ANNUAL REVIEW 2017 Land of the giants - Private Equity International
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ANNUAL REVIEW 2017
Land of the giants
Cycle-Tested Credit Expertise
Extensive Market Coverage
Comprehensive Solutions
Relative Value Focus
Ares Management is
honored to be recognized as
Lender of the Year in North America
for the fourth consecutive year
as well as Lender of the Year in Europe
Lender of the year
in Europe
Ares Management, L.P. (NYSE: ARES) is a leading global alternative asset
manager with approximately $106 billion of AUM1 and offices throughout the
United States, Europe, Asia and Australia.
With more than $70 billion in AUM1 and approximately 235 investment
professionals, the Ares Credit Group is one of the largest global alternative
credit managers across the non-investment grade credit universe. Ares is also
one of the largest direct lenders to the U.S. and European middle markets,
operating out of twelve office locations in both geographies.
Note: As of December 31, 2017. The performance, awards/ratings noted herein may relate only to selected funds/strategies and may
not be representative of any client’s given experience and should not be viewed as indicative of Ares’ past performance or its funds’
future performance.
1. AUM amounts include funds managed by Ivy Hill Asset Management, L.P., a wholly owned portfolio company of Ares Capital Corporation
and a registered investment adviser.
learn more at:
www.aresmgmt.com | www.arescapitalcorp.com
The battle of the brands
the US market on page 80, advisor Hamilton
TOBY
MITCHENALL Lane said it had received a record number
EDITOR'S of private placement memoranda in 2017 –
ISSN 1474–8800 LETTER
MARCH 2018 around 800 – and that this, combined with
Senior Editor, Private Equity faster fundraising processes, has made it dif-
Toby Mitchenall, Tel: +44 207 566 5447
toby.m@peimedia.com ficult to some investors to make considered
Special Projects Editor decisions.
Graeme Kerr, Tel: +44 203 862 7491
graeme.k@peimedia.com This chimes with what we hear from other
Americas Editor, Private Equity investors: that the number of funds in the
Marine Cole, Tel: +1 212 633 1455
marine.c@peimedia.com It is the story that that’s been playing out for market at the moment is making it tricky to do
Editor, Private Equity International
a decade. Big firms getting bigger and using anything but re-up with existing relationships.
Isobel Markham, Tel: +1 646 380 6194
isobel.m@peimedia.com
their brand capital to grow their franchises This is turn gives rise to a recurring com-
Asia Reporter
upwards and outwards. plaint we hear about the advent of more GP-led
Carmela Mendoza, Tel: +852 2153 3148
carmela.m@peimedia.com
The growth of powerful franchises happens secondaries transactions (as we explore on
Reporters
in two ways and both are on abundant display page 10): “If I have my hands full with the day
Rod James, Tel: +44 207 566 5453 in this year’s Annual Review. First is the fund job of assessing managers and making com-
rod.j@peimedia.com
size growth. Contributing to the $411 billion mitments, why should I be forced to reassess
Alex Lynn, Tel: +44 207 566 5463
alex.l@peimedia.com raised across all private equity funds last year a fund to which I have already committed?” It
Contributor were the largest ever euro-denominated fund is an issue that we expect to hear more about
Adam Le
(CVC Capital Partners’ Fund VII), the largest in the months to come.
Senior Production Editor
Mike Simlett, Tel: +44 20 7566 5457 ever Asia-focused fund (KKR’s third Asia fund) New managers, or even established man-
mike.s@peimedia.com
and the largest fund ever, full stop (Apollo’s agers looking to forge new relationships, are
Production and Design Manager
Miriam Vysna, Tel: +44 20 7566 5433 Fund IX). struggling to get a foot in the door unless they
miriam.v@peimedia.com
However, a series of banner fundraises do have something genuinely extraordinary and a
Head of Marketing Solutions
Alistair Robinson
not alone explain the growth of the market, spotless record to offer.
Tel: +44 20 7566 5454
alistair.r@peimedia.com
or indeed the growth of the individual buyout One normally associates a flight to quality
Subscriptions and Reprints
shops.Yes, fund size is increasing; the average with times of uncertainty or turmoil. While
Andre Anderson, +1 646 545 6296
andre.a@peimedia.com
fund raised in 2017 was $754 million. In 2014 today’s market is characterised by some of the
it was just $508 million. However, if you look former we have not yet seen much of the latter.
Jack Wharton, +44 203 862749
jack.w@peimedia.com at the largest three funds raised in any year, However, the consolidation of capital among
Sigi Fung, +852 2153 3140 they tend to account for around 20 percent of some of the established brands in the private
sigi.f@peimedia.com
the buyout market, which held true in 2017 equity business – and indeed their dominance
For subscription information visit
www.privateequityinternational.com. (see page 71). of our 2017 Awards roll of honour in both
Director, Digital Product Development The second contributor to private equity vanilla private equity and emerging strategies
Amanda Janis, Tel: +44 207 566 4270
amanda.j@peimedia.com franchise growth has been the sideways expan- and specialist sectors – suggests investors are
Editorial Director sion into new strategies, geographies and asset seeking comfort in the familiar. For more on
Philip Borel, Tel: +44 207 566 5434
philip.b@peimedia.com classes, as explored on page 6. Whatever you the awards turn to page 36.
Director of Research & Analytics
do, don’t call it style drift; it is established
Dan Gunner, dan.g@peimedia.com
managers with the infrastructure, connec- Enjoy the review.
Publishing Director
Paul McLean, paul.m@peimedia.com
tions and know-how to offer their investors a
Chief Executive
comprehensive set of products to access private
Tim McLoughlin, tim.m@peimedia.com markets, which appears to be what they want.
Managing Director — Americas What does this mean for institutional inves- Toby Mitchenall
Colm Gilmore, colm.g@peimedia.com
tors? In a nutshell, more work and tight due
Managing Director — Asia
Chris Petersen, chris.p@peimedia.com diligence deadlines. As noted in our review of e: toby.m@peimedia.com
a n n ua l re v i e w 2017 private equity international 1
CONTENTS
STORIES OF THE YEAR
4 Succession, succession, 24 Investing in GPs
everywhere
26 10 new firms making waves
6 GPs branch out in 2017
We profile the top debut fundraises
8 Credit line controversy
30 Friday’s best
10 GP-led secondaries deals The highlights from PEI’s Friday
Letters over the last 12 months
12 LPs going direct
32 Transformative powers
14 The growth in cov-lite loans Our Operational Excellence Awards
provide a reminder of how private
16 Korean LPs to the fore equity can create lasting value
18 Apollo’s mega-raise 34 Privately spoken
The pick of the responses from our
20 The rise of Japan monthly Privately Speaking feature
interview
22 Long-term funds
KEY THEMES 2017 THE PRIVATE EQUITY
69 The year in fundraising 82 Europe: Winds of change INTERNATIONAL AWARDS 2017
Strength in numbers The French presidential election and 36 Introduction
Britain’s impending exit from the EU
74 Secondaries: Powering ahead come amid worries about a possible 38 The roll of honour
Fundraising and transaction bear market
volumes hit new highs in the 39 The private equity game changer
secondaries market in 2017, with 84 Asia: Picking up speed of the year
deals expected to smash records The year delivered strong exits for
40 Global
again in 2018 GPs, increased dealflow in Japan,
South Korea and Australia as well 43 EMEA
80 North America: Going supersize as a rise in fundraising
As the economic cycle approaches its 54 Americas
peak, it can be challenging to predict 86 Emerging markets
what will happen in 2018, but one Emerging markets fundraising is 59 Asia-Pacific
thing is almost certain: more money showing signs of bouncing back with
will flow into private equity Asia leading the way
AND FINALLY:
88 Best of Final Close
A sideways look at private equity
90 PEI Fortune Teller
What do I do if there is GFC II?
92 Quotables
74 84 The best soundbites of the year
NEW YORK Private Equity International is published © PEI 2018 be aware that external contributors
130 West 42nd Street, Suite 450 10 times a year by PEI. may represent firms that may have
New York, NY 10036 No statement in this magazine is to an interest in companies and/or
+1 212 633 1919 To find out more about PEI please visit: be construed as a recommendation their securities mentioned in their
Fax: +1 212 633 2904 www.thisisPEI.com to buy or sell securities. Neither this contributions herein.
publication nor any part of it may
LONDON Cancellation policy: you can
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+852 2153 3240 for the accuracy of the content in departments in either our London or
Fax: +852 2110 0372 this magazine. Readers should also New York offices.
2 private equity international annual review 2 017
Look ahead. Share our vision. MVision is a pre-eminent alternative assets fundraising advisory firm, experienced in raising significant amounts of capital for our GP clients Our long established investor relationships and in-depth industry knowledge means the advice we offer is relevant, targeted and efficient www.mvision.com MVision Private Equity Advisers Limited is authorised and regulated by the UK Financial Conduct Authority. MVision Private Equity Advisers USA LLC is registered with the SEC as a broker dealer, and is a member of FINRA and SIPC. MVision Strategic (Asia) Limited is licensed by the Hong Kong Securities and Futures Commission. 16048-02
STORIES OF THE YEAR
MOVING ON
Succession, succession, everywhere
Some of the largest private equity managers have “We began to feel at some point that
it’s time to hand the reins to younger
unveiled their transition plans from founder control to
people,” Rubenstein told Bloomberg.
the next generation. By Marine Cole and Toby Mitchenall “Our firm is in a very good shape so we
wanted to make a transition when it was
Part and parcel of the evolution of the pri- in good shape.”
vate equity industry is the gradual with- These succession events are, of course,
drawal of the personalities that helped inevitable and necessary.
shape it.The most successful have managed From an industry observer’s standpoint,
to create institutions that bear their cultural though, they are also tinged with regret.
DNA, but that will ultimately outlive them Rubenstein, in particular, has been a source
with new generations at the helm. of colour and column inches since he graced
That became apparent in 2017 with a the pages of PEI in our first edition. Who
string of leading fund managers unveiling could forget the holiday rap he recorded
their succession plans as the founders reach for investors back in 2014?
retirement age. The entrepreneurial spirit needed to
In July, KKR appointed Joe Bae and Handing over control: many firms have yet to found a firm in an alternative asset niche
address the issue publicly
Scott Nuttall as co-presidents and co- is not necessarily the same spirit required
chief operating officers, with co-founders to guide a publicly listed asset management
Henry Kravis and George Roberts, both We began to business.The challenge, as Rubenstein told
73, remaining co-chairmen and co-chief feel at some us in 2016, is to find someone with the
executive officers. A few months later, it creative mindset of an entrepreneur.
was Carlyle’s turn. Effective 1 January 2018, point that it’s Of course, Rubenstein, Conway, Kravis
co-chief executives David Rubenstein and time to hand the reins to and Roberts have not left the building: they
Bill Conway and chairman Daniel D’Aniello younger people are all still involved in their firms. And less
stepped back and Kewsong Lee and Glenn operational responsibility frees up time
David Rubenstein
Youngkin became co-CEOs. for more extracurricular activities – like
And in mid-November, Apollo Global rapping.
Management expanded its executive lead- Nevertheless, one can’t help feeling that
ership team by naming Scott Kleinman and as the founders of the industry take their
James Zelter as co-presidents, with the three steps away from the limelight, the industry
initial founders keeping their current roles. will lose some of its colour. n
TIMELINE
September October
“The PE industry is still very personalised, and not very Carlyle announces
institutionalised,” TPG’s David Bonderman says in a report. Kewsong Lee and Glenn
“Most of the big businesses are still run by their founders. Youngkin will become
There will need to be a generational change over time.” co-CEOs on 1 January
01 02 03 04 05 06 07 08 09 10 11 12 2017
July November
KKR appoints Joe Bae and Apollo Global Management expands its
Scott Nuttall as co-presidents leadership team by naming Scott Kleinman
and co-chief operating officers and James Zelter as co-presidents
4 private equity international annual review 2 017
A remarkable track record
of long-term growth.
An award-winning reputation.
Since launching in 2006, Gulf Capital has become one of the region’s most successful alternative investment
firms. We have built a track record of delivering long-term returns and industry-leading results that has made us
the firm of choice for regional and global investors.
www.gulfcapital.com
Firm of the Year Best SME Credit Best Private Equity Firm in the Middle East,
MENA 2014 Fund 2015 2011, 2012, 2013, 2014 and 2015
Best Alternative Investment Firm, 2016
STORIES OF THE YEAR
GROWTH STRATEGIES
GPs branch out
Private equity firms have turned to credit and sector-
specialisation to keep up with LP demands for capital
allocations over the past year, writes Alex Lynn
With vast amounts of capital being com- Hong Kong-based private equity firm
mitted to private equity funds in 2017, China Everbright and venture capital firm
general partners have branched out into Walden International are seeking $500 mil-
other strategies and geographies to ensure lion for their new private equity vehicle
this money is put to work. focused on the semiconductor industry.
Private credit has been among the most Apax Partners has also raised at least $1 bil-
common routes for strategic expansions lion for a vehicle targeting minority stakes
this year. In August, Chicago-based Thoma and buyout deals in high-growth software,
Bravo hired Jack Le Roy from Summit Part- internet and tech-enabled services compa-
ners amid plans to raise $750 million for the nies globally.
strategy. Texas-based The Sterling Group This year also saw the continuation of Growth areas: expansion is targeting new strat-
is raising its initial private credit vehicle the trend of firms looking at long-term egies and geographies
with a target of between $200 million and capital. More than one quarter of private
$250 million, sister publication Private Debt equity professionals believe long-life funds “We are starting to see Asian GPs –
Investor reported in August. will grow in popularity over the next five mainly from China where there are some
Zug-based Capital Dynamics is aiming years, according to Intertrust’s Private Equity huge firms – setting up teams in Europe
to hold a first close in Q2 for its first direct Market 2017 report. and the US,” Antoine Dréan, founder of
lending fund after launching a new private GPs also began looking further afield for placement agent Triago, says. “I wouldn’t
credit division in September. opportunities in 2017. be surprised if we see a mega-firm from
There were 23 first-time corporate Permira Advisers, one of Europe’s big- China acquire a group or groups in either
credit funds in market as of 12 December, gest private equity firms, was seeking $1.5 the US or Europe over the coming year.”
targeting at least $8.7 billion, according to billion for its debut Asia-focused vehicle, Strategic mergers and acquisitions are
PEI data. PEI reported in November. Chinese pri- an “increasingly common” means of achiev-
Many firms have launched sector-spe- vate equity giant CITIC PE appointed Réal ing broader geographic presence, Dréan
cific funds in order to differentiate them- Desrochers, former head of private equity notes. Notable examples include Paris-
selves from the competition, with health- at the California Public Employees’ Retire- based Eurazeo’s purchase of a 30 percent
care and technology vehicles among the ment System, to lead the firm’s expansion stake in New York-headquartered Rhône
most popular areas. in North America. Group in November. n
23 FIRST QUARTER MOST READ ONLINE
Number of first-time corporate 1. PEI awards: KKR, EQT among 6. Vista plots ‘long-life’ fund offering
credit funds in market in0 2017 the winners
7. SoftBank to acquire Fortress
2. Coller: shared ownership ‘biggest for $3.3bn
mistake’ new GP can make
8. CalPERS considers alternatives
3. Hamilton Lane files for IPO to PE model
$1.5bn 4. Carlyle paid nearly $48m
in clawback in 2016
9. SoftBank: ‘We are a small group
and can move very fast’
Target size of Permira’s debut 5. CalPERS’ PE advisor resigns 10. Axiom Asia smashes target with
Asia-focused fund over $1bn close
6 private equity international annual review 2 017
WHAT COUNTS
IS NOT
JUST WHAT YOU DO,
BUT
HOW YOU DO IT.
At Ardian, we strive to deliver quality investment performance
from the US$66bn of assets we manage or advise for clients.
We do this with a relentless focus on generating returns that are durable
and sustainable in the long term. The value created and results achieved
are shared with our investors, but also our partners, investee companies
As of September 30, 2017, Ardian has $66bn of assets under management
and their employees. That makes a difference.
@Ardian | www.ardian.com
Excellence. Loyalt y. Entrepreneurship.
Paris London Frankfurt Milan Madrid Zurich New York San Francisco Beijing Singapore Jersey Luxembourg
STORIES OF THE YEAR
FUND FINANCE
Credit line controversy
The use of subscription a commitment to a private credit fund man- investors to help ensure credit facilities are
aged by Alcentra over concerns about the used appropriately.
credit lines was one of the leverage facility used in the fund. In doing so, the association nudged the
most divisive issues in 2017, Howard Marks, the chairman of Oaktree debate in the direction of creating ‘indus-
writes Toby Mitchenall Capital Management, poured petrol onto try best practice’ (while also acknowledging
this sparking debate when he chose to focus that different fund types had differing credit
The use of subscription credit lines was one of his widely read memos on the topic facility requirements).
a defining debate among LPs and GPs in in April. Among the many aspects Marks As the debate rumbled on, PEI was gath-
2017.While it is nothing new for a fund to explored, the most notable ones pointed ering views from all parts of the private
use a credit facility to finance acquisitions, to the unknown risks that may result from equity ecosystem to get a better handle on
concern began to mount about the length the practice. how important an issue this was. What we
of time managers were leaving these facili- His note would later prompt a former found was an issue as divisive among limited
ties outstanding before calling capital from board member at the California Public partners as any we’ve covered during our
limited partners. Employees’ Retirement System, Michael 17 years of publishing. This is not because
In March, San Bernardino County Flaherman, to quiz the board about how investors seem genuinely worried about the
Employees’ Retirement Association, a Cali- much the pension understands the risks possibility of fund level leverage triggering
fornia pension fund with more than $8 bil- of credit facilities. In July ILPA released a the next financial crisis (they don’t), but
lion of assets under management, rescinded document offering a nine-point guide for because GPs who use long-dated lending
facilities to postpone capital calls can make
their performance look better than it oth-
erwise would.
LPs who, like these managers, strive
to maximise IRR tend to welcome the
approach. But if you are an investor who
focuses on the money multiple, and all you
can do with your uncalled cash is park it in
a zero-interest bank account while footing
the extra cost of the facility – well, then
you will be less inclined to applaud GPs for
Cash call: lending facilities are used to postpone capital calls perfecting the art. n
TIMELINE
February
July
ILPA gathers
ILPA issues
LP views on
April nine-point
fund finance
Howard Marks publishes guidance on
‘Lines in the sands’ memo the use of
credit lines
01 02 03 04 05 06 07 08 09 10 11 12 2017
May
What we found was an issue as
March Ex-CalPERS board
SBCERA rescinds Alcentra member asks for divisive among limited partners
commitment based on report on credit as any we’ve covered during our
credit facility line use 17 years of publishing
8 private equity international annual review 2 017STORIES OF THE YEAR
SECONDARIES
Blue chips are down with GP-leds
A handful of big-name deals pushed GP-led processes into the mainstream in 2017,
but questions around their planning and execution will dominate discourse going into
2018, says Rod James
Many were expecting 2017 to be the year Group, which in turn made a stapled com-
when GP-led secondaries processes truly mitment to the $800 million-target EQT
arrived, when big-name deals would cement Mid-Market Asia III. LPs who decided to
their role as a portfolio balancing tool, not part with their stakes received a 19.5 per-
just a cry of distress.These observers were cent net internal rate of return and a 1.8x
largely correct, as one big deal after another net money multiple.
came to the market. A process on Nordic Capital’s Fund VII,
In June it emerged that BC Partners, one a €4.3 billion buyout vehicle, had its first
of Europe’s biggest private equity houses, was bidding round in the last week of Novem-
considering using a stapled deal to help boost ber. The deal would involve moving the
fundraising for its €6.7 billion 10th fund. remaining 10 assets in the 2008-vintage
The process, which closed in Septem- fund, which has a net asset value of around
ber, involved secondaries firm Lexington €2 billion, into a multi-year continuation
All in: Blue-chip GPs are targeting secondaries
Partners buying around $700 million worth vehicle which would have a five-year term.
of stakes from 22 limited partners in BC The traffic has not all been one-way. In
European Capital IX, a 2011-vintage, €6.7
billion vehicle, at the same time as commit- 19.5% October Apax Partners decided against
carrying out a process on its €11.2 billion
ting around $300 million to Fund X. Net IRR for LPs 2007-vintage Apax Europe VII fund as it
in EQT deal
In October Warburg Pincus sold a $1.2 became clear that there was insufficient
billion strip of Asian investments from its investor support. Debate continues to rage
2012-vintage, $11.2 billion Fund XI, help- as to whether it is fair to propose a process
ing the firm reduce its exposure to the with no “do-nothing” option which would
region. Lexington and Goldman Sachs Asset
Management backed the deal.
$1.2bn allow LPs to continue with what they origi-
nally signed up to. As secondaries become
Size of Asian investment
In September EQT gave investors in sold by Warburg Pincus more mainstream, further debate regarding
its sixth and seventh flagship buyout funds how best to run such processes is likely to
the option to sell their stakes to Partners continue into the new year. n
TIMELINE
July October
Warburg Pincus taps Apax Partners decides not
Lazard to run the $1.2bn to proceed with process
sale of a strip of Asian on its seventh fund after
assets from its 11th fund push back from its LPAC
01 02 03 04 05 06 07 08 09 10 11 12 2017
June September November
BC Partners said to be EQT uses a secondaries deal First bids received for process
considering using a staple to on its sixth and seventh funds on 2008-vintage €4.3bn
help raise its €6.7bn 10th fund to help raise its $800m Asian Nordic Capital VII
mid-market fund
10 private equity international annual review 2 017PROUD 2017 WINNER OF TWO
PRIVATE EQUITY INTERNATIONAL
AWARDS
THANK YOU FOR YOUR
CONTINUED SUPPORT & VALIDATION
OF EATON PARTNERS.
PRIVATE EQUITY | PRIVATE CREDIT | REAL ASSETS | REAL ESTATE | HEDGE FUNDS
Eaton Partners, LLC | Member FINRA | A subsidiary of Stifel Financial Corp. | www.eatonpartnersllc.comSTORIES OF THE YEAR
DIRECT INVESTING
Finding their own targets
Limited partners bulked up
direct investment teams
and made large purchases
in 2017, says Adam Le
From sovereign wealth funds such as Abu
Dhabi Investment Authority, to pension
funds including Canada Pension Plan Invest-
ment Board and Ontario Public Services
Employees Union Pension Trust, to family
offices such as Man Capital or Chinese
fund of funds Gopher Asset Management,
making direct investments in private com-
panies has been “very hot”, the head of pri-
vate equity at a large pension fund told PEI. Direct hit: The Canadian pension funds were among those selecting their own deals
The reasons are varied. ADIA, the
world’s second-largest sovereign wealth Notable large deals by pension funds this barometer, the number of LPs planning to
fund, said in July it had increased its expo- year included CPPIB’s November acquisi- make direct investments has plateaued at
sure to direct private equity investments tion of a 30 percent stake in online insur- 31 percent, after jumping to 30 percent
amid fears of a potential drop in returns. ance business BGL Group and fellow pen- from 17 percent between summer 2006
It cited a combination of high valuations, sion fund CDPQ’s $400 million investment and summer 2012.
increasing competition and rising interest in Hyperion Insurance Group. The difficulty of making investments
rates in the US as potentially dampening LPs are, of course, bulking up their teams directly, as opposed to through a fund
future absolute returns for private equity, in order to make more direct investments, structure or co-investing with a GP, may
in its annual report for 2016. such as USS Investment Management, the have contributed to the levelling off of inter-
Others, such as Canada’s Caisse de dépôt investing arm of the UK’s Universities est in the strategy. Florida’s $196 billion
et placement du Québec, have cited the abil- Superannuation Scheme, which hired three State Board of Administration mulled going
ity to select the types of assets it feels will be investment professionals in October to help direct, according to documents published
more resilient amid a potential downturn. it pursue its continuing shift towards directs. at the beginning of the year. After robust
Sovereign wealth funds in general have But interest in the strategy may have internal discussion it ultimately passed on
been preparing to ramp up direct invest- reached its peak. According to second- the proposal, citing a lack of internal staff
ments. Almost half of SWFs surveyed in aries firm Coller Capital‘s bi-annual LP resources. n
PwC’s Sovereign Investors 2020 report
in 2016 said they would invest in targets SECOND QUARTER MOST READ ONLINE
directly, up from 21 percent two years 1. PEI 300: Blackstone claims top 6. Ex-CalPERs member asks for
earlier. spot credit-line report
“They want to do it on their own,” Babak 2. PEI 300 revealed: the industry’s 7. Ardian invests $2.5bn in
fundraising giants Mubadala deal
Nikravesh, a partner at Hogan Lovells and
3. CalPERS considers merging 8. Abraaj shifts focus from
one of the organisers of the inaugural Sover- PE with public equities regional funds
eign Investors Conference in NewYork, told 4. CPPIB: ‘We are part of too much 9. SoftBank Vision Fund:
Private Equity International in late November. money in Asia’ $93bn and counting
“Concretely, that means scaling up and put- 5. Blackstone launches retail 10. CalPERS cuts yearly costs by
channel nearly 40%
ting people on the ground.”
12 private equity international annual review 2 017» We are delighted that our
achievements have been
recognised by PEI’s readership Mid-market firm
of the year in Europe
and look forward to replicating
the success of the past year in
2018. «
Guillaume Jacqueau Exit of the year
Managing Partner, Equistone Partners Europe in Europe
www.equistonepe.com
© EQUISTONE PARTNERS EUROPE LIMITED
Authorised and regulated by The Financial Conduct Authority.STORIES OF THE YEAR
LEVERAGE
The rise of cov-lite loans “The sponsor and borrower can then
outline what steps they will take to remedy
the situation.That in turn allows lenders to
provide thoughtful, constructive solutions,
Should we be worried about the continued loosening of
including more time and capital.”
debt covenants, asks Isobel Markham In a cov-lite situation, the lenders are
forced to take a back seat, Schwimmer
Over the last 18 months, leverage has been performance of its businesses, covenants tells PEI.
creeping up to 2007 levels, but this time or not. Lenders are “praying for a correction”
around there’s an added element, something However, Randy Schwimmer, head of that will allow them to tighten up on terms,
which the private equity industry didn’t see origination and capital markets at credit Schwimmer says. A rise in interest rates
even in those heady pre-crisis days. asset management firm Churchill Asset would have more of a long-lasting impact.
Back in 2007, only 29 percent of institu- Management, makes the case in his research However, as Schwimmer points out, LIBOR
tional debt issued in the US was ‘covenant- paper The Case for Covenants that, if a busi- peaked at around 5.5 percent in 2007; in
lite’ – devoid of all maintenance covenants. ness starts to go downhill, it’s best for the September it was at 1.3 percent. “We’ve got
In Europe, the figure was just 7 percent, private equity house to bring the lender in a long way to go before we’re at pre-crisis
according to data from LCD, part of S&P on the discussion at an early stage. interest rate levels,” he says. n
Global Market Intelligence.
This has rocketed to 75 percent of
newly-issued institutional debt in the US
last year, and 60 percent in Europe.To look
at it another way, in January 2006, just 0.95
percent of outstanding leveraged loans in
the US were cov-lite. In July this year, that
number was 72.71 percent.
The attractiveness of cov-lite loans for
private equity buyers is clear: they offer
much more flexibility.The firms can pursue
expansion plans, add-on acquisitions, new
product roll-outs and the like without lend-
ers looking over their shoulders.
For the private equity house, cov-lite
loans are no more risky than those with
a full set of covenants. A prudent GP
will be closely monitoring the financial Rough ride: cov-lite loans put lenders at a disadvantage
TIMELINE
July October
72.7% of outstanding A healthcare services
US leveraged loans are company with EBITDA
cov-lite, up from 0.95% in $75m-$100m range
January in 2006 has a covenant capping
US Libor at 1.6% leverage at 9.5x EBITDA
01 02 03 04 05 06 07 08 09 10 11 12 2017
August December
Hellman & Friedman raises US Libor at 1.9%
$265m in cov-lite loans
to fund its acquisition of
SanpAV
14 private equity international annual review 2 017Fund V Acquisitions and Recent Disposals
Australia/New Zealand
$6B Transaction Value
iNova Allied Mills Patties Foods
Pharmaceuticals Bakery Products Savoury Baked Goods Manufacturer
Multinational Carve-Out Leveraged Buyout Public to Private
Sep 2017 Mar 2017 Sep 2016
MARKET SERVICES
Financial Services Private Education Fire & Video Security
IPO/Selldown Leveraged Buyout Trade Sale
Sep 2016 Apr 2016 Apr 2016
Natural Health Products Baked Goods Manufacturer
Private Vendor Corporate Carve-out
Dec 2015 May 2015
2017 Australasia – Firm of the Year, PEI Award
2016 Australasia – Firm of the Year, PEI Award
2016 Best Management Buyout $300 – $500M for Link Group, AVCAL Award
2016 Best Management Buyout >$500M for Energy Developments, AVCAL Award
2015 Australasia – Firm of the Year, PEI Award
2015 Best IPO for Link Group, FinanceAsia Award
2015 Best Management Buyout $300M – $500M for Hoyts, AVCAL Award
2015 Exit of the Year Large Cap for Spotless, AVCJ Award
2014 Australasia – Firm of the Year, PEI Award
2014 Asia-Pacific – Upper Mid-Market Winner for Peters Ice Cream, PEI Operational Excellence Award
2014 Australia – Best Management Buyout >$500M for Asaleo Care (formerly SCAHA), AVCAL Award
2013 Australia – Private Equity Firm of the Year, M&A International Global Award
2013 Asia-Pacific – Large Equity House of the Year, ACQ Global Award
2013 Australia – Private Equity Firm of the Year, ACQ Global Award
2012 Australia – Firm of the Year, PEI Award
www.pep.com.auSTORIES OF THE YEAR
SOUTH KOREA
Korean LPs to the fore
A low interest rate
environment and growth
in pension fund money
continue to fuel South
Korean LPs’ expansion
into alternatives, says
Carmela Mendoza
The South Korean investor landscape saw
great changes in 2017.
Several pension funds and insurance
Flying the flag: South Korea looks set to be a growing force in private equity as pensions try to boost
companies pledged to increase their expo-
returns
sure to alternatives this year as they face
public pressure to deliver higher returns. Benefit Association is plotting to expand Kyobo Life Insurance and Hyundai Marine
Korea’s largest pension, the 601 trillion its alternatives portfolio with an additional & Fire Insurance are also getting more
won ($550 billion; €466 billion) National 700 billion won into private equity. active in private equity and increasingly
Pension Service, said in March it is planning Korean pensions have been overweight favouring the North American and Euro-
to increase its holdings of foreign and alter- in fixed income – as much as 70-80 percent pean markets, according to PEI data.
native investments from 31.3 percent in of their portfolios historically. Because of Korean LPs are diversifying into new
2017 to up to 40 percent by 2021, follow- the sensitivity of interest rate movements strategies such as distressed debt and credit,
ing the Ministry of Strategy and Finance’s as well as the foreign exchange rate, Korean and a separately managed accounts have
asset allocation plans. pensions suffer more compared with other also grown in favour. Korea Scientists and
Other institutional investors are follow- global pensions. Engineers Mutual Aid Association plans to
ing NPS’s lead. By 2021 the 5.4 trillion won With pension fund sizes increasing, it has allocate $120 million to a separately man-
Government Employees Pension Service is become difficult to achieve required returns aged account for a multi-asset strategy by
set to allocate up to 24 percent of its total from investing in conventional fixed income year end. Hyundai Marine & Fire Insurance,
assets to alternatives, and the 14 trillion and bonds, which is prompting this move with $27 billion in assets, is also keen to
won Korea Teachers Pension Fund is plan- toward greater exposure to alternatives, expand its private equity and private credit
ning to allocate 40 percent over the next including alternative investments overseas. exposures via separately managed accounts
three years. Meanwhile the Public Officials Insurers such as Samsung Life Insurance, from its existing manager roster. n
TIMELINE
April October
Government Employees Pension Korea Scientists and
Service names Chang-hoon Lee, Engineers Mutual-aid
former head of Prudential Asset Association issues RFP
Management, as CIO for $120m SMA
01 02 03 04 05 06 07 08 09 10 11 12 2017
March May November
National Pension Service The Public Officials Korea Post Insurance Fund finalises
plans to increase foreign Benefit Association negotiations to allocate $100m
and alternative investments commits $40m to Apollo apiece to two global multi-strategy
to 40% allocation by 2021 Investment Fund IX FoFs
16 private equity international annual review 2 017STORIES OF THE YEAR
FUNDRAISING
Apollo’s mega-raise
The largest private equity fund of 2017 was unorthodox, writes Marine Cole
In many ways, Apollo Investment Fund IX, allows them to lower placement fees. For We cut people
Apollo Global Management’s ninth vehicle, Fund IX, Apollo spent just $3.5 million on
and its 2017 fundraising, nicely sum up the third-party placement agents, down from back to about
state of the current private equity market. $15.4 million for Fund VIII, which closed $25 billion
The fund was oversubscribed in a on $18.4 billion four years ago; and more because we thought
matter of months, illustrating the robust than $20 million for Fund VII.
fundraising environment. It plans to invest In an unusual strategy, Fund IX had no that’s what we could
more heavily in distressed debt opportu- specific initial target or hard-cap, which handle responsibly
nities – possibly a quarter of total capital some limited partners saw as a risk. Apollo Leon Black
– reminding us that the current economic initially said in its 2016 third-quarter earn-
cycle has reached a high and looks set to ings conference call that the size of Fund IX
turn a corner in the next couple of years. would be similar to Fund VIII. At launch, it as of 31 December. The mix of equity and
The process demonstrates how large verbally communicated to LPs that the fund distressed debt strategies was also attrac-
listed alternative asset managers have cre- would not exceed $20 billion – although tive, as it allows investors to cash in on both
ated internal fundraising machines, which it ultimately closed at nearly $25 billion. sides of the cycle.
Regardless of such unorthodoxies,Apollo’s Apollo co-founder Josh Harris told ana-
$248.9bn
fundraising process was quick and successful. lysts in April that its LP base is globalising,
Co-founder Leon Black indicated in particularly in Asia, the Middle East and
Apollo’s AUM as
early December that it received $30 bil- Europe, with North America representing
of December 2017 lion in demand in only six months. “We cut a little less than half of investors.
people back to about $25 billion because Apollo, which had $249 billion in total
we thought that’s what we could handle assets of the end of the year, will start
26% responsibly,” he said.
LPs were attracted by the performance
deploying the fund in early 2018. n
Net IRR of Fund VII of Fund VIII which has an unrealised net
THIRD QUARTER MOST
internal rate of return of 23 percent and READ ONLINE
Fund VII which had a 26 percent net IRR
1. The 10 largest H1 fund closes
2. Warburg Pincus to explore
secondaries process
3. Deutsche secondaries team
spins out
4. Committed capital fees
‘on the way out’
5. Apax runs GP-led process
on Fund VII
6. Family offices in five charts
7. GIC warns of investor
complacency
8. BC investors agree secondaries
deal with Lexington
9. EQT runs stapled secondaries
deal on Fund VI
10. CITIC PE to market $2bn fund
before year-end
Sky high: Apollo’s huge fund was oversubscribed by $5 billion
18 private equity international annual review 2 017ACL-2018.02.17
PROUD WINNERS OF
PEI 2017 AWARDS
Landmark Partners specializes in secondary market transactions
of private equity, real estate and real assets investments, with
approximately $22.0 billion of committed capital. Founded in
1989, the firm has one of the longest track records in the
industry and is a leading source of liquidity to owners of
Secondaries Deal of the Year in North America interests in real estate, real asset, venture, mezzanine and
buyout limited partnerships. Landmark Partners has more than
Secondaries Deal of the Year in Europe 100 professionals across four offices in Boston, London, New York
and Simsbury, Connecticut.
Boston | London | New York | Simsbury landmarkpartners.com
THIS IS NOT A SOLICITATION OR OFFERING. LANDMARK WAS SELECTED TO BE ON A LIST OF NOMINEES FOR THE AWARDS REFERENCED ABOVE BY THE EDITORIAL BOARD OF PRIVATE EQUITY INTERNATIONAL AND WAS SELECTED AS THE WINNER OF THE AWARDS THROUGH A VOTING PROCESS BY READERS OF PRIVATE EQUITY INTERNATIONAL. LANDMARK DID NOT APPLY FOR THE AWARD. THE
SELECTION OF LANDMARK TO RECEIVE THE AWARD WAS BASED IN PART ON SUBJECTIVE CRITERIA AND A LIMITED UNIVERSE OF CANDIDATES. THERE CAN BE NO ASSURANCE THAT A DIFFERENT EDITORIAL BOARD OR VOTERS MIGHT NOT HAVE SELECTED OTHER FIRMS OR TRANSACTIONS AS THE WINNERS. LANDMARK DOES NOT KNOW WHETHER IT HAS BEEN RATED BY THIS OR ANY OTHER
THIRD PARTY IN ANY WAY THAT WOULD CONFLICT WITH THIS AWARD. THE INFORMATION PROVIDED ABOVE IS SOLELY FOR INFORMATIONAL PURPOSES AND MAY NOT BE REPRESENTATIVE OF A PARTICULAR INVESTOR’S EXPERIENCE, NOR SHOULD THE INFORMATION BE CONSTRUED, OR RELIED UPON, AS ANY INDICATION OF FUTURE PERFORMANCE OF LANDMARK OR ANY OF ITS FUNDS.STORIES OF THE YEAR
ASIA
The rise of Japan
With structural changes in place, increased appetite from “Founder/owner successions have been a
large part of that and continue to drive a
LPs and strong dealflow, Japan will continue to be a lot of dealflow in the mid-market buyout
major market for private equity, writes Carmela Mendoza space,” he says.
Tsuyoshi Imai, a Tokyo-based partner at
Japan made headlines this year with mega- on a combined ¥168 billion ($1.5 billion; Ropes and Gray, adds that a lot of private
deals and oversubscribed fundraises, as pri- €1.4 billion). Final closings of more than $3 equity firms are bullish on Japan because
vate equity firms continue to cash in on billion were also held for Integral Group, of the strong exit activity in the last three
enhanced corporate governance standards, NSSK,Tokio Marine Capital, CITIC Capital to four years.
demographic shifts and a buzzing mid- and The Longreach Group, all of which will Folsom believes the penetration of pri-
market scene. mainly invest in Japan. Nomura Holdings is vate equity in Japan, which is just 5 percent
Consulting firm Bain & Company char- also back in private equity after a three-year of overall M&A activity, will grow further
acterised 2017 as one of the biggest years hiatus and is looking to seed a Japan-focused going forward. “That 5 percent could move
ever for Japan’s private equity market, on fund with $895 million of its own capital. to 10 percent in the future, which means
track to deliver its largest deal volume since Richard Folsom, co-founder of the size of the pie for private equity could
the 2008 global financial crisis. Deal value Advantage Partners, expects the strong double, opening a lot of room for new play-
climbed to $24 billion through September, investment activity to continue in 2018. ers in the market,” he says. n
an almost three-fold increase from the pre-
vious year’s $8.8 billion.
Global firms KKR and Bain Capital set
their sights on closing mega-deals – $18
billion for Toshiba’s memory chip unit, $4.5
billion for auto parts maker Calsonic Kansei
and $1.3 billion for Hitachi’s power tools
unit, among others.
Fundraising activity also soared this year,
with 12 Japan-focused vehicles raising more
than $4 billion, dwarfing the $350 million
that was raised in 2016, according to PEI
data.
J-STAR and Advantage Partners held
final closes for their latest buyout vehicles Bright prospects: private equity’s share of M&A is forecast to double in the future
TIMELINE
January May
KKR buys Hitachi Koki, Advantage November
Hitachi’s power tool Partners V closes Nomura Holdings
unit, for $1.3bn on ¥60bn returns to private equity
01 02 03 04 05 06 07 08 09 10 11 12 2017
April September
J-STAR No. 3 Bain Capital-led group
closes in on buys Toshiba’s chip unit
¥33.25bn for $18bn
20 private equity international annual review 2 017TEAM WORK Our investment professionals collaborate across continents as we are dedicated to giving our investors genuine global advice. Fund Investments Secondary Investments Co-Investments Partnership Investments alpinvest.com
STORIES OF THE YEAR
LONG-TERM FUNDS
Time on their side
Investors can expect more
vehicles with a life longer
than 10 years in 2018,
writes Adam Le
Long-term funds – vehicles with a life
longer than the traditional 10 years –
increased in popularity this year with the
arrival of several funds dedicated to the
strategy.
Long-term funds that held their final
close include Bain Capital spin-out Core
Equity Holdings, which raised €1 billion for
its debut vehicle in September, and Cove
Hill Partners, also founded by a Bain alum- Patient approach: holding assets for longer brings greater expertise
nus, which held a final close on its debut
vehicle in September on $1 billion. Other private equity firms are getting in Carlyle was also active during the year,
Proponents of the strategy argue the on the long-term action in different ways. making at least two investments from its
traditional private equity model is an out- KKR is seeking to acquire as many as 12 $3.6 billion Carlyle Global Partners vehi-
dated piece of technology that needs a long-term core investments from its bal- cle. Launched in 2015, the fund focuses on
revamp. By holding assets for longer, these ance sheet over the next five years, Scott long-dated investments in North America
managers believe they can gain deeper Nuttall, the firm’s co-president, said. KKR and Europe and holds six assets including
expertise in the industries they focus on completed the first of these with the $4.3 the March acquisition of ice products dis-
without having to sacrifice returns, as they billion acquisition of US insurance broker- tributor Arctic Glacier and the July pur-
would in an infrastructure-like fund. age and consulting firm USI Insurance Ser- chase of basin energy assets Hilcorp San
“Why would you sell a business that vices alongside CDPQ in March. Juan.
you know, a team that you like, a strategy Blackstone, which raised $5 billion for Apollo Global Management plans to
that you’ve helped devise, [when] you keep its Core Equity Partners long-term vehicle, launch a long-term equity and credit vehi-
generating the sorts of returns you want to made investments from the fund this year cle, it announced in December. Named
generate?” Core Equity partner Alain Stoes- including music rights organisation SESAC Hybrid Value, the fund will aim to deliver
sel told PEI in June. Holdings in January. returns in the mid-teens. n
TIMELINE
March Why would you sell a business that September
Carlyle’s long-term you know, a team that you like, a Core Equity
fund acquires Arctic strategy that you’ve helped devise, and Cove Hill
Glacier hold final closes
[when] you keep generating the sorts on their debut
of returns you want to generate?” vehicles
01 02 03 04 05 06 07 08 09 10 11 12 2017
January July December
Blackstone’s $5bn Carlyle fund Apollo announces
Core Equity Partners acquires Hilcorp plans for Hybrid Value
fund invests in SESAC San Juan assets long-term vehicle
22 private equity international annual review 2 017DEVELOPING COMPANIES
ACROSS THE GLOBE
A LEADING INVESTMENT FIRM
www.eqtpartners.comSTORIES OF THE YEAR
INVESTING IN GPS
Grabbing a slice of the PE pie
General and limited partners have been snapping up Chas Burkhart told PEI in November. It
instead plans to launch a$200 million per-
manager stakes during 2017, writes Alex Lynn manent capital vehicle of “unconstrained
duration” by the second quarter of 2018.
Private equity firms are finding that, rather October and had been expected to hold a In July, Blackstone acquired a minor-
than doing the deal, they are the deal, as first close on $2 billion in December. ity stake in buyout firm Leonard Green
specialist funds and other asset managers Goldman Sachs Asset Management is & Partners through its Strategic Capital
see the value in the GP model. understood to be raising at least $1.5 billion Holdings fund, a $3.3 billion permanent
A number of firms who raise capital for its second Petershill fund, which will capital vehicle focusing primarily on hedge
for the strategy – acquiring stakes in asset acquire stakes in hedge funds and private fund managers.
managers primarily to access a share of equity firms. Meanwhile, Hycroft Capital Likewise, Eurazeo, which uses perma-
management fees and carry across all the is aiming to raise at least $750 million for nent capital, acquired a stake in NewYork-
target GP’s vehicles – have enjoyed a strong its debut fund. based Rhône Group in November, and then
year of fundraising. Dyal Capital Partners’ The fund of firms model is by no means a majority stake in Paris-based Idinvest in
fourth fund, for example, had secured $1 new. Pennsylvania-based Rosemont Invest- February 2018.
billion of commitments as of the end of ment Partners was an early adopter of the With this flurry of activity late in the
model, having first raised such a vehicle year, the trend shows little sign of slowing
in 2000. down in 2018. However, the depth of the
And just as the private equity model has exit market remains to be seen, Virginie
In some cases,
evolved to welcome more long-term funds Bourel, partner and head of strategic advi-
the funds are or permanent capital vehicles, so too have sory at placement agent and advisory firm
looking at an funds of firms. Rosemont, which has so far Triago, tells PEI.
IPO for the management raised three closed-ended funds targeting “In some cases, the funds are looking
minority equity stakes in other investment at an IPO for the management company;
company management businesses, has scrapped the it could be one by one or a combination of
Virginie Bourel traditional fixed-term fund model, founder several,” she says. n
FOURTH QUARTER MOST
READ ONLINE
1. Blackstone is moving towards
permanent capital
2. 10 new firms making waves
in 2017
3. CDPQ poaches PSP private
equity senior director
4. Introducing the Private Equity
Hall of Fame
5. Apax pulls GP-led deal
6. Carlyle names successors
as co-founders step aside
7. PEI Awards 2017:
let the games begin
8. Apollo’s child prodigy
9. LPs face huge risks on
co-investments
10. Fundraising continues
to outstrip 2016
Tempting target: funds are looking to buy stakes in GPs
24 private equity international annual review 2 017proud
satisfaction from the achievements
of those you are close to
€12 billion closed for 10 clients in 2017
We are proud of what our clients have achieved in 2017,
resulting in our team being recognised by the industry
through this award
Thank you to all our clients, investors, industry partners and peers
This award demonstrates the strength of our model, approach and
team and we wanted to thank everyone who helped us to make our
vision a reality
rede-partners.com
London Office 3rd Floor, 110 Park Street, London W1K 6NX +44 20 7952 2460 info@rede-partners.com
New York Office 12 E 49th St, 17th Floor, New York, NY 10017 +1 (646) 982-1638 info@rede-partners.comSTORIES OF THE YEAR
FIRST-TIME FUNDS
Making waves in 2017
From Sydney to Boston,
a slew of firms made
a splash with their first
vehicles last year. We
profile the top debut
fundraises
Raising a first-time fund is never an easy
task, but limited partners’ insatiable appe-
tite for private equity coupled with a desire
to get in there early with potential future
winners has made this year a good time
for established teams with a strong track
record to try their luck. Here’s a compila-
tion of some of the top debut fundraises
by emerging managers.
SPINNING OUT
OF AUSTRALIA’S GIANT
Adamantem Capital
Founded in July 2016 by Anthony Kerwick
and Rob Koczkar, former managing direc- manufacturing, high-end equipment, GOING LONG (US VERSION)
tors at Pacific Equity Partners, Adamantem advanced materials, medical technologies Cove Hill Partners
Capital is expecting to hold a final close and environmental protection technolo- Bain Capital veteran Andrew Balson
on its debut fund on around A$600 mil- gies looking to expand their businesses into raised more than $1 billion this year in a
lion ($456 million: €385 million) to invest China.The firm closed its debut fund on its few months for his new long-term private
in mid-market opportunities in Australia $1 billion target, with China Investment equity fund, Cove Hill Partners Fund I,
and New Zealand. The founders were hit Corporation as an anchor investor. which has a 15-year life span. Boston-based
with a lawsuit by PEP in April alleging the Cove Hill Partners, which Balson founded
Adamantem team might have used confi- GOING LONG (EUROPE VERSION) after working for 17 years at Bain Capital,
dential information such as the financial Core Equity Holdings collected money mostly from family offices,
performance of PEP’s funds and portfolio The Brussels-based firm closed on $1 bil- university endowments and foundations
companies in its fundraising materials, but lion for Core Equity Holdings I, a 15-year to make five to eight investments in the
PEP lost its case in late September. life structure that aims to invests between consumer and technology sectors in North
€200 million and €500 million of equity in America.
WHERE EUROPE AND ASIA MEET three to five deals.The four main partners,
AGIC Capital who together have more than five decades THE APOLLO
Founded in 2015 by ex-Deutsche Bank of combined experience in private equity OF THE LOWER MID-MARKET
executive chairman Henry Cai, Asia Ger- – most of it at Bain Capital, have collected Gamut Capital Management
many Industrial Promotion Capital targets capital from North American and European Former Apollo Global Management senior
investments in European small and mid- endowments, foundations and large family partners Stan Parker and Jordan Zaken
cap companies specialising in intelligent offices. launched mid-market firm Gamut ››
26 private equity international annual review 2 017STORIES OF THE YEAR
›› Capital Management in 2015 and held
a final close on their debut fund Gamut
Investment Fund I on $1 billion, ahead of
its $750 million target, at the beginning
of 2017. Their aim is to replicate Apollo’s
strategy of investing in buyouts, carve-outs
and distressed-for-control investments in
the lower mid-market.
DEUTSCHE SECONDARIES VETERANS
Glendower Capital
The secondaries team, led by Carlo Pirzio-
Biroli, Charles Smith, Adam Graev, Chi Summa Equity: trend spotting in the Nordic region
Cheung and Deirdre Davies, spun out of
Deutsche Bank in the summer and will ($211 million: €198 million) for its debut FOLLOWING NORDIC MEGA-TRENDS
continue to advise on existing assets. The fund, which will invest A$15 million-A$40 Summa Equity
firm also planned to pre-market Glendower million in local mid-sized companies with Set up in 2016 by five partners – Reynir
Secondary Opportunities Fund IV in the enterprise values of up to A$100 million Indahl and Johannes Lien, formerly at Scan-
autumn, seeking between $1.5 billion and across a broad range of industries in Aus- dinavian private equity house Altor,Tommi
$2 billion, indicating it will be in full fun- tralia and New Zealand. Unkuri and Jenny Keisu, formerly at Nordic
draising mode in 2018. Meanwhile, it has Capital, and Christian Melby, formerly at
already closed a couple of deals, purchasing OPERATIONS-HEAVY Norwegian firm Norvestor Equity – Nordic
two stakes in Duke Street Capital’s sixth CARLYLE SPIN-OUT lower mid-market firm Summa Equity
fund from Kuwait Investment Authority. Stellex Capital Management smashed through its initial SKr3.3 billion
The mid-market private equity firm ($372 million; €349 million) target to close
ZEROING IN ON AUSTRALIA’S launched by two former Carlyle execu- its debut fund on SKr4.3 billion.The “mega-
MID-MARKET tives held a final close on its first fund in trend driven” firm follows four investment
Odyssey Private Equity the summer after nearly two years of fun- themes: resource scarcity, energy efficiency,
Former Quadrant Private Equity co- draising, raising $870 million, ahead of its changing demographics and tech-enabled
founder George Penklis teamed up with $750 million target. The Teachers’ Retire- businesses.
three former CHAMP Ventures executives ment System of Texas was an early backer,
– Gareth Banks, Jonathan Kelly and Paul committing $50 million in November 2015 TARGETING UK BUSINESSES
Readdy – to set up Odyssey Private Equity to the fund raised by founding partners Ray Tenzing Private Equity
in 2016. The firm raised A$275 million Whiteman and Michael Stewart. Founded in January 2015 by Guy Gillon
and Rob Jones, who both have experi-
ence investing with special situations
investment firms, and Christian Hamil-
ton, a former partner at UK mid-market
firm Inflexion Private Equity, UK lower
mid-market firm Tenzing closed its debut
fund on its £200 million ($269 million;
€227 million) hard-cap after just three
months in market. The fund is targeting
buyout investments in UK businesses with
enterprise values of between £10 million
and £50 million with high organic growth
Odyssey Private Equity: backing mid-market deals in Australia prospects. n
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