Pleasure and pain: Iberia and Electra

A GOOD MONTH FOR…

Iberia, which is witnessing the early stages of a private equity revival, according to S&P Capital IQ’s EMEA Private Equity Market Snapshot. Spain’s macro-economic indicators have been “firmly positive” in the wake of post-crisis reforms, including in banking and labour markets, with unemployment falling and domestic consumption rising. The picture in Portugal is “relatively similar”. Deal-making, however, remains difficult, with global players aware of opportunities but only local funds actually making any investments. 

California-based firm The Gores Group, which booked a whopping 10x return on its $1.3 billion sale of immunotherapy company Therakos to Mallinckrodt Pharmaceuticals. The firm acquired the company three years ago from former J&J division Ortho-Clinical Diagnostics using equity from its $2.1 billion, 2011-vintage Gores Capital Partners III. Under Gores’ ownership the company’s turnover grew from $120 million to $200 million and its EBITDA from $42 million to $100 million.

Industry behemoth Blackstone Group, which probably has enough cash to declare itself a small nation. On an earnings call, president and chief operating officer Tony James said the firm had finished fundraising for its Blackstone Capital Partners VII fund on $17.5 billion and was now sitting on an $85 billion mountain of dry powder. The new fund will focus on making investments in energy and commodity-related businesses, consumer-facing financial services and other industries where it can put a buy-and-build platform play together. Either that or solve the Eurozone debt crisis. We’ll keep you posted.

A BAD MONTH FOR…
Electra Private Equity, which suffered yet another attack from activist investor Edward Bramson. In an open letter to Electra investors, Bramson’s Sherborne Investors again urged shareholders to back the appointment of two Sherborne directors to the Electra board. Bramson said Electra’s “hostile reactions” to Sherborne’s proposal to nominate a “small minority of qualified directors” were “disproportionate”, with the letter adding that Electra “wrote to certain of its shareholders threatening retribution” if they were to support Sherborne. In a response, Electra chairman Roger Yates said Sherborne “has still made no case” for changing Electra’s model, and has “instead chosen to make baseless criticism about the way the company is run”. Needless to say, he once again urged shareholders to vote against Sherborne’s resolutions. The saga continues…

The investment committees at CalPERS and CalSTRS, who found themselves on the sharp end of California State Treasurer John Chiang’s tongue regarding private equity fees. In a letter to the pension giants, Chiang called on them to help him “mop up another private equity industry mess” and work with his office to develop state legislation to enforce fee disclosure by private equity firms. In response, CalPERS said it “applauded” Chiang, right, for seeking greater disclosure, and pointed out that it had “long fought for greater disclosure and transparency in the private equity industry”.

Canadian giant CPPIB, which lost senior principal Mark Corbidge to Texas mega-fund TPG. After almost two years at the pension plan, where he focused on its direct private equity investments, Corbidge has been appointed partner at TPG’s London office. There he will assist with origination and portfolio company-related activities. Corbidge previously spent close to three years as co-head of private equity at Doughty Hanson after joining the firm in 2004 as a principal.