Good morning Eurohubsters, Craig McGlashan here with the Dealflow.
Things are a bit calmer this morning after some volatile trading in public markets yesterday following UBS’s rescue of compatriot banking giant Credit Suisse. European markets are pretty much green across the board – let’s see if that holds up this week and sets some calm conditions for dealmaking.
We’ve got two deals to report this morning, with KKR planning to sell its stake in a Spanish renewables company to its joint partner Brookfield Renewable. Meanwhile, Beverly Hills-based private equity firm Regent has agreed to buy the international online programme management business of publishing and education firm Pearson. That deal has a novel payment structure.
Finally, we have the latest in our series of interviews with senior women in private equity, with Julie Gautier of PAI Partners taking the questions, and a reminder to nominate candidates for PEI Group’s third annual Women of Influence in Private Markets list.
KKR will sell its 50 percent stake in renewable developer X-ELIO to its joint venture partner Brookfield Renewable, which will fully own the company after the deal. Brookfield will acquire the extra stake via a follow-on investment through the same fund that made its original acquisition.
Headquartered in Madrid but with a presence globally, X-ELIO develops, constructs, finances and operates solar PV plants, storage and hydrogen projects.
KKR originally invested in X-ELIO in 2015 before Brookfield took a 50 percent stake in 2019. Since KKR’s investment, X-ELIO has had over $2bn of investment. The company has built or developed 3GW of renewables projects across five continents since its founding in 2005.
X-ELIO is expected to have 3GW of assets in operation, under construction or ready-to-build by the end of the year across Spain, Italy, the US, Australia, Japan and Latin America. It also has over 10GW of advanced near-term pipeline.
“Since KKR’s initial investment eight years ago, we have helped X-ELIO transform into a global leader in sustainable energy development,” said Tara Davies, co-head of European infrastructure at KKR.
Regent, a private equity firm based in Beverly Hills, California, is set to buy the international online programme management business of Pearson, a global publishing and education business headquartered in London.
The sale of the unit – called Pearson Online Learning Services (POLS) – concludes a strategic review by FTSE 100-listed Pearson.
POLS had gross assets of £113 million ($138 million; $129 million) and net assets of £78 million as of 31 December 2022. It generated £155 million of revenue and £26 million of adjusted operating losses last year, with around £5 million of stranded costs, “which have now been eliminated”, according to a posting on the London Stock Exchange. Statutory losses before tax last year were £52 million.
Payment will be deferred. Pearson will receive 27.5 percent of POLS’ positive adjusted EBITDA in each calendar year for six years. Pearson will also receive 27.5 percent of the proceeds Regent makes from selling POLS.
In the process
Next up, we have the latest in our series of interviews with senior women in private equity.
Understanding that private equity as an industry has an issue in terms of diversity is “half of the battle”, according to Gautier. “Because most of the time, people just don’t notice,” she added.
PAI is aiming to tackle this topic by ensuring it recruits more women. Approximately 50 percent of the firm’s recruits last year were women, according to Gautier. “Whenever you have a recruitment process, you must make sure you include women in the process,” she said. “It sounds stupid when you say it, but most of the time, it’s not done.”
Out of the three portfolio companies Gautier supports at PAI, two have gender parity at board level, and nearly at management level as well. For Gautier, to reach goals like this, one must actively work for it. “If you don’t ask, it will not happen,” she said.
Women of influence
It’s your last chance to nominate candidates for PEI Group’s third annual Women of Influence in Private Markets list, which recognises trailblazing women in alternative assets.
The deadline for nominations is tomorrow, Wednesday, 22 March.
The list – which will include women from private equity, infrastructure, private debt, real estate and venture capital – will be published in July by Private Equity International, Private Debt Investor, Infrastructure Investor, Venture Capital Journal and PERE.
That’s all from me today – speak to you again tomorrow.