Good morning Eurohubsters, Craig McGlashan here with the middle of the week Dealflow.
It’s hard to ignore the big take-private news of the morning, with Elon Musk making a U-turn and offering to buy Twitter at his original offer price of $44 billion. But we’ll do our best to ignore it for a few paragraphs at least, so we can bring you exclusive coverage of a deal being announced later today.
Labour pains. Orangewood Partners will announce later this morning that the New York-based firm has made a strategic investment in Barrington James, a Crawley, West Sussex-based global recruitment business that serves the pharmaceutical, biotechnology and medical device sectors.
Neil Goldfarb, managing partner of Orangewood, shared the strategy behind the deal with PE Hub’s Aaron Weitzman in an exclusive email exchange.
Barrington James operates in the “highly attractive and growing life sciences sector, helping highly skilled professionals and companies come together”, Goldfarb said.
Positions in the life sciences industry “require significant industry knowledge and an understanding of the needs of these very specialised and technical businesses”, he said. “Naturally, the pandemic put a large spotlight on the life sciences and biopharma sectors, which we think are going to continue to attract interest and investment over the long term.”
Staffing is a “long-term pain point for companies”, Goldfarb said. “The labour force continues to become more transient and, with work from home here to stay, we believe these trends will only accelerate in the future.”
He added the firm also liked Barrington James’ management team and the culture the company built over the years, and that is “hard to replicate”.
This is the first institutional equity capital in the company’s history. While Orangewood is now the company’s largest shareholder, the company’s leadership team rolled over a significant portion of their interest into the deal.
Companies that seek to address staffing shortages in the healthcare industry have been attracting private equity investors lately. For example, One Equity Partners announced last week that the New York firm had acquired Prime Time Healthcare, a healthcare staffing services provider that specialises in nurses and other practitioners.
Small is best. Switching back to Musk, he took to Twitter (where else?) last night to proclaim: “Buying Twitter is an accelerant to creating X, the everything app.” Hopefully (for Musk), ‘X’ will also feature debt raising functionality, because unless he plans to just use cash to buy the social media platform, he might find banks unwilling to lend. Investors have been less than keen to take buyout debt off banks’ books, as with the $15 billion debt package for the LBO of Citrix Systems by Vista Equity Partners and Elliott Management.
I spoke to the managing partners at a couple of private equity firms in London yesterday who were pretty happy that their focus is on smaller firms, given the difficulty in obtaining debt right now for the mammoth deals.
Speaking of meetings, today and tomorrow I’ll be with PE Hub Europe’s Nina Lindholm and David Wansboro at Private Equity International’s Investor Relations, Marketing & Communications Forum: Europe in London.
Let me know if you’re there and would like to have a chat. I’m on firstname.lastname@example.org.
Tech a break. While the Twitter deal is back on, another tech deal is off. We’ve written a lot about US private equity firms eyeing up European firms with the strong dollar making the potential deals even more palatable.
But Chicago, Illinois-based private equity firm GTCR’s potential cash offer for GB Group, an identity verification, location intelligence and fraud prevention firm based in Chester in England, is not going ahead after the firms said they could not agree terms.
We covered the initial news that GTCR was considering a deal back in early September.
The news comes a few weeks after another move by a US private equity firm – Thoma Bravo – for a UK tech firm – Darktrace – failed to get past the discussion stage.
Approval. Another big deal involving US money for a UK company that is going ahead – albeit without private equity involvement – is GXO Logistics’ purchase of Clipper Logistics.
Greenwich, Connecticut-based GXO agreed terms to buy Leeds-based Clipper back in May in a cash and share deal valuing the latter at £965 million ($1.1 billion; €1.1 billion) but was awaiting regulatory clearance. The UK Competition and Markets Authority green-lit the deal yesterday.
Tech charge. One tech deal that is on is Hg’s purchase of TrustQuay from Silverfleet Capital.
TrustQuay, headquartered in Fleet, England, provides entity management, client accounting, practice management, compliance and workflow software for trust, fund and corporate service providers. Hg will support TrustQuay’s next phase of growth as the company rolls-out its new Software as a Service (SaaS) offering, TrustQuay Online.
“At Hg we focus on SaaS and technology businesses that are leading their sector towards change and a better way of working,” said Richard Earnshaw, director at Hg. “To date we’ve aggregated over a decade of experience in fintech, investing over $1 billion in more than 10 fintech leaders in the last five years alone.”
Hg targets technology buyouts primarily in Europe and the US. It has over $40 billion in funds under management with nearly 300 employees across its headquarters in London, Munich and New York.
Final whistle. Lastly, a group of private equity funds led by Carlyle Group is ready to take a share of less than 10 percent in a new media company that holds the broadcasting rights of Italy’s top football league, Serie A, according to a letter seen by Reuters.
For the latest in how private equity and sport are intersecting, I’d recommend checking out a piece by my teammate Kirk Falconer over at Buyouts. Kirk speaks to Boston Red Sox CEO Sam Kennedy among others. It’s a must-read – particularly for sports fans!
That’s it from me – I’ll speak to you again tomorrow.