Good morning, Hubsters. MK Flynn here with today’s Wire.
It’s a busy morning, beginning with a multi-billion-dollar enterprise software deal from Vista Equity Partners, and including a Q&A with Monroe Capital’s Ted Koenig.
Take private. In its first deal of 2023, Vista has agreed to buy publicly-traded Duck Creek Technologies, a developer of technology for the property and casualty insurance industry, for $2.6 billion.
“Duck Creek is playing an outsized role in accelerating cloud strategies and unlocking all the advantages they provide this crucial sector of today’s economy,” said Monti Saroya, senior managing director and co-head of Vista’s Flagship Fund. “Duck Creek’s modern cloud architecture and demonstrated market traction position it to define the next generation of mission-critical technology for P&C insurance.”
The deal follows a prolific year for Vista. In 2022, the Austin, Texas-based PE firm bought Citrix for $16 billion and Avalara for $8.4 billion and sold Datto to Kaseya for $6.2 billion.
Tech-focused PE firms including Vista and Thoma Bravo are taking advantage of the public market volatility to make acquisitions, and we expect to see more take-private tech deals in 2023.
For more on the trends, see my recent interview with Thoma Bravo’s Holden Spaht.
Go to debt financing. PE Hub’s Q&A series with private equity leaders reflecting on highlights from 2022 and sharing their outlooks for 2023 continues today with Ted Koenig, chairman and CEO of Monroe Capital.
Headquartered in Chicago and founded in 2004, Monroe is a boutique asset management firm specializing in private credit markets, including direct lending, asset-based lending, specialty finance, opportunistic and structured credit and equity. The firm had $14.1 billion of committed and managed capital, as of October 1, 2022.
I asked Koenig to share his perspective on the rise of private credit.
“In our view, private credit’s role has shifted over the years to the go-to source of debt financing for companies of all sizes in all industries,” Koenig said. “Direct lenders’ ability to provide borrowers with certainty of execution, and custom and tailored financing solutions, cannot be matched by the traditional bank underwriting and syndication process. Certainty is always highly valued by sponsors, but never more so than during periods of market volatility when banks are less willing to put their balance sheets at risk and when new issuance for collateralized loan obligations, the primary buyer of leveraged loans, slows. The second half of 2022 demonstrated the valuable role that private credit can and will play keeping the M&A market functioning and liquid, even in periods of uncertainty. As we head into an uncertain and likely recessionary environment, this will further accelerate private credit’s importance to M&A in 2023.”
For more, read the full interview here.
Home improvement. Later today, LightBay Capital and Freeman Spogli & Co, are expected to announce the acquisition of residential services company Infinity Home Services, sources told Buyouts’ Chris Witkowsky. The two firms have partnered on several investments in the past.
You can read more about that expected announcement here.
We’ve seen an uptick in PE deals involving home maintenance. The trend began during the pandemic, when lockdowns motivated home owners to make improvements, and it’s expected to continue even if there’s a recession, as many people consider domestic repairs essential.
Extra, extra. Before I sign off for the day, I’d like to encourage you to sign up for PE Hub Europe and our Dealflow daily newsletter.
Today, the UK-based editorial team led by editor Craig McGlashan covered a pair of deals in the world of drug discovery by Inflexion and Novo Holdings, among other developments.
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That’s it for now. Aaron Weitzman will write tomorrow’s newsletter, and Chris Witkowsky will be on duty Wednesday. I’ll be back on Thursday.
Cheers ‘til then,