It’s a reflective Dealflow this morning, with some news elsewhere chiming with some of our most focused coverage over the last few months. The theme of antitrust controls is high on the agenda with news that Thoma Bravo was stymied in an acquisition bid by such concerns – we take the opportunity to look back on our coverage of Triton and Bain’s race to buy Caverion, in which competition concerns played a large part.
We also look at news that a private equity-owned firm based in the UK might list in New York rather than London – something in keeping with our recent coverage that sellers need to get ‘creative’ on exits.
Deals wise, Nina Lindholm talks to Sun European about its plans for its new acquisition MegaGroup, while Hunter Point Capital invests in a private capital firm, and Metric Capital and Scope take a stake in a Danish toy company (no, not that one).
Antitrust
Triton Partners has taken control of just shy of 24 percent of the outstanding shares in Caverion, a Finnish construction firm it is looking to take private. That’s no real surprise, given the Caverion board said that Triton had a de facto holding of nearly 30 percent when taking into account conditional share purchases as it switched its support to Triton from a rival Bain Capital offer last week.
I raise the news mainly because the Caverion story, which we’ve covered in depth here at PE Hub Europe, has had an antitrust element at its heart, something that is making headlines elsewhere this week.
In the Caverion case, Bain – the first bidder – warned that Triton’s offer could get held up in competition controls due to the latter’s ownership of Swedish building company Assemblin. The Caverion board agreed that could be an issue, although it later supported Triton due to Triton’s offer price being “sufficiently higher” than Bain’s as to “outweigh the higher risks in Triton’s offer”.
That’s an interesting contrast to something that’s happened in the US, where the Financial Times has reported that private equity firm Thoma Bravo lost out in a battle to buy customer service software provider Qualtrics “amid fears US authorities would stymie the deal on antitrust grounds”, according to sources spoken to by the FT.
Thoma Bravo had hoped to merge Qualtrics with its portfolio company Medallia, according to the FT. But Silver Lake and CPP agreed to buy Qualtrics for $12.5 billion last month.
As we wrote back in January, the tussle for Caverion was a battle “that legal sources say is a harbinger of growing antitrust scrutiny in private equity globally”. We expect more and more of these type of stories in the months ahead.
If you have any thoughts on the increasing focus on antitrust from regulators, send them over to me at craig.m@pei.group
Water management
Next up, PE Hub Europe’s Nina Lindholm takes a deep dive into Sun European’s acquisition of MegaGroup, a Dutch wholesaler of water technology products for installers, professional end-users, resellers and equipment manufacturers across northwest Europe.
“The reason why we found it attractive is that the underlying market is growing pretty nicely,” Sun managing director Paul Daccus told Nina. “[It’s growing by] around 3 to 5 percent, but that’s across all of its product categories. There are certain areas which are growing significantly quicker than that.”
Irrigation and industrial applications are some of these areas, according to Daccus. He added that a lot of the growth in these segments is driven by increases in regulatory requirements. “But even above that, most corporates now are very focused on making sure that they’re doing more than the bare minimum from the regulatory point of view, particularly around the ESG credentials of those businesses.”
This growth is opening doors for further M&A and consolidation. “We’ve already identified over 160 potential targets, ranging from a €1 million EBITDA up to teens of EBITDA,” said Daccus. MegaGroup’s competitors are smaller regional operators, according to Daccus, but they have “quite nice” customer bases, making them interesting targets for consolidation.
Check out the full interview to find out in which markets Sun plans to grow the firm as well as what attracted the private equity firm to invest.
IPOs
We looked at exits in depth this week, with Nina Lindholm speaking to Warburg Pincus’ Ruoxi Chen about the firm’s sale of Polyplus and how market conditions mean that private equity firms will need to get ‘creative’ with their exit strategies.
One of the reasons that exits are proving tricky is that one traditional route, public listings, has been dormant. Back in February, Tikehau Capital’s Roberto Quagliuolo, who had recently listed EuroGroup Laminations, an Italian producer of stators and rotors for electric motors, told us that the IPO market was “binary”.
“You have a story – energy transition, electrification, clean mobility. Either you are riding one of these well-identified macro trends or the market is closed. Investors don’t feel the need to take risks for stories that are not perceived as a clear pureplay.”
There are signs however that the IPO market might be reopening – although it could still require some of that creativity that Warburg’s Chen talked of.
London-headquartered commodity broker Marex is considering an IPO that could come early next year – but the listing might be in New York rather than in its home city, according to a report in the Financial Times.
Marex is owned by private equity firms JRJ Group and Trilantic Europe.
I’d love to get your thoughts on whether the IPO market is reopening – or if indeed it’s reopening in some parts of the world but not others. Pop them over to me at craig.m@pei.group
Secondaries
Hunter Point Capital has made a strategic minority investment in Coller Capital, an independent investor focused on the private capital secondaries market.
Coller’s recent funds include Coller Credit Opportunities I, which closed in February 2022 with committed capital of approximately $1.5 billion. At the start of April, the firm held a first close of its Coller Capital Secondaries RMB I Fund.
In addition to its London headquarters, Coller has offices in New York, Hong Kong and Seoul.
Toys
Metric Capital and Scope have partnered to invest in Maileg, a Danish toy brand.
Maileg is headquartered in Herning.
Maileg’s co-founders Dorthe and Erik Mailil will reinvest alongside Metric Capital and Scope, and will retain a significant stake in the company, according to a release.
Editor’s note: This article originally said that Silver Lake and CPP bought Qualtrics last month. It has been updated to reflect that the Qualtrics deal was announced last month, but has not closed.
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