We asked CFOs at PE firms – people who, let’s face it, get risk – what the biggest ones facing their firms are. Here are five responses in a three-minute video on sister publication pfm. Cybersecurity crops up twice: “We move large amounts of money. We are an obvious target,” says Sandton Capital Partners CFO Dimitri Korvyakov.
Markets ripe for P2Ps
The value of take-privates is at its highest since 2006. Firms completed $227 billion of public-to-private deals last year, the highest level since a peak of $421 billion in 2006, according to Bain & Co’s Global Private Equity Report 2019.
The number of listed companies is on the wane but the number of listed companies that look worth delisting is on the rise, says Bain. The number of US public companies with enterprise values between $2 billion to $10 billion and an EV/EBITDA multiple plus a take-private premium lower than the average private market multiple soared to 183 last year, exceeding the previous high of 151 in 2008.
Apollo, for example, has identified the public markets as fertile hunting ground. The firm has completed eight US take privates in the last three years, including the acquisition of Aspen Insurance for a reported $2.6 billion.
Stone Point Capital is back in market with its latest fund, and notably it’s not aiming for a huge size increase as some others have: the hard-cap is set at $6.5 billion, $1 billion over its predecessor. In fact, Stone Point has consistently increased its fund size by $1 billion for its last three vehicles. This is impressive discipline in a strong fundraising environment; according to recent research by Investec, 55 percent of GPs expect their next fund will be more than 25 percent larger than its predecessor, and 12 percent expect it to be twice as large.
Enjoyed GDPR? Well if you or any of your portfolio companies does business in California, you should already be prepped for the California Consumer Privacy Act. It will take effect on 1 January 2020, but certain factors of the legislation, such as their 12-month “lookback” policy, make it crucial for firms to start preparing now. Firms should look at how they and their portfolio companies share data.
Soros sells secondaries. Soros Fund Management, the family office of billionaire investor George Soros, is to shop a $1 billion portfolio of PE and VC stakes, including positions in 2012-vintage cleantech vehicle the Silver Lake Kraftwerk Fund. It is looking to de-risk its portfolio, sister publication Secondaries Investor understands.
Stonehage staffs up. Family office manager Stonehage Fleming has added Meiping Yap (formerly GIC and HarbourVest) as director and James Jefferson (formerly MVision and BlackRock) to its private capital team in London.
Is climate change destroying your portfolio? We’re on the hunt for case studies of PE-backed companies that have been affected by climate change and extreme weather. Know of any examples? Let us know: email@example.com.
Want more data? There are more than 6,700 institutions in our database, including Stone Point, Stonehage Fleming and Soros Fund Management from today’s Side Letter.
They said it
“Although public data is scarce, anecdotal evidence suggests that returns for those who invested early in this cycle have been sensational.”
Consulting firm Bain & Co ponders what investments in GP interests will deliver by way of returns in the future.
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