Will exit slowdown disrupt fundraising? Five Arrows, Insight Partners to take minority stake in Kpler

Happy Friday!

A lot of the Hub community is out for a long holiday weekend, so we’ll keep this one brief. A few things to kick off your day:

Interesting deal this week: Five Arrows and Insight Partners agreed to invest more than $200 million in Kpler, which provides tech-led data, analytics and market insight. Through the investment, the two firms will take a minority interest in the company.

Kpler formed in 2014 and self-funded two acquisitions — ClipperData and JBC Energy. With the new funding, the firm intends to hire more than 100 employees over the next few months, the company said in a statement. Read more here on PE Hub.

Five Arrows closed its fourth European fund on 450 million euros last year, beating its target. The firm is the private equity fund raised by the merchant banking group of Rothschild & Co, which itself has been around for more than 200 years (!)

Coming back: After a relatively tepid start to the year, PE dealmaking appears to be gathering momentum. This includes exit activity, which has also been slow after strong performance last year. Heavy exit activity led to strong distributions from GPs back to their LPs in 2021, which fed into the ever-escalating fundraising cycle that has kept LPs on their heels with managers coming back faster than ever, with larger funds and new products.

Anecdotally, we’ve heard that distributions have slowed over the past weeks or months, which could be a sign that fundraising actually (gasp) slows, but right now that doesn’t seem to be the case. But if capital stops flooding back into LPs’ coffers, the frenetic fundraising cycle may get disrupted.

“Numerous sponsors expect traditional LPs will have exhausted their full-year 2022 commitments by early summer. Because of this, many firms are pushing back final closes to 2023 at the request of LPs, while other firms are delaying the launch of successor funds to 2023,” according to Pitchbook’s Q1 2022 US Private Equity Breakdown.

Key person: Here’s some drama, and we at the Wire love The Drama: I Squared, the infrastructure manager, just closed its third fund on $15 billion. Shortly after that announcement, the firm’s US investment head, Thomas Lefebvre, resigned. Another regional head, Chucri Hjeily, also resigned, sources told me.

LPs hate to see this — senior executives who leave right after a fund closes. It raises all kinds of questions and comes as a disappointment as LPs have backed a certain management team, who they pledged capital to for 10 years or more.
In this case, the key-person protections in the fund weren’t triggered, as they only cover the trio of managing partners (two out of three must leave). Lefebvre and other regional heads reside in a sort of second-tier of leadership at the firm. Read more here on Buyouts.

What have you seen? Hit me up if you have insight into the situation, or if you have thoughts about key-person protections at cwitkowsky@buyoutsinsider.com.
Personal: Exercise has always been an important part of my day, both for physical but probably more important, mental maintenance. Lately, I’ve been doing a regime of pull-ups of various sorts. As I get older, I noticed weight lifting is getting harder on my muscles and joints, but body-weight type exercise is much easier on the frame. However, the exercises themselves are no easier! What helps you maintain physical (and perhaps mental) health?

Have a great holiday weekend! Reach me with tips n’ gossip, feedback, or your workout routine at cwitkowsky@buyoutsinsider.com or over on LinkedIn.