We’re focusing on growth equity this morning, with sources telling me that the asset class could enjoy a strong 2024.
We have a couple of growth deals to report, first as Raine Group leads a funding round for a UK sportswear company then as Eiffel Investment Group, Azora Capital and Andera Partners co-lead a funding round in a French cleantech business.
We then switch to take-privates, where we look at how EQT’s move for veterinary pharma company Dechra and Brookfield’s takeover of payments business Network International are faring from a regulatory standpoint.
Lastly, we have what might be a ray of light for the exit market as one high profile IPO by a private equity firm trades above its listing price.
I’ve been speaking to sources lately about growth equity, particularly around how it’s managed to avoid some of the troubles faced by buyouts – especially as it tends not to rely on debt, which has of course become more expensive and harder to come by. The sector has also been able to utilise financial engineering techniques to bridge the valuation gap afflicting much of dealmaking.
We’re going to have more on that next week, but in the meantime we have a couple of growth deals to report.
First up is a sector that just seems to get bigger and bigger – sports. While private equity takeovers of big name sports teams might grab a lot of attention, many GPs are finding novel ways to invest in the sector, such as LBK Capital looking to play the “nascent asset class” of football transfers with lower-league Italian club Triestina.
Tapping into the vast retail potential of sports is another option – one taken by the Raine Group, which has led a £145 million ($184 million; €168 million) investment round in Castore, a sportswear brand and end-to-end digital retailing platform for global sports teams. Hanaco Ventures and Felix Capital also participated in the investment through their respective growth funds.
Liverpool-based Castore will use the cash to sign new sports franchises and supply its customers with a full range of merchandise while also providing them with data and tools to deepen engagement with fans, according to a release.
“Sports teams and leagues are among the most cherished brands in the world,” said Jason Schretter, partner of the Raine Group, in a statement. “They deserve comprehensive and bespoke solutions to help them better connect, engage and monetise their global fan bases. Castore’s differentiated combination of high-quality merchandise and data-driven technology solutions is the answer sports franchises need to unlock this massive opportunity.”
Sticking with growth, Eiffel Investment Group, Azora Capital and Andera Partners have co-led a €100 million investment round in Mylight150, a French cleantech company, alongside existing investor Elevation Capital Partners.
Eiffel Investment Group will invest in Mylight150 via its Eiffel Essentiel fund, Azora through its Azora European Climate Solutions Fund and Andera via its Andera Smart Infra I fund.
Demeter Partners’ Paris Fond Vert fund, a shareholder in the company since 2020, will exit the capital structure in this round.
Lyon-based Mylight150 also provides value-add services, such as its subscription-based virtual battery solution. It has quintupled its turnover and workforce over the last three years and is expected to generate around €100 million in sales in 2023.
While the UK’s Competition and Markets Authority has made some in M&A nervous with its warning that digital media giant Adobe’s planned takeover of interface design application Figma could harm competition, a couple of take-private deals have been passing their regulatory hurdles.
EQT has won approval from the Australian authorities for its £4.88 billion takeover of UK-based veterinary pharmaceuticals company Dechra. Dechra has manufacturing facilities in Australia, one of the 88 countries where its products are available. The private equity firm is now waiting for antitrust approval from the European Union.
Dechra shareholders approved the deal back in July. EQT expects the deal to close in early 2024.
Brookfield Asset Management has gained a series of merger control clearances for its £2.2 billion take-private of London-listed Network International, a payments company headquartered in Dubai.
Authorities in Nigeria, South Africa, Kuwait, Namibia, Saudi Arabia and Tanzania have signed off on the deal. Network and Brookfield are still working with other jurisdictions and now expect the deal to close in the first quarter of next year.
On the up
We’ve written plenty about how the near-dormant IPO market has been one of the problems for exits this year, with some of the deals that have gone public struggling in the aftermarket.
Well, there’s perhaps a ray of light on that. After private equity firm L Catterton listed its German shoemaker Birkenstock in the US at $46 per share back in October, the shares then opened at just over $40. But after steadily rising over the last few weeks, they tipped over the IPO price yesterday for the first time.
Are there signs now that IPOs could open as an exit route next year? Send me your thoughts at email@example.com