Motive Partners expects SEC rules to buoy financial data sector

We are seeing more and more signs that things are picking up for private equity dealmaking.

We’ve got a couple of private equity-backed businesses looking to launch IPOs – Triton and L Catterton are the owners there – while we also report on the latest take-private bid in the UK, this time by HIG Capital.

We then take a look at an exit by Hayfin Capital Management to a Thoma Bravo-backed company.

But first, we hear from Motive Partners about how an area not always associated with an uptick in dealmaking – regulation – is upping the value of the financial data sector.

Convergence

The US Securities and Exchange Commission’s new rules for the private equity market have sparked a lot of debate – to say the least – but at least one GP sees them as an opportunity as they will drive demand for financial data.

Anything promoting greater transparency and consistency in the industry is “an overall net positive”, Neil Cochrane, partner at Motive Partners, told Nina Lindholm. “It will probably come with some increased costs in terms of producing that level of information,” he said. “It also points to the convergence of private and public markets, and it’s a good example of what is demanded by the allocators as well. It’s overall a very exciting time for the industry.”

Motive Partners acquired a majority stake in With Intelligence, a data provider for allocating, fundraising and business development in the public and private markets, for £400 million ($516 million; €461 million) in late July.

Despite M&A such as Morningstar’s acquisition of Pitchbook and MSCI’s acquisition of Burgiss, the sector remains fragmented, according to Cochrane.

“We can see a further convergence of private markets with public markets’ infrastructure tools and data requirements,” said Cochrane. “That’s driving a lot of activity in the sector.”

Check out the full article for more on Motive’s plans for With Intelligence.

Listing lift

A quiet IPO market has been one of the reasons behind a difficult exit outlook this year, but we’re seeing more and more signs that things are changing.

A lot of eyes have been on the US, where UK microchip company Arm and US delivery company Instacart have launched IPOs. “People are watching to see how those go and to see what investor sentiment support there is in the US,” an investment banker told me a couple of days ago. “It’s a sign of risk appetite, of whether we’re risk-on and back to doing things.”

It looks like some other companies believe risk-on is back.

German manufacturer Renk Group, majority owned by private equity firm Triton, announced that is planning an IPO on the Frankfurt Stock Exchange.

Renk provides products such as gear units, transmissions and power-packs to military and civil customers. In its 2022 fiscal year, about 70 percent of its revenue came from the military sector. Its revenue was €849 million and adjusted EBIT was €144.3 million.

Triton acquired it in 2020 and will remain majority shareholder following the IPO.

Meanwhile, compatriot Birkenstock, a footwear company owned by private equity L Catterton, has filed for an IPO, but it has opted to attempt a listing in the US.

Support

The US certainly seems to be a likelier destination for listings than Europe, and in particular, the UK, where several businesses are potentially delisting.

Speaking of which, HIG Capital’s take-private bid for UK mail and logistics company DX Group has won backing from the company’s biggest shareholder.

Gatemore Capital Management, a fund manager that controls 19 percent of DX’s outstanding shares, said yesterday that it supported HIG’s non-binding and conditional proposal. Fellow major shareholder Lloyd Dunn has also backed the proposal.

Gatemore became DX’s largest shareholder in 2017 when it kept the business afloat with a £24 million convertible note financing. DX has since moved from losing over £10 million in EBIT per year to making £30 million in EBIT per year, while revenues are growing at double digit rates, according to a release.

HIG made an all-cash offer of 48.5p per share for DX earlier in the week. It values the total outstanding equity at around £290 million ($362 million; €336 million).

DX’s share price was trading around 43p at time of writing, having been around 36p before the take-private offer was announced.

Power out

Just to further highlight how things are opening up on the exit front, Thoma Bravo portfolio company JD Power announced that it has entered a definitive agreement to acquire Autovista Group, a provider of automotive data, analytics and industry insights, from Hayfin Capital Management.

The acquisition is expected to close by the end of 2023.

Headquartered in London, Autovista is made up of five brands: Autovista, Eurotax, Glass’s, Schwacke and Rødboka.

Thoma Bravo acquired Troy, Michigan-based JD Power in 2019.