FCA takes interest in private capital after mini-budget chaos, report says; Beyond takes majority stake in ANK

In the aftermath of the mini-Budget, sterling and UK government bonds plunged in value, leading pension funds to sell some of their liquid assets.

Good morning Eurohubsters, Craig McGlashan here with the Dealflow.

The UK is set to have its third prime minister of the year after a flurry of developments at the weekend in the race to become leader of the ruling Conservative Party. The vacancy at the top of government opened after markets reacted badly to a “mini-budget” – and now the country’s financial regulator is concerned about how that fallout is affecting private equity and its investors, according to a report.

Regulatory interest. The Financial Conduct Authority got in touch with several PE firms after the mini-budget in late September by former chancellor Kwasi Kwarteng, people briefed on the calls told the Financial Times.

In the aftermath of the mini-Budget, sterling and UK government bonds plunged in value, leading pension funds to sell some of their liquid assets and potentially leaving them overexposed to private markets.

In addition, “interest rates are rising and inflation is high” and the talks with the regulator covered how private markets are “operating in light of these fundamentals”, a person familiar with the calls told the FT.

Financials. Private equity firms Centerbridge Partners and Clearlake Capital are among the potential buyers for Credit Suisse’s US asset management unit, according to a report by Reuters.

Other potential buyers include Janus Henderson Group and Blue Owl Capital, the report said.

We’ve been writing a lot about finance M&A deals – closed and potential – of late. Check out some of our coverage here and here.

Teaming up. We’re also seeing some investment firms join forces and there was more of that late last week.

Aaron Weitzman of our affiliate site PE Hub in the US reported on BDT Capital Partners and MSD Partners agreeing to merge to form an advisory and investment firm.

The objective behind this merger is not to “be the biggest firm,” as sources familiar with the deal told Aaron. The goal is to create a firm to serve family- and founder-led business owners and long-term investors.

BDT is a merchant bank founded in 2009 by Byron Trott after an investment-banking career that included working with Warren Buffett, the Pritzker and Koch families as well as other prominent investors. It has about $33.3 billion under management.

MSD Partners was formed in 2009 to manage the capital of a range of third-party investors in addition to Michael Dell and his family.

The combined firm’s offerings will include private capital, credit, real estate and growth equity. Upon close, Trott and Greg Lemkau, CEO of MSD, will be co-CEOs. Trott will also work as chairperson of the combined firm, and Dell will become chairperson of the advisory board. The transaction is expected to be completed in early 2023.

You can read Aaron’s full piece here.

That tie-up came shortly after EQT closed its merger with BPEA, in a move that aims to boost EQT’s presence in Asia-Pacific.

You can check out our coverage of that deal here.

Healthy dealflow. Another sector that looks to be buoyant in the face of wider economic trouble is the healthcare sector.

Beyond Capital Partners announced that it has acquired a majority stake in medical supply store group ANK Group.

Kaiserslautern-headquartered ANK Group consists of the companies Ank Sanitätshaus, Orthopädietechnik Kaiser, Sanitätshaus, Rehatechnik and Ank Orthopädieschuhtechnik. The group has 13 stores in eight different cities.

The group plans to grow organically and via M&A outside the State of Rhineland-Palatinate with Beyond’s support.

“The ANK Group and its shareholders and employees meet the core of our investment strategy, namely to help strongly positioned asset-light companies in their further growth through supra-regional expansion,” said Christoph Kauter, managing partner and founder of Beyond Capital.

That’s it from me – have a great day and we’ll speak again tomorrow.