PEI Awards 2016: Americas winners

LARGE-CAP FIRM OF THE YEAR IN NORTH AMERICA
1. Blackstone
2. Apollo Global Management
3. KKR

Blackstone kept busy in 2016, investing or committing more than $6 billion of equity to new deals and existing portfolio businesses, including providing the equity for the $6 billion take-private of healthcare company TeamHealth Holdings, while returning $12 billion of capital to its LPs.

It also began the investment period for its seventh flagship fund, Blackstone Capital Partners VII, and was very active on the fundraising front, receiving large commitments for its seventh secondaries fund, its Tactical Opportunities platform and its first core private equity fund, which targets longer-term investments.

“We continue to strive to navigate a complex market environment nimbly, take advantage of market dislocations, and remain disciplined and focused on deals where we can create value through operational intervention,” said Joseph Baratta, Blackstone’s global head of private equity. “As we head into 2017 we have strong momentum, and are well-positioned to understand the changing market environment and ready to take advantage of the opportunities it will create.”

MID-MARKET FIRM OF THE YEAR IN NORTH AMERICA
1. ABRY Partners
2. Ardian
3. L Catterton

ABRY Partners was one of the most active firms in the mid-market segment in 2016, particularly in media, as well as healthcare, information technology, financial services and B2B, with the majority of its deals being add-on acquisitions.

The 2016 deals out of its $1.9 billion eighth flagship fund, ABRY Partners Fund VIII, include a majority stake in Dermatology Associates, a Dallas-based operator of skincare clinics, and an investment in specialist insurer NSM Insurance Group.

On the fundraising side, the Boston-based firm secured a 30 percent carry with a 9 percent preferred return for its ABRY Heritage Partners fund, a debut fund focusing on the lower mid-market, which it launched in May 2016 with a $525 million target.

The firm, which was founded in 1989, is led by Jay Grossman, Peggy Koenig and Erik Brooks.

LIMITED PARTNER OF THE YEAR IN NORTH AMERICA
1. Canada Pension Plan Investment Board
2. Teacher Retirement System of Texas
3. California Public Employees’ Retirement System

Canada Pension Plan Investment Board, which has a private equity allocation of more than 20 percent, grew its total assets to $300 billion in 2016, and has increased its private equity portfolio to more than $63 billion, almost half of which is in direct investments. 

Transactions completed in 2016 included the acquisition of Ascot, American International Group’s Lloyd’s platform for $1.1 billion, and a $2.5 billion investment to purchase a 40 percent stake in Glencore Agricultural Products from Glencore plc.

Senior appointments included the promotion of Shane Feeney to senior managing director and global head of private investments, taking over the responsibility for CPPIB’s private investment activities. Ryan Selwood was also appointed managing director and head of direct private equity and is now responsible for overseeing co-sponsorships and other direct private equity transactions.

CO-INVESTMENT OF THE YEAR IN THE AMERICAS
1. Apollo Global Management et alia for ADT Corporation
2. TPG, CPPIB for Viking Cruises
3. Ontario Teachers Pension Plan, RedBird Capital and Aethon Energy for J-W Energy

Apollo Global Management had its busiest year ever in 2016, deploying more than $12 billion in the first nine months of the year, including more than $8 billion in private equity. The take-private transaction of home-security monitoring company ADT was the largest buyout of the year, and Apollo took full advantage of co-investors’ interest to sign the equity cheque.

Teachers’ Retirement System of the State of Illinois was one of the co-investors in the transaction, injecting $30 million.

“The most notable completed transaction during the second quarter was the opportunistic buyout of ADT, which highlighted our ability to embrace complexity, utilise creative financing, and execute a large transaction,” Apollo co-founder Leon Black said in the firm’s second-quarter earnings conference call in August.

“In a very Apollo-esque deal, we were able to combine ADT, the leading alarm services company, with Protection 1, an existing Fund VIII portfolio company, resulting in the largest sponsor-backed transaction so far this year with an aggregate enterprise value of approximately $15 billion.”

NORTH AMERICAN DEAL OF THE YEAR
1. Silver Lake Partners and KKR for Ultimate Fighting Championship
2. Apollo Global Management for ADT
3. TPG for McAfee

Mixed martial arts is one of the world’s fastest growing sports, so investors are hoping for strong returns from KKR and Silver Lake Partners’ acquisition in July of Ultimate Fighting Championship in a $4 billion deal that was made along with MSD Capital, Michael Dell’s investment vehicle, and talent agency WME IMG.

The bouts are transmitted by pay-per-view broadcasts to 129 countries. UFC, which started in 1993, earns revenue from both media rights and sponsorships. The sellers, brothers Frank and Lorenzo Fertitta, purchased UFC for $2 billion in 2000.

For Silver Lake, the UFC deal helps grow portfolio company WME. It first made a strategic minority investment in WME in 2012 and subsequently reinvested in the company when it acquired IMG in 2014.

NORTH AMERICAN EXIT OF THE YEAR
1. Permira for Intelligrated
2. KPS Capital Partners for Anchor Glass
3. TA Associates for BATS Global Markets

It is always a sweet spot when a portfolio company aligns perfectly with a firm’s core strategy. Package distributor Intelligrated combines two of Permira’s favoured investment areas: industrials and technology. Permira bought a majority stake in Intelligrated from then-owner Gryphon Investors for $500 million in 2012 through its fourth fund, Permira IV.

It collaborated closely with Intelligrated’s management team to improve its software products, according to Permira partner and co-head of the firm’s industrials sector team Richard Carey. Using its global network and operational knowledge in this sector, Permira helped bring in big new e-commerce customers such as Fresh Direct and UPS, and planted its flag in Brazil and China, among other operational improvements. As a result, the firm posted a more-than-5x return when it sold Intelligrated to Honeywell in 2016 for $1.5 billion, up 191 percent from the value at entry.

SECONDARIES FIRM OF THE YEAR IN THE AMERICAS
1. Strategic Partners Fund Solutions
2. Ardian
3. Lexington Partners

It’s easy to see why readers chose Strategic Partners Fund Solutions: the Blackstone unit was firing on all cylinders, fundraising for both private equity and real estate secondaries vehicles. In September, the firm announced it had amassed almost double the target for its real estate fund and in December sister publication Secondaries Investor reported the unit was on the cusp of raking in a cool $7.5 billion for its private equity vehicle, which went on to close in January 2017.

Strategic Partners closed a transaction on average every five days in 2016, completing its 1,000th secondaries deal since inception. Successes include the decision to increase its stakes in tail-end fund Doughty Hanson III, which went on to exit its sole remaining asset, the world’s largest supplier of rotor blades for wind turbines.

SECONDARIES DEAL OF THE YEAR IN THE AMERICAS
1. Ardian for Ontario Teachers’ Pension Plan
2. AlpInvest Partners, Canada Pension Plan Investment Board, HarbourVest Partners and Pantheon for Lee Equity Partners
3. KKR

Only two portfolios larger than $1 billion traded in the first half of 2016, according to Greenhill Cogent. Both of these were in North America, a region where Ardian has been building up its presence. It came as no surprise, then, that the global investment firm emerged as the buyer of one of these portfolio sales: Ontario Teachers’ Pension Plan’s disposal of around $1 billion in private equity interests in a process run by Evercore.

The deal, of course, was just business as usual for Ardian in a year when it amassed the largest-ever pool of secondaries capital with its $10.8 billion haul for ASF VII, came first in sister publication Secondaries Investor‘s 2016 Si30 ranking of the top secondaries fundraisers over the last five years, and celebrated its 20th anniversary.

Despite this, its US head Benoît Verbrugghe is quick to downplay the firm’s achievements: “Some people are very good at being a bit more exotic. We are boring,” he told Secondaries Investor in October. “We want to buy well-known assets where you have quality and where you can have visibility. The world is a little bit weird today.”

SECONDARIES ADVISOR OF THE YEAR IN THE AMERICAS
1. Evercore
2. Park Hill
3. Greenhill Cogent

Three years ago, Evercore’s secondaries advisory group had a staff of around 10 professionals. As of January it boasted more than 25 – a sign the independent investment bank’s unit has grown considerably in a short period. The firm worked on some of the secondaries world’s biggest deals last year, including Ardian’s purchase of $1 billion worth of private equity stakes from Ontario Teachers’ Pension Plan, which won in our Secondaries Deal of the Year category. 

North America accounted for the majority of Evercore’s roughly 40 executed deals that closed last year, including a sale of as much as $500 million worth of private equity stakes from OPTrust, which manages the Ontario Public Services Employees Union Pension Plan.

What is the firm’s secret sauce? “This is a boot leather business – the more you go out and meet people and provide good actionable ideas, the more dealflow is generated,” says Nigel Dawn, head of Evercore’s private capital advisory group.

SPECIAL SITUATIONS/TURNAROUND FIRM OF THE YEAR IN NORTH AMERICA
1. KPS Capital Partners
2. KKR
3. Sun Capital Partners

Not only did KPS Capital Partners celebrate its 25th anniversary in 2016, but it was also busy investing and returning capital to its investors. 

The firm completed two add-on acquisitions and two portfolio company recapitalisations. It also distributed about $900 million to investors and exited two platform investments. One of them, Anchor Glass Container Corporation was sold to CVC Capital Partners and BA Glass for more than $1 billion, allowing the firm to post a 5x return only two-and-a-half years after its initial investment.

“The Anchor Glass exit marked the culmination of our 2016 investment activity,” said Jay Bernstein, a partner at KPS. “The success of our investment in Anchor Glass demonstrates KPS’s ability to see value where others do not, to buy right and to make business better.”

DISTRESSED DEBT INVESTOR OF THE YEAR IN NORTH AMERICA
1. Oaktree Capital Management
2. Cerberus Capital Management
3. KKR

Oaktree Capital Management has returned to claim first place in North American distressed debt investing. With the exception of last year, the Los Angeles-based debt specialist had won the category every year since 2010. Oaktree bounced back in 2016 raising $8.43 billion for its Oaktree Opportunities Fund Xb – a reserve fund – as of November, according to PEI data. In the second quarter, Oaktree brought in $1.8 billion for two distressed debt funds. Across the third quarter, Oaktree’s distressed debt strategy achieved a 4 percent gross return. In September, the firm saved rare earth metals producer Molycorp from bankruptcy by turning the distressed company’s bankruptcy debt into a majority equity stake.

FIRM OF THE YEAR IN CANADA
1. HarbourVest Partners
2. Northleaf Capital Partners
3. ONCAP

HarbourVest is no foreigner to the Canadian market, as the firm has been investing there for about 25 years. In 2016, the global firm took it to the next level. It closed its first Canada Growth Fund on C$375 million ($286 million; €268 million), a venture capital and growth-focused fund of funds formed under the government of Canada’s venture capital action plan. The fund also makes direct investments. The milestone came about a year after HarbourVest opened its office in Toronto, led by Senia Rapisarda, a managing director at the firm.

“Canada has always been part of HarbourVest’s strategy,” Rapisarda said. “Canadian companies and technologies are world class. We’re looking for emerging and best-in-class managers and we realise the need to build Canadian startups to critical mass.”

In 2016, the team made 10 fund investments, equally split between Canadian and US general partners, and three direct investments.

FIRM OF THE YEAR IN LATIN AMERICA
1. Advent International
2. HIG Capital
3. L Catterton

For the third consecutive year and the ninth time, Advent International has picked up the Latin American award. The Boston-based firm marked its 20th year in the region with two new investments. It acquired Mexico-based chemical manufacturer Viakem in April, and its holding company Gotemburgo Participações bought auto parts distributor Fortbras Group in Brazil in August. There were also three add-on acquisitions, including the purchase of Peruvian Peruquimicos in October by chemical distributor portfolio company GTM.

“We continue to see opportunities that will benefit from our sector-focused and highly operational approach, and are working hard to make 2017 another successful year,” São Paulo-based Advent managing partner Patrice Etlin said, noting that Advent’s Latin American investments increased by about 17 percent in value in the first nine months of 2016.

FUND OF FUNDS MANAGER OF THE YEAR IN NORTH AMERICA
1. Adams Street Partners
2. HarbourVest Partners
3. Ardian

Adams Street Partners’ fund of fund business was particularly active on the investing side in 2016, making 25 fund commitments totalling $737 million across the venture capital and buyout sectors.

The private market firm hired Brijesh Jeevarathnam from Commonfund as a partner and co-head of global venture fund investment to focus on primary venture capital fund investments; and brought in a new investor relations head as part of a diversification into raising some asset class-specific funds.

The primary fund of funds team, now led by Kelly Meldrum, a partner and head of primary investments, also raised $2.6 billion in capital in 2016.

“Last year, we experienced considerable growth in terms of assets, offices and employees,” said Jeff Diehl, a managing partner at Adams Street Partners, adding that the firm also launched a private credit strategy and opened new offices in New York and Boston.

PLACEMENT AGENT OF THE YEAR IN NORTH AMERICA
1. Evercore
2. Park Hill
3. Eaton Partners

Private equity in North America has a new favourite fundraising advisor. For the first time, investment bank Evercore has claimed the top spot in the placement agent category. Evercore had a busy 2016 in North America, raising such funds as the $410 million Bridge Growth Partners – a growth-oriented debut fund that raised capital from insurers, family offices, high-net-worth individuals and other institutional investors.

Earlier in the year, Evercore advised on the fundraising of Arlington Capital Partners IV, which closed on its $700 million hard-cap after being in the market for just three months. Brown Brothers Harriman’s BBH Capital Partners V closed in that same month, also advised by Evercore. The fifth fund from BBH Capital Partners raised $802 million, beating its initial $600 million target.

LAW FIRM OF THE YEAR IN NORTH AMERICA (FUND FORMATION)
1. Proskauer
2. Debevoise & Plimpton
3. Weil, Gotshal & Manges

Proskauer’s work spans the asset class, covering, among others, private equity, fund of funds and venture capital. The firm represented Ridgemont Equity Partners, on the formation of Ridgemont Equity Partners II, a buyout fund with total capital commitments of $995 million. The fund was oversubscribed and closed at its hard-cap over the past 12 months.

The Proskauer team advised on the closing of more than 10 funds and separate accounts for Ares, representing over $12.6 billion. One highlight was Ares Corporate Opportunities Fund V, a mid-market buyout fund that accrued $7.85 billion. With an original target amount of $6.5 billion, the fund was significantly oversubscribed. It also advised long-time client Deerfield Management on the fundraising of Deerfield Private Design IV, a healthcare-focused venture fund with $2.4 billion in commitments. The private equity group at Proskauer is co-headed by Howard Beber, Robin Painter, David Tegeler and Sean Hill.

LAW FIRM OF THE YEAR IN NORTH AMERICA (TRANSACTIONS)
1. Kirkland & Ellis
2. Proskauer
3. Ropes & Gray

The winner of two awards in the Americas law firm category, Kirkland & Ellis represented numerous private equity firms in multi-million dollar transactions over the past year. Bain Capital selected the firm to advise on the $1.28 billion sale of Physio-Control International to Stryker Corporation, with Kirkland having also represented the firm when it acquired the company in 2011.

Elsewhere, Kirkland advised Vista Equity Partners on several transactions, including the $2.35 billion sale of TransFirst, a secure transaction processing and payment technologies provider, to TSYS which was announced in January 2016. Other clients included Golden Gate Capital, which led a private investment group that agreed to acquire Neustar, a provider of real-time information services, for $2.9 billion, and Warburg Pincus, whose portfolio company, Brigham Resources, it advised on the sale of its Permian Basin leasehold interests and related assets to Diamondback Energy for $2.43 billion.

LAW FIRM OF THE YEAR IN NORTH AMERICA (SECONDARIES)
1. Kirkland & Elils
2. Proskauer
3. Ropes & Gray

Given its 15-year, well-established presence in the secondaries market, it’s no surprise that Kirkland & Ellis once again scooped the law firm of the year in the secondaries category for North America. Kirkland represented American Capital on the divestiture of a large portfolio of CLO interests through the formation of a special purpose acquisition vehicle and related sale of CLO interests. It also advised GP-sponsors and secondary institutional investors on fund recapitalisations and restructuring, as well as tail-end portfolio sales by funds of funds. 

“The secondaries market has evolved to include a wide variety of transactions beyond traditional fund portfolio sales. We have responded by building out dedicated capacity to cover secondaries transactions around the world,” Michael Belsley, global practice leader, told PEI.

LENDER OF THE YEAR IN NORTH AMERICA
1. Ares Capital Corporation
2. GSO Capital Partners
3. Lone Star Funds

Specialty finance company Ares Capital Corporation continued to expand its offering throughout 2016. Externally managed by an affiliate of Ares Management, it topped our sister publication Private Debt Investor’s 2016 list of the largest publicly traded business development corporations, or BDCs, with assets of $9.3 billion.

Successes in 2016 included formalising a direct lending partnership with Varagon Capital Partners. The programme now has $926 million in first lien senior secured loans.

Ares Capital also announced a $3.4 billion acquisition of American Capital. The deal closed in early January, increasing the size of the BDC to more than $12 billion in assets. As a result, Ares Capital increased its revolving credit facility capacity from an aggregate $2.2 billion to $3.5 billion and extended the maturity on these facilities.