Good morning Eurohubsters, Nina Lindholm here with the first Dealflow of the week.
I hope you all had a good weekend. Somehow, we are already at the end of October. Before we start November though, there is one merger that was completed this month that we get to take a closer look at. We’ve also got an add-on deal in the IoT connectivity sector, as ECI Partners portfolio company CSL announced a fresh deal just this morning.
Better together. Earlier this month, we covered EQT’s completed merger with Baring Private Equity Asia to create BPEA EQT, with BPEA CEO Jean Eric Salata staying at the helm of the combined Asian private capital business. This morning, we’ve got bit more on that deal, as my colleague Craig McGlashan spoke with Christian Sinding, EQT CEO, about his plans for BPEA EQT and whether the merger will affect the firm’s business in Europe.
“The move significantly expands both our LP bases, so it’s a win-win,” Sinding said. “We’re looking forward to introducing our clients that currently have no existing relationship with BPEA to Jean and his team – particularly in Europe, the Americas, and the Middle East – and vice versa.”
The deal had a total consideration of €6.8 billion when the firms announced the deal in March, comprising 191.2 million new ordinary EQT shares – corresponding to a dilution of approximately 16 percent – and €1.5 billion in cash.
To learn more about BPEA EQT and Sinding’s views on consolidation in the private equity sector more widely, read Craig’s full interview with Sinding here.
This month saw another big investment firm merger. Just before the weekend, we also covered Nuveen’s acquisition of Arcmont Asset Management. The deal by Chicago-headquartered Nuveen and London-based Arcmont will create Nuveen Private Capital, which will be one of the world’s largest private debt managers with more than $60 billion in combined committed capital, according to Nuveen.
Nuveen is the investment manager of insurance company TIAA. It invests across traditional and alternative asset classes.
Making connections. Moving on from PE firm mergers to an add-on deal. ECI Partners-backed CSL, a provider of IoT connectivity, announced the acquisition of Caburn Telecom, a global provider of secure IoT connectivity, SIM management and software. The purchase of Caburn will add further IoT expertise and scale to CSL’s propositions and services, the firms said.
Wigan, England-based Caburn has over 1 million live IoT connections across a variety of sectors serving customers in the UK, Europe, US and Asia. Caburn has a proprietary platform that enables customers to manage and monitor their entire SIM base.
“We look forward to supporting the combined group to continue to build on its strong growth since our investment, both organically and through further M&A,” said Paul McCreadie, partner at ECI.
London-headquartered ECI acquired Watford, England-based CSL in August 2020.
Better times ahead. There’s been a lot of talk around the tough market environment, and how it affects dealmaking and LP’s behaviour. Schroders Capital seems optimistic, as its data shows European private equity investors need not fret.
According to Schroders, recession year vintages have been “a pretty good time to invest”, as funds raised in tough times are able to pick up assets at depressed values, and later exit in the recovery phase.
Additionally, many value-drivers, such as M&A, technical innovation, professionalisation, and export-oriented business models can create value “even against a challenging macroeconomic backdrop”.
As for inflation risk, the research states that while many companies’ profitability will come under pressure, “not all will suffer”. Companies with weaker market positioning, or whose products and services are more easily substitutable, are likely to have a tough time, whereas those able to pass on higher costs into higher prices will prove more resilient.
Schroders’ research says that almost every year since 2008 has involved a crisis of some sort for investors but returns “have been strong through thick and thin”.
Do you agree with the optimistic views of Schroders Capital? If you have any thoughts on the matter, drop me a line on email@example.com.
That’s all from me today. I’ll actually be writing to you all week, as Craig McGlashan enjoys some well-earned time off this week.