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BC Partners eyes 3.1x return on Presidio exit; Capital flows slow to small buyouts as exits stay strong

Morning Hubsters!

This is Chris, on for Wire Wednesday.

I’ve been fully immersed in the emerging manager world the past few weeks, and some interesting angles have emerged from my numerous conversations.

One we’ll touch on today is the exit and return potential for emerging and small buyout funds. Simply put, the exits are there, and will continue to be there for smaller shops, which is not the case at the larger end of the market. More on that below.

But first, some deal news …

• BC Partners leveraged increased demand for increasingly complex IT services to grow Presidio

• Private equity and healthcare: a bitter pill to swallow?

• HighVista to beat target on 10th fund for ‘unusually compelling opportunity’ in small buyouts

Exit

BC Partners announced the exit of Presidio, which provides secured cloud-based IT services, in April. The firm grew the investment organically and through tuck-in acquisitions and will retain minority interest in the company once the sale closes, according to Fahim Ahmed, a partner at BC Partners, who spoke with PE Hub’s Rafael Canton. Read more here on PE Hub.

Healthcare

Regulatory scrutiny is heating up on private equity’s investments in healthcare. Adam Brown, a practicing emergency physician and founder of the healthcare growth strategy firm ABIG Health, thinks the proficiency of private equity firms in navigating regulatory complexities is a crucial determinant of future success in the industry, according to a recent article in PEI.

Read the whole story by Private Equity International’s Carmela Mendoza on PE Hub.

Small buyouts

As several firms bring fresh pools of capital into the small and emerging manager segment, a recent report from StepStone Group titled “Pound the Table for Small Buyouts” makes the case that LPs should be focused on this segment for its return potential and easier paths to exit. Small buyout funds sold 5.9 percent of their investments through the first three quarters of 2023 and nearly 9 percent in the LTM period ended in the third quarter of 2023, the report said.

That’s it for me! Hit me up at christopher.w@pei.group with tips n’ gossip or find me on LinkedIn.

Read the full wire commentary on PE Hub ...

Also of note (may require subscriptions)

HighVista Strategies is expected to announce the closing of its 10th flagship private equity fund, which backs small and emerging managers both through fund commitments and directly investing alongside them. (Buyouts)

KKR opts to trust the process: While markets lose their heads, KKR’s Pete Stavros and Nate Taylor ignore the noise and zealously embrace their ‘linear deployment’ strategy. (Buyouts)

Unity Partners, led by former HGGC partner John Block, is targeting $300 million for a debut mid-market buyout offering, sources told Buyouts.

Private equity firms are seizing opportunities in the skincare sector across Central and Eastern Europe, buoyed by factors such as growing wages pushing up disposable incomes, Leszek Muzyczyszyn, senior partner at Innova Capital, told PE Hub Europe.

Pantheon, the fourth-largest Europe-headquartered secondaries firm according to the SI 50 ranking, will ramp up its secondaries offering under the leadership of incoming chief executive Kathryn Leaf. (Secondaires Investor)

Private Equity International is out with its annual special report on the Future of Private Equity, exploring the mega-trends, market dynamics and up-and-coming talent shaping the future of the asset class. Included is its can't-miss "40 under 40: Future Leaders of Private Equity" list, highlighting 40 young professionals making their mark on the industry.

PERE is out with its Real Estate Debt 50, ranking the largest capital raisers in the real estate debt space.

The appeal of the recycling industry for infrastructure investors is clear. Waste management is undeniably an essential service, and revenues are immune to both economic cycles and black swan events such as the pandemic. The recycling industry also benefits from high barriers to entry, as well as stable and predictable cashflows. (Infrastructure Investor)

After the strong performance of private credit markets post-pandemic, European markets saw a slowdown in 2023 with fundraising and deal volumes falling back. But market participants expect a stronger year in 2024. Private Debt Investor's regional guide profiles all the major markets, and explains why France is consolidating its place as number one for private debt in Europe.

Canada’s quest to recharge its growth trajectory: After a couple of years of slower growth, Canada’s venture system is re-energized and poised to resume its expansion. (Venture Capital Journal)

The SEC’s successful prosecution of a first-of-its-kind “shadow trading” case changes private equity managers’ risk calculus, experts warn. (Private Funds CFO)

They said it

“There’s an increasingly big role for private equity in the healthcare market. It’s both a source of funding and of spurring on efficiency in healthcare businesses, and a source of innovation.”

— Arvin Abraham, a partner in Goodwin’s private equity group, talks about private equity and healthcare investing.