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The best of 2022 in stories; Vestar, OEP and Corsair talk high rates and inflation

Good morning, Hubsters! Aaron here filling in for MK.

As there are just a handful of days left in the year, we are going to look back to PE Hub and PE Hub Europe’s greatest hits of the year.

I am going to highlight a story from each member of the team. We are thankful for all of our readers and proud of the work we did in 2022. Here are each of our favorite articles this year, starting with North America and then followed by our colleagues across the pond.

Rising rates. If you missed it, the first episode of PEI Group’s podcast series Private Markets and the End of Cheap Money drops, focusing on M&A was hosted by MK Flynn, as she spoke with a wide range of dealmakers, including private equity firm leaders, lenders and investment bankers, about the impact of high interest rates and other factors like high inflation on private equity-backed transactions.

Click here to listen to thoughts from Norm Alpert, founding partner at Vestar Capital Partners; Greg Belinfanti, senior managing director of One Equity Partners; Marc Leder, co-founder and co-CEO of Sun Capital Partners; Ignacio Jayanti, CEO of Corsair Capital; Milwood Hobbs Jr, managing director and head of North American sourcing and origination at Oaktree; Michelle Handy, managing director and head of portfolio and underwriting of First Eagle Alternative Credit’s direct lending platform; and Peg Jackson, managing director, software, internet and digital media at Stifel.

Pandemic pets. Like home services, pet care is another market that has proven itself to be recession resistant. Last year, this sector racked up $123.6 billion in sales, an industry milestone, reported the American Pet Products Association. Of that number, $50 billion was spent on pet food, accounting for about 40 percent of all sales within the industry.

If you know me, I am a big animal lover – especially dogs. Iris Dorbian wrote about how private equity leveraged this boom in pandemic-era pet ownership with a slew of deals whose momentum has not ebbed this year.

Back in June, Rainier Partners capitalized on the pet ownership boom by investing in Pet Food Express, a California-based pet retail chain that sells everything from pet foods and supplements to services like pet washes. PFE’s growth and profit potential attracted the Seattle lower-middle-market PE firm to make its first-ever investment in the company.

Click here to read the whole story.

Onshoring. In April, Obey Martin Manayiti wrote about how private equity firms have begun to think local when it comes to the supply chain, as they had been trended toward globalization, but now the pendulum is swinging the other way.

Private equity firms are seizing the opportunities to invest in companies that aim to minimize supply chain disruptions, nearshore parts and services and leverage technology to create more efficient and cost-effective approaches. To learn more about PE supply chain strategies, PE Hub spoke with several investors and consultants.

Click here to read the whole story.

Ridiculous return. Switching over to PE Hub Europe. Back in November, Nina Lindholm reported on Nordic Capital and Five Arrows exit of The Binding Site to Thermo Fisher Scientific in a deal valued at £2.25 billion ($2.6 billion; €2.6 billion). The exit yielded 19x Nordic Capital’s initial investment in The Binding Site, according to sources close to the matter, who added that it made it the firm’s best investment to date, Nina wrote.

Click here to read the whole story.

Geographical growth. Earlier this month, Craig McGlashan caught up with Thomas Rajzbaum, managing director and head of EQT’s French infrastructure advisory team about how EQT will leverage its tie-up with Baring Private Equity Asia to grow the geographical footprint of Trescal, a provider of regulated calibration services for testing and measurement equipment.

EQT’s Infrastructure V fund entered exclusive negotiations in late November to take a near 75 percent stake in Trescal. EQT will leverage its tie-up with Baring Private Equity Asia to grow the geographical footprint of Trescal, according to Thomas Rajzbaum.

Click here to read the whole story.

That’s a wrap for today. Chris Witkowsky will be with you for Wire Wednesday tomorrow and I have the honor and privilege of writing the last two editions of this year on Thursday and Friday. As a reminder, we will be off next week and returning in early January.

Cheers,

Aaron

Read thefull wire commentaryon PE Hub …

Also of note (may require subscriptions)

Audax Group revealed its new strategy that is a kind of hybrid between secondaries continuation funds and straight-up non-control M&A investing. The goal is to back treasure assets that sponsors are trying to hold and grow, even when they run up against structural fund issues like tapping out reserve capital or boosting portfolio companies beyond concentration limits.

Over a decade on from the ill-fated Solyndra episode, the US Department of Energy’s loan programme is back. Jigar Shah, the clean energy pioneer, who now leads it, explains how. (Infrastructure Investor)

At the start of the year, private markets participants were forced to assess their Russian exposure – today, the impact of the conflict in Ukraine continues to ripple through the industry and broader global economy. (Private Equity International)

Pennsylvania’s large teachers’ pension pulled a recommended commitment to Insight Partners’ 13th flagship fund. (Buyouts)

"Tech start-ups that have traditionally relied on deep-pocketed Silicon Valley investors to fund ambitious growth plans are being forced into alternative financing deals to sustain their businesses and avoid drastic cuts in valuation." (Financial Times)

"Private equity giant KKR said on Tuesday it will buy Japanese drug developer Bushu Pharmaceuticals from Hong Kong-based private equity firm BPEA EQT, but did not disclose financial details of the deal." (Reuters)

"Vice Media is expecting to miss a 2022 revenue goal by more than $100 million, according to people familiar with the situation, a blow for the new-media company as it pursues a sale." (Wall Street Journal)

"Private equity’s debt tower is teetering: What was once a simple story of buy, fix, sell is more complicated, after years of cheap money and keen investment." (Financial Times)

"Buyout firms want a slice of the US healthcare spend but face a backlash from doctors and legal battles with insurers." (Financial Times)

"Investment firm General Atlantic closed its first climate-focused fund with about $3.5 billion available for the strategy, or roughly 12.5% less than it had reportedly sought when fundraising began for the vehicle last year." (WSJ Pro)