ADIA, CapitalG agree stakes in H&F-backed biz

KKR in A-Gas deal with TPG; GenAI ‘one big hype’, says Main’s Zwemstra.

Things are a little busier on the deal front this morning, as we report a couple of transactions that each involve several private equity firms.

First, Abu Dhabi Investment Authority (ADIA) and CapitalG have entered definitive agreements to acquire minority stakes in a business software services provider.

Next, KKR has agreed to sell a majority stake in a refrigerant gas supplier to TPG.

We then get the thoughts of Charly Zwemstra of Main Capital Partners on generative AI, as he gives us quite a different take to what we’ve heard from other private equity firms.

We then look at an acquisition in the US covered on PE Hub that could lead to some European deals, before we finish on an update on TPG’s reported interest in EY.

Team investment

The first deal of the day involves a company that had already drawn heavy private equity interest.

Abu Dhabi Investment Authority (ADIA) and CapitalG have entered definitive agreements to acquire minority stakes in TeamSystem, a business software services provider to businesses and accountants in Italy and Spain.

TeamSystem reported a turnover of around €700 million in 2022 and has about 1.8 million customers. It is based in Pesaro, Italy.

Hellman & Friedman (H&F) will remain the majority shareholder. It first invested in TeamSystem in 2016.

Silver Lake agreed to buy a €600 million minority stake in TeamSystem in May.

“We firmly believe that TeamSystem is well positioned to continue to grow in both existing and new markets,” said Hamad Shahwan Aldhaheri, executive director of private equities department, ADIA. “This investment aligns with our approach of supporting market-leading software businesses that offer mission-critical solutions to their customer bases.”

ADIA is a global investment institution that invests on behalf of the government of Abu Dhabi.

CapitalG is Alphabet’s independent growth fund. It is based in San Francisco, California.

Expanding gas

Next up is another deal involving several private equity firms.

KKR has agreed to sell a majority stake in A-Gas, a supplier and manager of refrigerant gases, to TPG Rise Climate, the climate investment strategy of TPG’s $18 billion global impact investing platform, TPG Rise.

A-Gas is headquartered in Bristol in the UK.

LDC will fully exit as minority investor as part of the transaction following a 12-year strategic partnership, while KKR will remain a significant minority shareholder.

KKR, via its KKR European Fund IV, invested in A-Gas in 2017.

A-Gas’s revenue has grown 14 percent and EBITDA by 18 percent on average annually since KKR’s investment. During that time, the company entered markets across Europe, such as Germany, the Netherlands, and Italy, while scaling its operations in the US, according to a release.

A-Gas also entered Canada with the construction of a new refrigerant recovery and reclamation facility in Ontario and expanded in Asia via the acquisition of a Japanese refrigerant reclamation and destruction company, the release added.

‘One big hype’

Yesterday, we featured a Q&A by PE Hub Europe’s Irien Joseph with Charly Zwemstra, founder and managing partner at Main Capital Partners, where we learned some of Main’s investment and exit plans.

One topic Irien and Zwemstra spoke about but that didn’t make it into the article was on generative AI – a topic on which Zwemstra has a rather different view to many of his peers. Here’s the extract:

What are the opportunities and is generative AI, on your dealmaking radar? Have you used any generative AI providers for deal origination?

No, but we are a digitally advanced company and we have developed our own systems. And as a firm, it is extremely data driven and we have data of roughly 12,000 software companies. We have our own tools to analyse, and to predict, so we do use artificial intelligence.

But in my view, there is nothing new. It got huge attention since ChatGPT was promoted in the market. It is one big hype. It only emphasises that the software companies are on the right road because they are the heavy users of artificial intelligence. I think another sector that will profit from it is groups like the big data groups because they have pure data sets, and you need those data sets to apply AI in a sensible way.

For more on how private equity firms are using generative AI, check out this article on BC Partners and this Dealflow featuring Partners Group.

European opportunities

Quick shoutout to a story by my colleague Obey Martin Manayiti over on PE Hub, who has an interview with Brandon Brahm, a partner at KKR, and Barry Lyon, the newly appointed CEO of Industrial Physics, of which KKR recently completed a buyout.

Industrial Physics makes equipment for testing myriad materials, such as plastic, paper and ink, for products used in a range of industries, including medical devices and consumer electronics. It is based in Boston, Massachusetts.

We might soon be featuring some deals involving the company on PE Hub Europe.

Industrial Physics is a “very attractive” business to use as a platform to consolidate the sector, Brahm told Obey. He said KKR is seeing M&A opportunities, not just in the US, but in Europe and elsewhere around the globe.

Check out the full piece here.

No deal

In yesterday’s Dealflow, we mentioned a report in the Financial Times on Tuesday that said TPG Capital had sounded out EY – one of the ‘Big Four’ accounting companies – about buying a stake in its consulting division.

EY has rejected the approach, according to an update from the FT yesterday.