| | | | | | | Good morning! We're in the middle of a heat wave here in NYC. I'll get right to our morning topic before I melt. Private equity, for the most part, has backed away from investing in gun companies. This is where I typically put in the data to shock you about the escalating violence. But we've all read/heard this a million times. Instead, I'm going to talk about Remington Outdoor, which is o ne of the more notorious PE investments in the sector. Remington Outdoor, in case anyone has forgotten, is owned by Cerberus Capital. I n 2012, Adam Lanza used an AR-15-style Bushmaster semiautomatic rifle to kill 20 children and six adults at the Sandy Hook Elementary School in Newtown, Connecticut. More recently, one of the assailants at the San Bernardino shootings in December used a DPMS AR-15 semiautomatic rifle, a spokeswoman for the Bureau of Alcohol, Tobacco, Firearms and Explosives said. Remington Outdoor owns the Bushmaster and DPMS brands. In May 2015, Cerberus offered to let its LPs sell their stakes in the company. Many investors took Cerberus up on its offer while some it's not so clear. There are still some PE firms that invest in the sector. Consider White Wolf Capital of Miami. Elie Azar, a former Cerberus executive, founded White Wolf in September 2011. White Wolf mainly acquired gun parts makers until February when it bought Stag Arms, which is known for making AR-15 type rifles. Azar said its regulation that is causing PE to pull away from the sector. The U.S. firearms sector is one of the most highly controlled and regulated industries in the country, Azar said in an emailed response to questions. The industry is subject to numerous legal requirements at the federal, state and local levels, Azar said. The sector, he said, is highly cyclical with boom periods followed by down cycles. The intense media scrutiny of gun companies has a "pull forward" effect, he said. Consumers will make purchases in the very short term that they would otherwise have delayed to a later time, he said. "At the end of the day, I view the impact of the heated debate on gun control as an exogenous stimulus that doesn't really help the industry in the long term and if anything, makes it more challenging to deliver consistent returns," Azar said. Big M&A News: Verizon made it official and has agreed to buy Yahoo's operating business for approximately $4.83 billion in cash. Reuters is reporting that Yahoo's Marissa Mayer plans to stay. Read the story here. News from Buyouts/PE HUB: Chris has a story on why many LPs hold their noses as they approve fund restructuring and give GPs more time to harvest investments. Read it here. Steve Gels has a story on Oaktree Capital Group's mezzanine team, which has drawn a loyal following from middle-market private equity firms. Check it out here. Brad Woolworth, former chief investment officer of Philadelphia Board of Pensions and Retirement, is now working on private equity at New York State Teachers' Retirement System, Chris is reporting. Check it out here. Housekeeping: Are you a single or multi-family office looking for co-investment opportunities from emerging managers? Take our brief survey to get your listing in our directory of family offices. Any comments, thoughts or complaints please send them to me at lbeltran@buyoutsinsider.com. -Luisa | | Today's Take | | | PE HUB First Read First Read begins the week with news that Verizon is buying Yahoo's internet business, WikiLeaks has published over 19,000 DNC emails containing personal information, and former KKK leader David Duke said he's going to run for the Senate, PE HUB Second Opinion Second Opinion closes out the week with depressing news of yet another shooting rampage in Europe, this time in a Munich mall. L'Oreal also agrees to acquire IT Cosmetics for $1.2 billion and Amazon's Jeff Bezos has displaced Warren Buffett as the third richest person in the world. Verizon emerges as front-runner in Yahoo auction, say sources: Reuters Yahoo Inc (YHOO.O) is focusing on U.S. telecommunications company Verizon Communications Inc (VZ.N) as the buyer of its core business after reviewing final bids that it received this week, sources told Reuters. Guns lose favor with private equity as shooting victims multiply Gun companies were once big business for private equity firms. But the mass shootings of recent months and years have caused the sector to lose favor with many sponsors, which cite reasons including the public outcries after the attacks; pressure from limited partners, including public pension funds; concern for socially responsible investing, and increased weapons-industry regulation. Sales of... Fear of 'crexit' doesn't hinder mounting leverage: S&P During the past several years of rock-bottom credit prices, the stock market routinely sold off on any sign that the U.S. Federal Reserve might lift interest rates. Former Fed chief Ben Bernanke signaled an intention to do this back in 2010, and the market acted like a wailing baby cutting its first tooth. If the Fed... Market at a glance U.S.-based buyout and mezzanine fundraising climbed about $4.7 billion over the past two weeks, bringing the yearly aggregate to $99.6 billion. The total now sits $31.7 billion — or around 24 percent — below this time in 2015. A cadre of funds reached the end of their fundraisings. Kelso & Co shut the door on Kelso... Chart of the week: Management fees are biggest gripe among LPs Preqin's 2016 Private Capital Fund Terms Advisor report showed that nearly two-thirds (64 percent) of LPs surveyed said GP management fees was the No. 1 issue they'd like to see improved. Increased transparency at the fund level came in second with 47 percent and performance-fee amount finished third with 42 percent. LP Scorecard: Florida's bets on Apollo, Carlyle paying off in spades State Board of Administration of Florida is one of the nation's largest retirement systems, but it wasn't until recently that it released detailed reports of its investment data. What Buyouts found out was that it is also a highly lucrative retirement system. And headlining that prosperity are Apollo Global Management and Carlyle Group. Apollo and... GP Profile: Oaktree's mezz team prides itself on repeat business Since Oaktree Capital Group launched the Oaktree Mezzanine Finance strategy in 2001, it has drawn a loyal following from middle-market private equity firms by building up long relationships in both good times and bad. Bill Casperson and Raj Makam, both managing directors and co-portfolio managers, spoke with Buyouts in the firm's Midtown Manhattan headquarters about the loan... Need to Meet: Brian Lenihan, co-chair of PE group, Choate Hall & Stewart Lawyer Brian Lenihan got his start in the tech world during the dot-com bubble, he recalled, "doing typical venture capital transactions." Before long, Lenihan was getting bored with these types of deals. At the same time, as the 2000s began, his clients were "starting to mature, in terms of their looking at larger and larger... Chart of the week: Limited partners wield power in fundraising The upper hand in fundraising is a perpetual see-saw between limited partners and general partners. But this year's annual Private Capital Fund Terms Advisor from Preqin shows LPs currently have the clout. Two-thirds of LPs claimed that fund terms and conditions were an impediment to them investing. Editor's Letter: Weighing restructuring against millions in fees Here's an eye-catching number that helps explain why many LPs hold their noses as they approve fund restructurings and give GPs more time to harvest investments in funds that may not earn a return for existing investors: First Reserve has collected more than $500 million in fees in Fund XI, which closed on $7.8 billion... Talking Deal Prices: Siris outbids strategic for Polycom; Angeles Equity keeps PPMs low Cash-flush strategic bidders tend to win auctions over private equity firms for publicly traded companies. But at least one recent exception is the videoconferencing company Polycom Inc. On July 8, Polycom opted for Siris Capital's take-private deal of $12.50 a share cash and rejected an earlier cash-and-stock offer from a strategic rival, Mitel Networks Corp, initially valued at $13.68... On the move, 7.25.16 PRIVATE EQUITY FIRMS Avante Mezzanine Partners hired Amanda Kim as an associate. Kim is a former associate at Goldman Sachs's alternative investment and manager selection group. BelHealth Investment Partners beefed up its team. Joining the healthcare-focused PE firm are Michelle Gallegos as controller, Bryan Assael as director of compliance and Peter Gurny and Alex Wood as associates.... Five Questions with Preeti Bhattacharji, director of strategic initiatives, Heron Foundation Heron Foundation launched in 1992 with a mission to help people help themselves out of poverty, with a focus on the U.S. The New York City-based private foundation has decided to redirect its financial holdings into impact investments. How's that going? We manage about $280 million. Clara Miller, our president, said every dollar we have needs... UMich commits millions to energy, oil & gas The University of Michigan disclosed almost $100 million of new commitments to private equity and venture capital in its July 21 meeting materials. Almost half the $9.9 billion endowment's new commitments went to energy- or oil- and-gas-related assets, including a new natural-gas-exploration partnership called Terra Energy Partners. University of Michigan committed $20 million to Terra... Ex-Philadelphia pension CIO joins NYSTRS private equity team Brad Woolworth, former chief investment officer of Philadelphia Board of Pensions and Retirement, is now working on private equity at New York State Teachers' Retirement System. Woolworth joined New York State Teachers' in April as manager of private equity, NYSTRS spokesman John Cardillo said. It's unclear whether he succeeded anyone. The system didn't publicize the... IPO Aftermarket: Analysts remain hopeful Twilio debut sparks more tech IPOs Aeglea BioTherapeutics remains the lowest performing VC-backed company to debut this year Venture-backed stocks pull back a little The PVCI ended June at 906.22 points | | NETWORKING...CAPITAL...DEALS Early pricing thru 7/15 at mandaeast.com Save $45 on general registration, discount code pehub16 1,300 middle market dealmakers 80% generated deal leads $125 billion in capital under one roof 1,000+ 1:1 deal meetings 80% of attendees are VP, Partner, Director |
| | | | VC Deals | | | Renovate Simply closes seed round Renovate Simply has closed its seed round. Financial terms weren't disclosed. Digitech Venture Capital Fund Inc, Digitech Venture Capital Fund Inc and a number of angel investors took part in the round. Austin-based Renovate Simply is a website that connects homeowners to contractors. | | PartnerConnect West will return this year with three insightful tracks: Buyouts West (9th year), Venture Alpha West (6th year) and the Private Real Estate Summit (4th year). Over 60 panels Over 500 delegates Over 150 Limited partners Over 300 fund managers, bankers, lenders and intermediaries All in one place dedicated to networking on a personal level. |
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| | | | | Goldman Sachs to invest $184 million in Brazil storage company, says executive: Reuters Goldman Sachs Group Inc (GS.N) will invest 600 million reais ($184 million) in Brazilian storage company Metrofit over the next 6 years, betting on a recovery from the harshest recession since the 1930s, a company executive told Reuters. ICV buys Universal Turbine Parts ICV Partners has acquired Alabama-based Universal Turbine Parts LLC, a provider of turboprop aircraft engines and engine parts. No financial terms were disclosed for the transaction that was done in partnership with Farol Asset Management LP, which is advised by Neuberger Berman Private Equity. PSP Investments and Ontario Teachers' to buy Santander's stake in Cubico The Public Sector Pension Investment Board and Ontario Teachers' Pension Plan will acquire Banco Santander's stake in London-based Cubico Sustainable Investments Limited, an energy and water infrastructure company. No financial terms were disclosed. Ardian invests in Jechange Ardian has acquired a minority stake in France-based utility comparison service Jechange. No financial terms were disclosed. China Resources, Macquarie team up to buy control of Australia healthcare firm GenesisCare: Reuters Chinese state-owned conglomerate China Resources Group and Australian bank Macquarie Group Ltd plan to buy majority control of GenesisCare Ltd, laying the groundwork for Australia's biggest cancer and cardiac services provider to expand into the world's second-largest economy, Reuters reported. EQT launches sale of part of Bilfinger unit weeks after purchase, say sources: Reuters Swedish private equity group EQT has put up for sale part of the real estate services business it bought from Germany's Bilfinger for 1.2 billion euros ($1.3 bln) less than two months ago, sources told Reuters. LVMH arm buys slice of Seoul cosmetics firm CLIO as South Korea beauty business booms: Reuters An investment arm of French luxury goods giant LVMH (LVMH.PA) said it took a minority stake in South Korea's CLIO Cosmetics, swelling the ranks of global investors placing a bet on booming demand for Korean beauty products in major markets like China, Reuters reported. Douglas acquires Quantum Fuel Systems Douglas Acquisitions has acquired Lake Forest, California-based Quantum Fuel Systems Technologies, a provider of compressed natural gas fuel systems. No financial terms were disclosed. | | ExecConnect: Where Great Networking equals Saving Time & Money!
At all PartnerConnect events, LPs and GPs gather in 1:1, 20 minute, private meetings put together through our ExecConnect program. Saving you both time and money, this is a great time for both parties to decide if they will advance their discussion to a second meeting. Interested in joining our ExecConnect database? Sign up here |
| | IPOs | | | | | PE-backed TPI debuts IPO TPI Composites, a maker of composite wind blades for the wind energy sector, has raised almost $69 million for its IPO after pricing its 6.25 million shares at $11 per share. The stock began trading July 22, 2016 on the NASDAQ under the ticker symbol "TPIC." J.P. Morgan and Morgan Stanley are serving as the lead underwriters. TPI's backers included Element Partners, Landmark Partners, NGP Energy Technology Partners, Angeleno Group and GE Capital. | | | | | | | Corporate raiders seek Brexit bargains in Britain: Reuters Overseas buyers lured by a plunge in the pound are looking to snare British companies on the cheap, ensuring a steady flow of deals since Britain voted to leave the European Union and defying expectations of an M&A drought, Reuters News reported. LVMH sells loss-making Donna Karan to G-III in $650 million deal: Reuters French luxury group LVMH (LVMH.PA) is selling Donna Karan International, the parent of New York label DKNY, to U.S. clothing firm G-III Apparel Group (GIII.O) in a deal valuing the loss-making fashion brand at $650 million, Reuters News reported. Verizon to announce $5 billion deal to buy Yahoo on Monday: Reuters Verizon Communications Inc (VZ.N) will announce an agreement on Monday to buy Yahoo Inc (YHOO.O) for about $5 billion, Reuters News reported. Genstar-backed Pretium buys Custom Blow Molding Pretium Packaging, a portfolio company of Genstar Capital, has acquired Escondido, California-based Custom Blow Molding, a provider of plastic containers for the sports nutrition market. No financial terms were disclosed. Mesirow Financial advised CBM on the transaction. L'Oreal to acquire TSG-backed IT Cosmetics for $1.2 bln L'Oreal has agreed to buy makeup and skincare brand IT Cosmetics, which is backed by TSG Consumer Partners. The price of the acquisition is $1.2 billion. Goldman Sachs, Piper Jaffray & Co and Financo LLC provided financial advice to TSG on the transaction. Verizon emerges as front-runner in Yahoo auction, say sources: Reuters Yahoo Inc (YHOO.O) is focusing on U.S. telecommunications company Verizon Communications Inc (VZ.N) as the buyer of its core business after reviewing final bids that it received this week, sources told Reuters. Verizon nearing deal to acquire Yahoo's core business: Bloomberg Verizon Communications Inc (VZ.N) is the lead bidder to acquire Yahoo Inc's (YHOO.O) core business, Bloomberg reported on Friday. Bain-backed QuVa Pharma acquires biotech facility in New Jersey QuVa Pharma, Inc. agreed to acquire a biotech pharmaceutical facility in New Jersey. Financial terms were not disclosed. QuVa has been backed by Bain Capital since the firm made a majority equity commitment in August 2015. | | Firms & Funds | | | | | 500 Startups has first close on $15 mln Turkish fund: Update 500 Startups said it has closed on more than $6 million of the $15 million Turkish fund it announced last October. Revel Partners collects over $20 mln for second venture fund Revel Partners has raised over $20 million for its second venture fund, according to an SEC filing. The target is $50 million. Goldman Sachs to raise first PE fund since financial crisis: WSJ Goldman Sachs plans to launch its first private-equity fund since raising $20 billion for GS Capital Partners VI in 2007. West Street Capital Partners will have a target between $5 billion and $8 billion, with the bank investing only a small amount of its own capital, in compliance with Dodd-Rank regulations. | | Human Resources | | | | | HKW promotes two Hammond, Kennedy, Whitney & Company has promoted Kent W. Robinson as a principal of operations and Ryan M. Grand as a vice president of deal generation. The appointments became effective July, 18, 2016. Robinson first joined HKW as a vice president of operations in April 2015 while Grand came on board as a manager of deal generation in April 2014. Scientific Ventures' Mark Templeton passes away at 57 Mark R. Templeton, the managing director of venture firm Scientific Ventures, died on July 17, 2016, in a boating accident. He was 57. Templeton was the former president and co-founder of Artisan Components. | | Odds & Ends + Hot Links | | | | | PE HUB First Read First Read begins the week with news that Verizon is buying Yahoo's internet business, WikiLeaks has published over 19,000 DNC emails containing personal information, and former KKK leader David Duke said he's going to run for the Senate, PE HUB Second Opinion Second Opinion closes out the week with depressing news of yet another shooting rampage in Europe, this time in a Munich mall. L'Oreal also agrees to acquire IT Cosmetics for $1.2 billion and Amazon's Jeff Bezos has displaced Warren Buffett as the third richest person in the world. PE-supported youth charity Capital for Children awards over $147K to nine nonprofits Washington, DC-based local youth development charity Capital for Children, which is supported by the private equity community, has just awarded $147,500 in new grants to nine nonprofits in the area. Among the recipients are The Literacy Lab and Horizons Greater Washington, both of which received $20,000 each. Since its founding in 2007, Capital for Children has donated $1 million to 12 nonprofits. Ken Doyle, senior partner at The Halifax Group, is the president of Capital for Children. |
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