conference and we put together a podcast. We used to do a monthly pod for about two years that you, Dear Reader, seemed to enjoy, so figured now is a good time to add our voices to the mix. Check it out here on Buyouts. Or here on PE Hub.
We try to hash out the deal environment and where it might be heading, fundraising and LP anxiety. Give a listen and let me know what you think. We may try and make the pod a regular offering again … reach me with your thoughts at email@example.com.
Hark! Tis’ a deal!
Yes, an actual deal. How’d they get it done, in this environment? Palladium Equity-backed Kymera International acquired Reading Alloys in a deal valued at $250 million, PE Hub’s new deal hunter Karishma Vanjani writes. Read more.
The deal was signed last year after an auction, and managed to close financing despite pandemic-induced market fears, Adam Shebitz, partner at Palladium, told Karishma. Goldman Sachs led the financing, which closed Friday.
Given the environment, “I didn’t take it for granted that the financing was going to close,” Shebitz said, adding the closing of funding would have been pretty mundane if not for the current environment. Indeed …
Pause: We know that fundraising has taken a hit in the current market downturn (of if you didn’t know that, read more here!) An interesting angle emerging from the fundraising side is that the processes that may take the biggest hit are those funds in the market pre-seeded with investments made before the pandemic swept through the world.
Pre-seeding a fund is usually something LPs like to see, so they have a sense of how a fund looks before committing. The blind pool fund is a little less opaque. But now, those deals done before the downturn may be looking shaky.
“In the current market, these early investments may be a drawback as LPs dig in to determine their current value and their prospects,” according to a fresh survey from Probitas Partners.
What have you seen along these lines? Hit me up with your thoughts at firstname.lastname@example.org.
Meanwhile, some limited partners have paused their private investing program as they analyze the current market, but few (maybe none) have definitively stopped investing in private equity for the rest of the year, the Probitas survey said.
Instead, LPs are focused on analyzing valuations in the current portfolio and understanding GPs’ disaster recovery plans. They are especially interested in liquidity issues of portfolio companies and GPs’ level of dry powder to support investments that need help, according to the survey.
CVC Capital Partners stuck with its below-market hurdle rate of 6 percent on its next flagship fund, writes Justin Mitchell on Buyouts. CVC Fund VIII’s hurdle rate is lower than the 8 percent customary in the PE industry. Read more.
TA Associates made a strategic growth investment in Accion Labs, a software product engineering business specializing in emerging technologies. Read more here on PE Hub.
Have a great day! Reach me with your thoughts, tips, gossip, whatever at email@example.com or find me on LinkedIn.