Side Letter: Women in Private Markets; PE’s UK love affair; LatAM long-holds

PEI Media's Women in Private Markets Summit kicks off this morning. Plus: Our latest deep dive examines the industry's burgeoning love affair with large UK assets. Here's today's brief, for our valued subscribers only.

They said it

“How many people would want to buy into public company equity if they were told you can’t sell it for 10 years? It’s a great advantage of PE and we’re not about to give it up. If I had to project five years ahead, I think retail investors will still be a very small part of the PE asset base.”

Don Gogel, chairman of Clayton, Dubilier & Rice, tells Professor Florin Vasvari of London Business School that private equity is “not a natural, high-octane retail product“.

Just happened

Women in Private Markets
“Don’t outmen the men,” was Level 20 chair Cheryl Potter’s advice to a packed-out room during this morning’s keynote speech at PEI Media’s Women in Private Markets Summit in London, which kicks off today. “Play a different game – what you bring is your diversity,” she added, noting that women need to embrace who they are and bring that to the table.

“Do not propagate the myth of having it all… You are making what you’ve got seem unattainable to other women.”

Attendees at the two-day event will also hear from the likes of: Deborah Zurkow, global head of investments at AllianzGI; Joanna Reiss, co-lead of impact for private equity at Apollo Global Management; and Floortje Brouwers, senior vice-president at Singapore’s GIC. Learn more about the event here.

London calling
It is no secret that private equity firms are increasingly hungry for UK assets, with Marks & Spencer, Wm Morrison, LV= and Asda among those linked to sales or having changed hands over the past year. The £85.5 billion ($113.8 billion; €100.3 billion) worth of transactions completed from January through October was more than double last year’s full-year total, according to DC Advisory.

Private Equity International’s latest Deep Dive – which you can read here –explores the factors driving these appetites and the potential implications for UK business. One consensus among dealmakers we spoke to was that this year’s frenetic dealmaking is likely to continue into 2022. And while most of the action in 2021 was in business services, technology, media and telecoms, expect PE firms to target mid-tier banks and insurers, as well as industrials and manufacturing, in the months ahead.

But PE’s love for the UK may not be entirely requited. High-profile acquisitions of supermarket chains in particular face intense scrutiny amid concerns over whether PE firms will be satisfactory stewards of the businesses. What’s more, some fear the UK’s post-lockdown recovery may be short-lived in certain sectors, which might harm overall market momentum. But in the near term, at least, the UK remains very much on PE’s radar.

They did the math

SEA change
Southeast Asia is having a moment. M&A values in the region hit $218 billion in the year to 10 November, up 80 percent on the equivalent period in 2020, according to Refinitiv. A series of prominent exits or announced exits in Indonesia (Bukalapak, for example, raised $1.5 billion in August – the largest IPO to ever take place on the Indonesia Stock Exchange) are only likely to sweeten the appeal for investors that wanted the region to have a demonstrable track record. So, just how much has investment grown? A new report (available here in video format) from growth equity firm Asia Partners outlines Southeast Asia’s recent expansion.

Essentials

Rio-lising an asset’s full potential
The PE industry’s yen to hold onto its best assets is gaining traction in Latin America. Brazil’s largest firm, Patria, is exploring the formation of listed continuation-driven vehicles for businesses it considers champions, affiliate title Secondaries Investor reports (registration or subscription required). The $9.3 billion firm, which is 40 percent owned by Blackstone, has looked at the London and Brazil stock exchanges as potential homes for the vehicle.

“I can give you amazing examples from our private equity fund, from our infrastructure fund, one or two champions per fund,” said chief executive Alex Saigh on a recent earnings call. “I would love to continue investing in these companies, given that they continue to deliver 20 percent-plus returns per year.”

Dig deeper

Institution: Montana Board of Investments
Headquarters: Helena, US
AUM: $25.3 billion
Allocation to alternatives: 22.9%

Montana Board of Investments has committed $100 million across two private equity vehicles, according to its November 2021 investment board meeting documents.

The commitments comprise $50 million each to Kinderhook Capital Fund VII and Crescent Asia Consumer & Deep Value Fund III. Both commitments are re-ups with existing managers.

MBOI’s recent private equity commitments have primarily focused on venture capital and buyout funds targeting investments in North America. Private investments, which include both private equity and private debt, constitute 8.72 percent of the organisation’s entire investment portfolio.

For more information on MBOI, as well as more than 5,900 other institutions, check out the PEI database.


Today’s letter was prepared by Alex Lynn with Rod James and Carmela Mendoza.