What a Monday, huh? How are you faring? Forgot what real drama in the markets was like …
Two forces are working to jam up the gears of private equity’s formerly well-oiled machine: the outbreak of coronavirus is physically keeping private equity folks from doing their jobs, and the cratering of the markets is forcing buyers and sellers to delay or even attempt to reprice transactions.
Some folks out there are anticipating a great buying opportunity if this market pain continues through the end of the month. So many GPs are sitting on fresh pools of capital recently raised that, if values indeed begin to come down on solid companies, this shocking, tragic global outbreak could mark the birth of a historic era of high-performing vintages in private equity.
“The volatility is going to have to die down and the market will have to settle at some level and people will be better able to react,” said a buyer in the secondary market. “We … don’t believe in timing the markets. Right now, though, it does seem like we’re entering a period where there’s strong buying opportunities and last week we began to identify specific sectors we feel will be less impacted by the various things going on.”
Fundraising: While uncertainty has been driven like a metal pole through the gears of dealmaking, it’s less clear what kind of impact this situation is having on fundraising. Fundraising was stronger last year than ever before, with GPs raising record levels of capital. This year kicked off with no indication of fundraising slowing down, but suddenly, sources tell me fundraising may also slow.
The feeling is, the firms in highest demand will still get their money, but those in the second tier of demand or under may find it a tougher slog right now. A few firms could be delaying bringing their funds to market for a bit, sources tell me.
What are you seeing? Hit me up with your tales from the frontlines at email@example.com
Anyway, what’s happening out there…
Tweets: Silver Lake is investing $1 billion in Twitter, which the company will use, along with cash on hand, to repurchase up to $2 billion of its shares. Read the news brief here on PE Hub.
As part of the deal, Silver Lake entered into a cooperation agreement with Elliott Management, which owns about 4 percent of the company’s common stock and economic equivalents. Silver Lake co-CEO Egon Durban, and Jesse Cohn, partner at Elliott, will join Twitter’s board of directors. Twitter also is searching for a third new independent director on the board.
As per the terms of the cooperation agreement, Silver Lake and Elliott agreed to refrain from commenting or trying to influence Twitter’s policies and decisions. The firms essentially agreed to maintain Twitter’s editorial independence.
Big hire: AE Industrial Partners hired former acting Secretary of Homeland Security Kevin McAleenan as an operating partner. McAleenan was only in the role for about six months, and attempted to implement President Trump’s increasingly muscular, divisive immigration policy, before publicly criticizing the tone of the administration’s policies. Read it here on PE Hub.
Big one from Milana Vinn on PE Hub today. Vista Equity is exploring strategic options for Infoblox, an IT automation and security business. A sales process hasn’t yet kicked off, but is expected to target strategic, the story said. Vista acquired Infoblox in September 2016 for $1.6 billion in a take-private. Read it here on PE Hub.
Nicole Musicco, who recently left the role of head of private markets at Investment Management Corp of Ontario, joined RedBird Capital Partners as a partner, Kirk Falconer writes on Buyouts. RedBird has a long affiliation with Musicco. RedBird was initially launched in 2014 with an anchor commitment from Ontario Teachers’, at which time Musicco led Ontario Teachers’ private equity fund and co-investment program. Read more here on Buyouts.
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