Bain predicts private equity slowdown; Accel-KKR plans US expansion for Singletrack

Eurazeo tops fundraising target as Bain says funds have ample dry powder to weather short-term woes.

Good morning Eurohubsters, Craig McGlashan here with the Dealflow.

The extreme heatwave in London has finally broken but a report from Bain & Company late yesterday afternoon suggests the private equity market is also cooling – in the short term at least. Despite that, dealmakers have told us of some bullish plans for their portfolio companies.

Dry powder. Bain said that uncertainty around asset valuations and the path of inflation has hit deal pipelines, “especially in the high-valuation technology sector”. The rising cost of debt is also complicating the picture.

But on the bright side, there is “ample” dry powder in private equity to see the market through these troubles, Bain said. Global dry powder rose in the first half of 2022 to reach a record high of $3.6 trillion, the firm added.

“PE funds are positioned for a strong rebound,” said Bain.

Going global. Some localised evidence of that ever-rising stock of dry powder came from Eurazeo, which on Tuesday announced that its Eurazeo PME IV Fund1 had exceeded its fundraising target by raising more than €1 billion, 50% more than its previous fund.

“This total reflects the success and appeal of Eurazeo’s small-mid buyout strategy which is focused on helping sector-leading French SMEs to expand internationally,” said Eurazeo.

US move. Speaking of international expansion, my colleague Nina Lindholm has a great interview on PE Hub Europe today with Accel-KKR’s Phil Cunningham, managing director and lead of its Emerging Buyout Partners fund, who outlines the firm’s plans to help technology firm Singletrack extend its geographical footprint to the US.

Accel-KKR announced a “significant” capital growth investment in Singletrack at the end of June.

London-headquartered Singletrack provides services to capital markets participants via its client engagement, research management and analytics products. Founded in 2009, the AI-enhanced client engagement platform can be used across sales, trading, research, investment banking, operations, strategy, corporate access and compliance.

Accel-KKR believes that platform can travel to a new continent. Cunningham said the firm was “well-regarded” in Europe, and especially in its UK home. “In conversations with Singletrack management, we saw that there are similar prospects in the US,” Cunningham said. “By tapping into Accel-KKR’s network and resources, the company is positioned to expand more efficiently than they could on their own.”

You can read Nina’s full interview here.

Making a connection. Yesterday I highlighted a piece on PE Hub by my US colleague Aaron Weitzman about Tower Arch Capital’s imminent majority investment in Intelligent Technical Solutions, an IT services provider headquartered in Las Vegas.

As the article talked about the growing demand for providers of IT services to small and medium sized businesses, I tied it in to a similar piece on PE Hub Europe from a few weeks ago, in which I spoke to Gonzalo Fernandez-Albiñana, head of Ardian Buyout Spain, about Ardian’s purchase of Alicante-based telecoms services firm Aire Networks.

Well, wouldn’t you know it, but we had yet another company in this niche finding private equity investment this morning.

OMERS Private Equity announced it had signed a definitive agreement to buy London-based Bionic, a provider of essential energy, insurance, finance and connectivity services to UK small-to-medium enterprises, from ECI Partners and its founders.

OMERS will take a majority stake, with the management team – led by CEO Paul Galligan – along with ECI Partners and the founders investing alongside OMERS. The deal will provide resources and expertise to help the company’s growth, both organic and via M&A.

“As a leading technology-enabled services platform, Bionic’s high-quality digital-hybrid model, one that pairs smart technology with world class human service, is at the forefront of helping UK SMEs source their business essentials: energy, insurance, finance and connectivity,” said Jonathan Mussellwhite, senior managing director and OMERS head of European private equity.

We’d love to get your thoughts on the future of this sub-sector of technology. Will there be room for several players with different approaches – Bionic’s is to match business owners with providers, suppliers and products via its platform, for instance – or will we see consolidation?

Let me know your thoughts at craig.m@peimedia.com

That’s it from me. I’ll speak to you on Thursday.

Cheers,

Craig