Consumer sector entries at a discount; exits slow in Q2

S&P Global Market Intelligence offers our top picks of global private equity news stories and more published throughout the week.

Valuations for consumer sector companies have taken a big dip over the past year, and that could entice more entries from private equity investors before the close of 2022.

Falling price points present "a significant [buying] opportunity for private equity," said Glenn Mincey, global and U.S. head of private equity for professional services firm KPMG. How significant?

Well, the market capitalization of the S&P 500 Consumer Discretionary index was down nearly 22% year over year as of July 26. Compare that to a 12% loss in the market cap of the S&P 500 index over the same period.

Private-market transaction values were also down, if not quite so much. S&P Global Market Intelligence data showed that, among those deals with disclosed transaction values, the average value of a private equity-backed deal in the consumer sector fell about 8% to $910 million in the first half of 2022 compared to the same period a year earlier.

Annual inflation on consumer goods and services hovered at a 40-year high as of June. Industry observers say ongoing supply chain issues and wage pressures are also clouding the outlook for the sector.

There are still opportunities for savvy private equity investors to create value. Kevin Martin, U.S. consumer and retail lead for KPMG, said investing in consumer sector companies' digital capabilities remains a tried-and-true path for private equity.

Read more on the M&A outlook for private equity in the consumer sector.

CHART OF THE WEEK: Global private equity exits fall in Q2

⮞ The total value of global private equity exit activity declined 14.6% to $168.01 billion in the second quarter compared to $196.65 billion during the same period a year ago.

⮞ The 722 exits recorded in the second quarter represented a greater than 29% decline from the 1,018 exits during the same period in 2021.

⮞ Exit volume and value are falling amid an inhospitable exit environment that Cameron Joyce, deputy head of research insights at Preqin, said is prompting private equity managers to hold onto portfolio companies longer.

FUNDRAISING AND DEALS

* A consortium led by Apollo Global Management Inc. reached an all-cash deal to buy airfreight company Atlas Air Worldwide Holdings Inc., The Wall Street Journal reported. The deal, which has an enterprise value of about $5.2 billion, is slated to close during the fourth quarter of 2022 or the first quarter of 2023.

* Thoma Bravo LP is purchasing Ping Identity Holding Corp. in a deal that values the identity solutions company at approximately $2.8 billion, Dow Jones Newswires reported. The deal could close by year-end.

* The Carlyle Group Inc. and Advent International Corp. will invest roughly $1.1 billion in Yes Bank Ltd. in exchange for a 10% stake each in the India-based bank.

* KKR & Co. Inc. agreed to sell Quadion LLC, or Minnesota Rubber & Plastics, to Swedish engineering company Trelleborg AB for $950 million. The transaction is expected to close before the end of 2022.

ELSEWHERE IN THE INDUSTRY

* Stonepeak Partners LP closed the acquisition of the Latin American operations of communications infrastructure company Lumen Technologies Inc. for $2.7 billion in cash.

* Affiliates of SK Capital Partners completed the purchase of Valtris Specialty Chemicals from H.I.G. Capital LLC. The acquired company produces specialty additives and precursors for plastics, coatings, pharmaceuticals and other applications.

* Rêv Worldwide Inc., in partnership with Searchlight Capital Partners LP, agreed to acquire the NetSpend Corp. consumer business from Global Payments Inc. The all-cash deal worth $1 billion could close during the first quarter of 2023.

* Tobacco products retailer Bolder Panther Group LLC received a follow-on investment of $50 million from Main Street Capital Corp.

FOCUS ON: RENEWABLE ENERGY

* Sequitur Renewables LLC, which is backed by ArcLight Capital Partners LLC, will purchase a 185-MW portfolio of operating wind farms from GlidePath Power Solutions LLC affiliates.

* Antin Infrastructure Partners agreed to buy a majority stake in renewable energy group Blue Elephant Energy AG. The deal is expected to close in the fourth quarter.

* Blackstone Inc. portfolio company Atlantic Power Transmission LLC signed a deal with Morrison Energy Group LLC, pursuant to which Atlantic Power will invest $50 million over 10 years in workforce development if it wins approval to build transmission infrastructure to deliver 3,600 MW of offshore wind power to the existing grid.

* Energy storage company Flatiron Energy LLC received a capital injection from Hull Street Energy LLC.