Happy Wednesday, Dear Tech Take Readers!
I am finally back home in Brooklyn after a few weeks of constant travel. And it seems like I arrived just on time – the city has entered Phase II of reopening. I already had a chance to enjoy a drink and some food at an outdoor patio of a local restaurant. Nothing like seeing New York slowly getting back to life.
TA’s and Carlyle’s big wins on ZoomInfo
Amid all the bad news in the market dislocation, I want to share a success story.
TA Associates turned its 2014, $90 million investment in ZoomInfo, into a valuation of $6.12 billion in the company’s public offering in June. That represents the largest paper return in the firm’s history. The math is based on the company’s $49.68 share price at the market close on Tuesday, June 23.
ZoomInfo, a cloud-based intelligence platform for sales and marketing teams, had a strong debut went it went public on June 4.
For Carlyle, the second biggest shareholder of ZoomInfo, paper gains are significant, too.
Carlyle owns 31 percent of ZoomInfo, which translates into $5.27 billion, assuming the $49.68 share price. That means that on paper, Carlyle would return 13x its equity in just over a year, if the firm was to sell its shares today.
For TA, even if we assume the realized dividends from the stake sale to Carlyle, the paper return is around 80x TA’s equity investment, sources told me.
As a firm, TA Associates, has had a pretty impressive run in 2020.
This year, the firm successfully sold stakes in MRI Software, making roughly 5x on its stake sale to Harvest Partners; and in Consersive, selling a 50 percent stake in the company to Advent International and making north of 6x its initial investment.
Yesterday, on June 23, the firm also announced it sold part of its stake in Aptean, an enterprise resource planning (ERP) and supply chain, to Charlesbank. TA Associates reinvested in the company, which is also backed by Vista Equity Partners.
TA made 3.5x its money on the stake sale, sources familiar with the deal told me.
What’s interesting about the Aptean deal is that TA reinvested in the company along with Charlesbank, another example of the longer hold trend, in which PE firms hold onto their treasured assets by committing more capital and extending the lifetimes of their best companies in the portfolio.
TA Associates has even raised a dedicated vehicle for those types of reinvestments in November 2019, TA Select Opportunities Fund, which closed on $1 billion.
Earlier this year, TA used the fund to reinvest in MRI Software as part of its stake sale transaction to Harvest Partners.
Any other successful stories or big exits that I should follow? Reach me at firstname.lastname@example.org.
Private equity fundraising has slowed across the board since the pandemic’s outbreak and is unlikely, at least in 2020, to repeat the record levels of the past couple of years. Emerging managers are expected to absorb the biggest blow, as many limited partners have narrowed their focus to incumbents, Chris and Kirk Falconer wrote on Buyouts.
In recent weeks, however, Buyouts has reported several fund closings and launches by newly-minted PE firms, indicating the downturn did not completely halt this activity.
Some general partners are persevering with inaugural vehicles launched before the health crisis, while others started up only recently. In both scenarios, there is evidence of successful fundraising.
This is perhaps not surprising in the case of pre-crisis funds, which may have developed early traction with LPs.
It is more surprising in the case of first-timers who began marketing, or ramped up marketing, after the outbreak. For example, Knox Lane in June collected nearly half of the $500 million target set for its debut fund less than three months after filing Form D fundraising documents. Read the story here on Buyouts.
Have a great day! Hit me up as always with tips n’ gossip, feedback or just to chat at email@example.com, on Twitter or find me on LinkedIn.