Second half dealmaking ‘to be more robust’; BlackRock agrees Kreos takeover

We start today finding out whether expectations earlier in the year that the second of 2023 would see a rise in dealmaking numbers still holds true.

Next, we look at BlackRock agreeing to take control of a private debt company, before we have the latest figures from Silver Lake’s take-private move for Software AG.

Finally, we round things out with the second aquaculture deal of the week, this time involving Earth Capital.

Green shoots

Earlier in the year, a lot of people had been telling us that they expected the second half of the year to see a rise in dealmaking, although of course then came events such as the collapse of Silicon Valley Bank and some higher-than-expected inflation numbers in places like the UK.

But the pressure to deploy funds and return cash to investors is still likely to mean a bump in dealmaking in the second half of the year – even if financing conditions are still far from ideal, market sources told PE Hub Europe.

There are “green shoots – the hope is for the second half to be more robust than the first half has been”, said Sunaina Sinha Haldea, global head of the private capital advisory group at investment bank Raymond James.

That optimism means some deals that were paused or died are being restarted, according to her colleague Allan Bertie, head of European Investment Banking.

“Buyers are feeling more confident on markets and hoping sellers see some flexibility,” he said. “After the summer, it could well be hectic. There will be deals planned for then, deals that were paused or died that have been restarted, and deals that have been brought forward all coming to market.”

But the poor financing conditions are still having an impact, particularly for public-to-privates, where financing “remains a challenge”, said Bertie.

“The amount of time banks have to commit funds is long. We’re waiting for stability to come back. The firms getting deals done are often using their own debt funds or reckon the deal works on an equity-only basis, then they will finance later.”

Check out the full article here, including on what is likely to drive dealmaking in the second half and how exits have performed.

Credit move

Speaking of in-house debt funds, BlackRock has signed a definitive agreement to acquire full control of Kreos Capital, a provider of growth and venture debt financing to companies in the technology and healthcare industries.

Kreos Capital is based in London.

“Coupled with our expectation that growth and venture lending will figure prominently in the expansion of the global direct lending opportunity set going forward, we believe this is an opportune time to welcome the Kreos team to BlackRock,” said James Keenan, CIO, and global head of BlackRock Private Credit.

Kreos’ 45-person team will join BlackRock as part of the transaction.

Edging up

Silver Lake’s tender offer to take listed German tech company Software AG private has reached 30.14 percent, according to a statement released today, ahead of the deadline on Wednesday next week. The threshold is 50 percent plus one share.

Software AG is subject to a rival bid from Bain Capital, and some existing investors in the company had publicly taken sides between the two private equity firms. Read more on that here.

Shoal of deals

And finally, my experience of fishing was always that you either caught no fish or a lot of fish. The same seems to be true of fish-related private equity deals.

After we covered Goldman Sachs Asset Management’s move for Norwegian salmon farm service provider Frøy earlier in the week, we have another deal in that sector to report.

Earth Capital (ECL) has made an investment in Ace Aquatec, an aquaculture technology company, to grow its current portfolio of products and markets.

Ace Aquatec is based in Dundee, Scotland.

ECL joins existing investors Aqua Spark and Chroma Ventures.

“Sustainable farming aligns perfectly with Earth Capital Limited’s mission to advance technology within the energy, food, and water sectors while driving towards a net-zero future,” said Bradley Jones, senior investment manager of ECL.