PEI Awards 2017: The Americas winners

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Game-changer

Large-cap firm of the year in North America

1. Apollo Global Management
2. Clayton, Dubilier & Rice
3. The Carlyle Group

Who can raise $25 billion in less than a year? Apollo can, with investors entrusting capital to the manager even before a target was set. On the investment front, Apollo deployed $5 billion in private equity last year and committed a further $2.6 billion. This includes the take-private of telephone conferencing services provider West Corp in a transaction valuing the business at $5.1 billion, teaming up with Ontario Teachers’ Pension Plan to acquire a majority stake in job portal CareerBuilder, and the $1.1 billion take-private of gulf club operator ClubCorp.

Towards the end of the year, Apollo hinted at a future succession plan, naming Scott Kleinman and James Zelter as co-presidents, in which capacity the pair will have full responsibility for the firm’s revenue-generating and investing businesses.

Mid-market firm of the year in North America

1. Oak Hill Capital Partners
2. New Mountain Capital
3. Audax Group

It’s a first-time win for Oak Hill Capital Partners, a firm with a family office heritage that makes a point of being the largest investor in each of its funds. The firm closed its fourth fund on $2.65 billion in 2017, significantly surpassing both its $2 billion target and its $2.5 billion hard-cap (including a $300 million GP commitment). As well as more conventional LPs, the fund attracted investment from current and former portfolio company management teams.

On the transaction side, Oak Hill offloaded Wave Broadband to TPG in a $2.4 billion deal and picked up several businesses, including Checkers & Rally’s Restaurants. The firm also continued to build its senior advisor programme with the hire of former FedEx Corporate Services CEO T. Michael Glenn.

Limited partner of the year in North America

1. Alaska Permanent Fund 
2. University of California
3. Ford Foundation

The newest converts are often the most zealous, and Alaska Permanent Fund is no exception.

The $65 billion sovereign wealth fund is a relative newcomer to private equity, having only invested through two separately managed accounts prior to the appointment of Stephen Moseley as head of private equity in 2013.

APFC is now making up for lost time; the fund committed $1.2 billion to funds and co-invested $200 million alongside sponsors last year alone. Its direct and co-invest portfolio netted a 9.7x cash-on-cash return through Celgene’s pending acquisition of Juno Therapeutics.

“We spend more than half of our time on co-investments and direct investments so we’re continually assessing the expected return on both our time and our money,” Moseley told PEI.

“Recent performance definitely supports this approach.”

North American deal of the year

1. Blackstone for Aon Hewitt
2. Sycamore Partners for Staples
3. Apollo Global Management for West Corp

Blackstone agreed to pay up to $4.8 billion for Aon’s tech-enabled benefits and human resources platform, the largest of its kind in the US serving approximately 15 percent of the US working population across more than 1,400 companies. Blackstone relaunched the company as Alight, and has partnered with management to invest into new products and services as well as pursuing add-ons to build on its core benefits administration platform, accelerate growth in its cloud deployment and services business and enter key strategic adjacencies.

“We saw Alight as a tremendous opportunity to invest in a highly attractive business with strong margins and cash flow, with the opportunity to accelerate growth in multiple vectors by investing in next generation technology and driving increased innovation,” said Peter Wallace, a senior managing director.

North American exit of the year

1. Oaktree Capital Management for AdvancePierre Foods
2. Berkshire Partners, ABRY Partners, Pamlico Capital Management for LTS Group
3. Cerberus Capital Management for Bowlmor AMF

Oaktree invested $100 million to acquire Pierre Foods through bankruptcy in 2008, and merged the business with Advance Food Co. and Advance Brands in September 2010. When Oaktree listed the business in 2016, retaining a 42 percent share, the firm reportedly scooped a massive 17x money. The total return was bumped up to 23x with an IRR of more than 90 percent when the company was acquired by Tyson Foods in a $4.2 billion take-private.

“Clearly, one of the all-time great private equity investments and certainly the standout in the history of Oaktree, it’s even more astounding to note that this is not a high-tech company, but a prosaic food producer and distributor,” co-chairman and chief investment officer Bruce Karsh said on the firm’s first-quarter earnings call in April.

Fundraise of the year (Americas)

1. Apollo Global Management
2. Silver Lake
3. Bain Capital Private Equity

Apollo Global Management’s ninth flagship fund will go down in private equity history. In less than a year the firm raised almost $25 billion for Fund IX, shattering the record for the largest-ever private equity fund set by the $21.7 billion Blackstone Capital Partners V back in 2007. Investors entrusted their capital to the manager even before a target was set, and the fund attracted $30 billion in investor interest. In the end, the fund welcomed 350 distinct limited partners. As with all its predecessors, Fund IX will invest across three broad areas – distressed-for-control, carve-outs and buyouts – and has the ability to tailor the asset mix depending on the investment climate. Due to come online imminently, the market is watching with keen interest to see where this capital is deployed.

Secondaries firm of the year in the Americas

1. AlpInvest Partners
2. Landmark Partners
3. Lexington Partners

Last year was a record one for secondaries fundraising and AlpInvest played no small part, hitting a $6.5 billion final close on its sixth secondaries programme. The $3.3 billion dedicated commingled secondaries vehicle AlpInvest Secondaries Fund VI was almost four-and-a-half times the size of its previous dedicated fund. The fund has committed to 12 transactions since it began deployment in September 2016, more than half of which were GP-led deals. “One of the biggest challenges was getting the AlpInvest brand known in the LP market,” the firm’s secondaries head Wouter Moerel told PEI in December. They know now.

Secondaries deal of the year in North America

1. Landmark Partners for Clearlake Capital
2. CPPIB, Evercore for Ardian portfolio sale
3. Coller Capital and UBS for Avista Capital stapled deal

Preferred equity was a key theme in the secondaries market last year, with 17Capital raising more than €1 billion in record time and Whitehorse Liquidity Partners closing its debut fund above target on $400 million. Few secondaries generalists have embraced preferred equity as wholeheartedly as Landmark, with such deals accounting for nearly a quarter of invested capital from its 2008-vintage Fund XV. In April last year, the firm used the fund to help Clearlake Capital, a West Coast lower- and mid-market private equity firm, purchase Reservoir Capital’s stake in its own GP management company. The stake represented around a 20 percent stake in Clearlake, sister publication Secondaries Investor reported at the time. Around a third of voters threw their backing behind the deal.

Secondaries advisor of the year in the Americas

1. Evercore
2. Credit Suisse
3. Park Hill

According to a report published by Evercore, 2017 saw record secondaries market transaction volumes of $54 billion, $17 billion up on 2016. The advisory firm itself helped a lot of that happen, proving to be among the busiest in North America last year. In March it helped Ardian offload a portfolio of more than $1 billion in pre-crisis stakes to Canada Pension Plan Investment Board. It also helped struggling Dallas Police and Fire Pension System execute multiple stake sales as it looked to generate cash flows from its illiquid portfolio. With a couple of big deals already in the pipeline, including Alaska Permanent Fund’s sale of $1 billion of stakes, 2018 is set to be just as busy.

Distressed debt investor of the year in North America

1. Apollo Global Management
2. Oaktree Capital Management
3. GSO Capital Partners

Investors clearly have confidence in Apollo’s distressed investing capabilities. Pension fund documents during its latest fundraising indicated Apollo was intending to invest up to a quarter of its mammoth $25 billion Fund IX in distressed debt opportunities, compared to less than 5 percent in Fund VIII. Investors were clearly in favour, with demand reaching $30 billion. Whether Apollo sticks to the plan to invest Fund IX in this way will depend on broader market conditions.

“[If] a recession happens in the next four years, it will be something we can also take advantage of in Fund IX in terms of that prowess,” co-founder Leon Black said on the firm’s second-quarter earnings call in August, “but if it doesn’t happen, we’re confident from what we were able to do in Fund VIII that we can continue to do that in Fund IX.”

On the investment side, Apollo teamed up with GSO Capital Partners to acquire Mood Media and provided $800 million in debtor-in-possession financing to Westinghouse Electric Company.

Firm of the year in Canada

1. Bain Capital Private Equity
2. Whitehorse Liquidity Partners
3. Onex

The initial public offering of luxury parka maker Canada Goose in March on the New York Stock Exchange and the Toronto Stock Exchange was one of the biggest of the year, a success for Bain Capital, which purchased a majority stake in the company in 2013. Canada Goose could be the gift that keeps on giving, as Bain has sold only a minority of its shares in the IPO and hasn’t pocketed its full return yet.

“We look for great companies with strong brands, a great consumer proposition and strong management teams who are looking for partners who can help them grow and expand, whether that’s into new markets, new product categories or other strategies,” said Ryan Cotton, managing director at Bain Capital Private Equity.

Firm of the year in Latin America

1. Advent International
2. Actis
3. Nexxus Capital

Advent International invested nearly $1 billion last year in Latin America, venturing into new markets not explored before.

“2017 was a record year for Advent in Latin America in terms of both capital deployed and realisations,” said Patrice Etlin, a managing partner at Advent International in Sao Paulo. “We invested over $700 million in seven new deals and add-on acquisitions, including our first direct investments ever in Peru and Chile, GMD and Enjoy, respectively.”

Advent also purchased a minority stake in Estácio Participações, the second-largest post-secondary education company in Brazil, building off its prior success with Kroton Educacional.

The firm also generated $1 billion in realisations from eight companies, including pending deals, breaking previous years’ figures. “These results underscore the effectiveness of our strategy, which combines deep sector expertise, local market knowledge and a collaborative, operational approach to building value in companies.”

Fund of funds manager of the year in North America

1. HarbourVest Partners
2. Adams Street Partners
3. Hamilton Lane

Boston-headquartered HarbourVest Partners knocked last year’s winner Adams Street Partners off the top spot to claim the crown, which it has now held no less than nine times. In 2017 the firm raised $5 billion for fund of funds, both commingled and separate accounts, $1.8 billion of which was for US primary fund investments. It also committed $1.7 billion to 31 funds, deployed $1.4 billion of US co-investment capital and $1.3 billion of US secondary capital. To top it off, HarbourVest closed its fourth co-investment fund on its $1.75 billion hard-cap.

“Both public and private markets were incredibly robust in 2017, which made for an active year in private equity,” said managing director John Toomey. “As a result, we saw commitments from more than 100 new investors globally who turned to HarbourVest for access to not only fund of funds, but also secondary, co-investment and bespoke SMA solutions.”

Placement agent of the year in North America

1. Eaton Partners
2. Park Hill
3. Credit Suisse

Eaton Partners helped raise nearly $11 billion in aggregate globally in 2017, including seven funds that hit their hard-cap or were oversubscribed. In North America, the placement firm, which was started in 1983 by Charlie Eaton, placed or arranged about $5 billion.

The firm also bulked up its workforce, forming a team dedicated to direct capital raising and hiring managing director Bill McLeod as part of the team. It also hired five more people in the rest of the business, including a managing director.

Two years after being acquired by mid-market investment bank Stifel Financial, Eaton Partners continues its growth plan, opening offices in San Francisco and in New York in 2017, following a new Chicago outpost in 2016.

Law firm of the year in North America (fund formation)

1. Debevoise & Plimpton
2. Simpson Thacher & Bartlett
3. Linklaters

Debevoise & Plimpton knocked last year’s winner Proskauer off the top spot to claim the crown for fund formation law firm of the year on the back of a string of impressive fundraisings.

The jewel in the crown on the private equity side was the $10 billion Clayton, Dubilier & Rice Fund X, which attracted more than $20 billion in investor demand. The firm also worked with Stone Point Capital in the formation of the $5.5 billion Trident VII buyout fund, advised HarbourVest Partners on its $1.9 billion Global Investment Program and $1.75 billion co-investment fund, mid-market firm One Equity Partners on its $1.65 billion Fund VI, and Morgan Stanley Investment Management with the formation of North Haven Capital Partners VI, which raised more than $1.5 billion.

Law firm of the year in North America (transactions)

1. Kirkland & Ellis
2. Simpson Thacher & Bartlett
3. Dechert

Kirkland & Ellis worked on more than 200 deals and on some of the largest transactions in the region last year, including Blackstone’s $6.1 billion acquisition of TeamHealth Holdings, a physician services organisation, and Pamplona Capital Management’s acquisition of global biopharmaceutical provider Parexel International for about $5 billion. It also advised on one of the most contrarian transactions of 2017: Sycamore Partners’ acquisition of Staples, for $6.7 billion.

“Dealflow in 2017 remained very robust, which required us to utilise both our depth and breadth of experience – which is unique given the size of our practice and the number of deals we handle – to help both long-term clients and new clients execute important transactions,” said Jon Ballis, a corporate partner and member of Kirkland’s global management executive committee.

Law firm of the year in North America (secondaries)

1. Kirkland & Ellis
2. Proskauer
3. Simpson Thacher & Bartlett

In North America, Kirkland & Ellis’s name pops up on many of the most prominent secondaries deals to have taken place last year. It worked on our American Deal of the Year, Clearlake’s acquisition, using preferred equity financing, of a stake in its own GP. It also dotted the i’s and crossed the t’s of the Warburg Pincus strip sale and the fund recapitalisations carried out by tech-focused PE firm Vector Capital. Michael Belsley, who leads Kirkland’s secondaries practice, said: “With respect to secondary transactions, Kirkland’s goal is not only to provide high-quality legal services to our clients, but to be a thought-leader in this market segment.”

In 2017, across all markets, Kirkland was involved in more than $12.9 billion of secondaries transactions, including 61 secondaries portfolio sales for an aggregate of $6.1 billion of transaction value.

Lender of the year in North America

1. Ares Management
2. KKR
3. Golub Capital

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Game-changer

It was a big year for Ares Management. In January, it acquired American Capital, bringing its BDC’s assets under management to more than $12 billion. It also raised $3.4 billion for its junior lending fund, surpassing the $2.5 billion target for its first vehicle for the strategy. Ares Private Credit Solutions will allow the firm to boost its deal activity in the upper mid-market.

“A big part of why we raised this fund was to migrate ‘upmarket’ into larger companies, where we continue to bring private capital into a market segment that is less crowded from competition,” Jim Miller, a partner and co-head of US direct lending for Ares, said during the firm’s conference call for third-quarter earnings results in November.