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Schwarzman outlines Blackstone’s 'innovation machine;' THL’s Josh Nelson discusses 'valuation correction'

Happy Fri-yay dealmakers! Aaron here on the Wire.

I don’t know about you, but it sure seemed like things picked up this week, and I am all for it! As the old cliché goes, “news never sleeps.” Well, there are some industries where that is not the case. But I think I speak for everyone when I say, that is most definitely the case with private equity.

Speaking of news, this morning as I was drinking my coffee, I came across an interesting report. Seems as though Apollo is among possible suitors for Just Eat Takeaway.com's Grubhub, Bloomberg is reporting. According to the report, other PE firms are doing their research and diligence – seems like it will be around a billion-dollar price tag to me. Now I am hungry…

New products. Blackstone is expected to this year hit $1 trillion of assets, a key milestone in the firm’s and private equity’s history, thanks mostly to non-stop product creation, writes Buyouts’ Kirk Falconer.

“You always have to be developing new products where the margins are greater and you can take the leading market share,” CEO Stephen Schwarzman said at the Bernstein 38th Annual Strategic Decisions Conference. “And if you really execute well on that, it’s very difficult for others to be as successful.”

For more on Blackstone’s “innovation machine,” read the full story here.

Valuation correction. I caught up with Josh Nelson from Thomas H. Lee Partners, when he introduced me to new healthcare hire Sam Hendler. (More on that in a moment.)  Nelson and I talked a lot about current market environment and dynamics, and I want to share his insights with you all.

Things can change quickly, and Nelson, head of the healthcare vertical at THL, agreed the market has evolved over the past few months. The last time I spoke to him was for PE Hub’s ongoing PE healthcare spotlight series.

“The public markets are the easiest place to see it,” Nelson said referring to the changing economy. “Clearly there has been a valuation correction there, as many of the public stocks are off meaningful amounts. The private markets are stickier and a little slower on the way up and on the way down, so they have not corrected as much as the public markets. But the trend line is such that where we are seeing transactions and values today is lower than it was at the end of 2021.”

Healthcare hires. This week saw some significant people moves. The afore-mentioned THL brought on Hendler as healthcare vertical team as a managing director, business development. Hendler came over in May from Harris Williams after 18 years there.

“Healthcare is hard and also really important and helping to make healthcare more efficient is going to be one of the most important things we will try to do across the 21st century, not only as investors but as citizens,” Hendler said. “Anytime you are in a market like the current one, it is going to require a certain level of nimbleness and flexibility and that is how we are oriented.”

Read the full story here.

Partners Group made a huge splash, as it brought in former Kindred Health CEO Ben Breier, who famously led the $4.1 billion sale of the healthcare provider to health insurer Humana and private equity firms TPG Capital and Welsh, Carson, Anderson & Stowe in a take-private deal that closed in 2018. He also orchestrated the subsequent sale of Kindred to LifePoint Health, backed by Apollo Global Management, at the end of 2021, at which point he left the company.

I got the opportunity to sit down with Breier over zoom to discuss the move in what was one my most memorable interviews and stories I have written and was lucky to have the exclusive.

Read the full story here.

Operational Excellence. Calling all operators. Do you know a best-in-class operator? If so, submit your nominees to enter Private Equity International’s Operational Excellence Awards 2022.

Submit your entries to OpEx@peimedia.com by Tuesday, June 21.

That is a wrap for both the day and the week. Enjoy the weekend. I know I am going to take advantage of the nice weather and go to the park, play a game of basketball and see if I can still dunk. Until next week…

Cheers,

Aaron

Read the full wire commentary on PE Hub ...

Also of note (may require subscriptions)

APG, the Dutch pension giant, is shopping its second large portfolio of private equity LP stakes this year as LPs across the industry work to free up liquidity to try and keep up with the relentless pace of fundraising. (Buyouts)

A recent Pennsylvania State Employees’ Retirement System investment committee meeting provided a window into the industry’s ongoing struggle to reconcile efforts to promote diversity, equity and inclusion, with the desire to deploy capital and maintain relationships with performing managers. (Private Equity International)