Tritium closes third fund; Permira takes stake in Acuity; PE firms like to snack

Good morning dealmakers, thank goodness it’s Friday!

It’s Obey Martin Manayiti here with the newsletter, my debut! From today onwards, I will be writing the Wire on Fridays. I’ll be capping each week with a deal trend that caught my attention in recent days.

Today, we’ll taste six deals that focus on snacks, and then munch on the latest episode of our podcast about the end of cheap money. We’ll also take a bite out of a healthcare-focused Q&A with Brighton Park Capital’s Calen Angert, and then, for dessert, we’ll conclude with a report from Katten law firm that forecasts a busy year for dealmakers.

But first, a quick look at some PE news released this morning.

Tritium Partners announced final closing on its third fund, Tritium III, with $684 million of committed capital. The fund represents a nearly 50 percent increase over the Austin-based firms 2019 second fund. Tritium now manages nearly $1.5 billion of capital commitments across its funds.

The fund will back lower middle-market companies in Internet marketplaces, supply chain and logistics, fintech and financial services, software, data and analytics, and tech-enabled business services companies.

Permira announced it is acquiring a majority stake in Acuity Knowledge Partners from Equistone Partners Europe. Equistone is reinvesting in Acuity as a minority shareholder. All three companies are headquartered in London.

Acuity is a provider of research, analytics, and business intelligence to the financial services sector. The firm is headquartered in London and has a global client base of more than 500 financial service firms. It has offices in the UK, USA, India, Sri Lanka, Costa Rica, China and Dubai.

Feeling Hungry: Since the beginning of year, PE Hub has seen a slew of deals in the food sector, particularly in the snacking space. There are several factors driving private equity interest. Many people consider eating small, frequent meals to be healthy. And consumer behaviors that began during pandemic lockdowns, such as eating at home, are now continuing due to economic challenges.

Chicago based-Hometown Food Company, a portfolio company of Brynwood Partners, a Greenwich, Connecticut-headquartered private equity firm that invests in the consumer sector, acquired Birch Benders from Sovos Brands.

Hometown’s baking brands include Pillsbury Baking, Funfetti, Hungry Jack, Arrowhead Mills, White Lily, Jim Dandy, Martha White and De Wafelbakkers.

Birch Benders makes baking mixes and frostings, as well as pancake and waffle mixes.
Henk Hartong, chairman and CEO of Brynwood Partners, told me that there have been some fundamental changes in the way consumers are behaving as a result of the pandemic.

“We have seen a tremendous amount of growth in at-home consumption for breakfast, meal and snacking occasions,” he said.

Hartong noted that shifting economic trends could be fueling the trend whereby more Americans are preparing their meals at home. “At first people couldn’t eat out because of the pandemic, but then it has become a function of the economy, which has made it more difficult to afford out-of-home locations, and more people are eating meals and snacks at home.”

Read the full story here for the rest of the deals.

Moving differently: In the fourth episode of our podcast series, Private Markets and the End of Cheap Money, PEI Group editors Adam Le, Graham Bippart and Alex Lynn, based in London, New York and Hong Kong, respectively, discuss how currency fluctuations are creating opportunities for some investors; how currency hedging products are on the rise; how private capital has been moving away from China to regions such as Southeast Asia; and how private credit funds are stepping in to fill the role of banks more in some global regions than others.

The editors also discovered that while central banks in most parts of the world have raised interest rates consistently over the past 12 months, rates are not moving in lockstep in every single global market.

You can listen to the whole episode here.

Outlook: Calen Angert, partner and head of Brighton Park Capital’s healthcare practice, shares his optimism for 2023.

What was the biggest challenge to completing deals in 2022?
Though not at 2021 levels, healthcare still saw strong deal activity in 2022.
Economic uncertainty and rising cost of capital were the biggest challenges to the pace of transactions, especially in the back half of the year.

While many less durable businesses were not able to transact, quality opportunities still commanded quality prices.

We expect this “haves and have-nots” dynamic to continue into 2023. A rough economic backdrop will weigh heavier on top lines and the “growth at all cost” mentality will continue to abate.

How do you expect the first six months of PE dealmaking in 2023 to compare with the last six months of 2022?
Overall, we expect an increase in opportunities and deals in the back half of 2023. For healthcare in particular, we expect deal volume to prove strong throughout the year.
Given healthcare is non-cyclical and has strong underlying tailwinds, it tends to become more attractive in markets like these.

For more, read the whole interview here.

Busy year: Continuing with a strong outlook theme, the Chicago headquartered law firm, Katten, released its 2023 middle-market private equity report yesterday.

The report pointed out that nearly three-quarters of investors expect deal activity this year to either remain at the same level as last year or increase (40 percent and 33 percent, respectively), while over a quarter (26 percent) expect a slowdown. This conclusion was reached after surveying 100 deal makers.

“Whether the current political and economic turbulence will dampen M&A or spur additional activity, it’s clear that 2023 presents a wide range of opportunities for dealmakers — even if that means adopting new acquisition strategies to adapt, and thrive, in the face of global market disruption,” read the report.

Some of the findings include:
• The availability of capital, inflation and interest rate hikes, fears of a recession—as well as the policy implemented to smooth things over—are among the factors posing the biggest hurdles to M&A in 2023.
• Finance and tech lead the way in terms of investment opportunities (54 percent and 47 percent respectively) followed by insurance (34 percent) and real estate (32 percent). Dealmakers are considering a diversified array of investments across industries like manufacturing, healthcare, insurance among others.
• 41 percent of respondents believe all-equity deals will be an important contributor to winning deals in 2023.
• Two in three dealmakers say they are slightly more confident deals will close after signing a letter of intent while 18 percent are significantly more confident compared to this time last year.

That’s it for me today. Have a great weekend, and MK Flynn will be back with the Wire on Monday.

Cheers,

Obey