What PE wants out of edtech investing, LLR’s David Reuter on software investing

LLR's Reuter discusses finding talent in a PE Hub Q&A.

Happy Wednesday!

This is Chris, on the Wire this morning.

Great investigation on the FT about Axel Springer, a German publisher, that fired the editor in chief of Bild, Europe’s top-selling daily newspaper, after an investigation revealed improper relationships with subordinates. The company initially only suspended the executive, Julian Reichelt, after an internal investigation from law firm Freshfields, but months later terminated Reichelt’s employment after details of the investigation became public in a New York Times investigation.
Axel Springer’s investors include KKR and CPPIB, which both have representatives who sit on various company boards. Read it here on the FT.

MK has another Q&A as part of a series on PE Hub. Today’s interview features David Reuter, partner with LLR Partners, which is investing out of its sixth fund that closed on $1.8 billion in 2020. Reuter said something that keeps him up at night is finding talent, something to which many businesses (including media!) can relate.

Read the full interview here on PE Hub. Here’s a teaser:

What are the software trends driving deals?
We focus on B2B applications, and it is all about labor and process efficiency – what can be automated to enable companies to do things better, faster, cheaper? It started with back office and paper-based processes, but has expanded to everything about the business.

EdTech: Private equity firms continue to be interested in investing in the education sector, even as the technology angle, helping students to learn remotely, an essential during the pandemic lock-down, fades as society returns to in-person events.

The education industry “checks a lot of the hallmark PE investable-asset criteria checkboxes,” according to Dani Forman, director of research with Axial. “For starters, it is non-cyclical, often produces recurring revenue and has predictable expenditures and cashflows.

Forman told Aaron Weitzman on PE Hub that over the last 24 months, deals in the education sector marketed via Axial’s platform have run the full spectrum of sub-sectors, ranging from traditional schools to vocational programs, edtech and more. Read it here.

Premium: CalPERS may be the biggest gorilla in private equity LP land, commanding a massive amount of capital to commit to managers and coinvestments. Yet even an institution that wields as much power as the nation’s largest public pension system still has to take premium economic terms on in-demand funds.

A summary of CalPERS commitments from last year shows the system agreed to several funds that included premium terms like carry rates that ratchet up based on performance, and above-market management fees. Read it here on Buyouts.

That’s it for me! Hit me up with tips n’ gossip, feedback or just your thoughts at cwitkowsky@buyoutsinsider.com or find me on LinkedIn.

Clock ticking: There are only a few more days to send in nominations for Buyouts’ Deal of the Year Awards. We’ll pick winners in seven categories: Deal of the Year, Large-Market Deal of the Year, Middle-Market Deal of the Year, Small-Market Deal of the Year, Turnaround of the Year, International Deal of the Year, and Secondaries Deal of the Year. The deadline is Friday, Feb. 11. Send in your candidates ASAP to me at cwitkowsky@buyoutsinsider.com. And visit here  for more info about the awards.