PE backs away from hotels; Middle East, North Africa investments climb in Q2'23

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

Private equity and venture capital investment in the global hotel, resort and cruise line sector peaked at $21.21 billion in 2021. The decline since then has been steeper than a black diamond run at Deer Valley, to name just one private equity-owned ski resort.

The value of private equity-backed deals in the sector plunged nearly 87% year over year to just $2.78 billion in 2022. That decline stands out, even in a year with a significant drop-off in private equity investments overall. As of late August, the 2023 total for private equity investments in hotels, resorts and cruise lines was on track to come in even lower.

After cratering in 2020, leisure travel rebounded in 2021 when pandemic-era restrictions began to lift, drawing more investors to the sector. As recently as April, Blackstone Inc. President Jonathan Gray was crediting travel and leisure investments for driving revenue growth in the alternative asset manager's private equity portfolio.

Judging from private equity's apparent lack of enthusiasm for the sector in 2023, it appears some of the post-pandemic excitement and activity has faded.

Read more about declining private equity investment in hotels, resorts and cruise lines.

CHART OF THE WEEK: Rising MENA region investment

⮞ Private equity and venture capital investments in the Middle East and North Africa (MENA) notched a small year-over-year increase in the second quarter, rising more than 2% to $5.23 billion, compared with $5.12 billion for the same period in 2022.

⮞ The results follow a first quarter in which investments in the region dropped 44% year over year to $2.35 billion from $4.19 billion in the same period a year earlier.

⮞ The largest private equity deal in the region between Jan. 1 and Aug. 25 was a bid by Francisco Partners Management LP and CVC Capital Partners Ltd. to acquire Network International Holdings PLC, a digital commerce business based in the United Arab Emirates, for about $2.91 billion.

TOP DEALS AND FUNDRAISING

– KKR & Co. Inc. is investing about $750 million in London-based transport electrification and battery storage solutions company Zenobe Energy Ltd. KKR will become a joint majority holder with existing Zenobe backer Infracapital, which is reinvesting in the company.

– Advent International Corp. will sell a majority interest in Brazil-based premium chocolate company Grupo CRM to Nestlé SA in a deal expected to close in 2024. Grupo CEO Renata Vichi will remain at the helm and will keep a minority stake in the company.

– Venture capital firm 500 Global raised $143 million at the close of 500 Southeast Asia III LP, its largest early-stage fund for Southeast Asia so far.

– Air Street Capital Management Ltd. announced its second fund with about $121.2 million in capital commitments. The fund will back AI-first companies.

MIDDLE-MARKET HIGHLIGHTS

– BGF Investment Management Ltd. made a £3 million investment in London-based Kooth PLC, which provides digital mental health and well-being services for the youth.

– AddSecure signed a deal to buy Clifford Group, a Dutch mobile security and connected mobility solutions provider, from NewPort Capital and NewPort Buyout Fund I Coöperatief UA.

– ECI Partners LLP is investing €300 million in UK-based business messaging solutions company Commify Ltd. The deal provides full realization for HgCapital LLP.

– L Catterton Partners acquired a significant minority stake in Swedish haircare brand Maria Nila AB through its European fund.

FOCUS ON: HEALTHCARE

– Thoma Bravo LP agreed to purchase cloud healthcare technology solutions provider NextGen Healthcare Inc. for $23.95 per share in cash. The parties expect to close the go-private deal in the fourth quarter.

– An investor group, including Earlybird Venture Capital GmbH & Co. KG, Andera Partners, EQT Life Sciences, Atlantic Bridge Services Ltd., WDC Investment Fund, StartGreen Capital, Seroba Life Sciences Ltd. and Summit Bridge Capital, sold Irish medical-device company Atlantic Therapeutics Ltd. to Caldera Medical Inc.

– Abbott Laboratories reached a deal to acquire Bigfoot Biomedical Inc., which develops smart insulin management systems, from Madryn Asset Management LP and Visionnaire Ventures.

– Laborie Medical Technologies Inc. signed an agreement to purchase interventional urology device company Urotronic Inc. for an up-front cash payment of $255 million and up to $345 million in additional milestone payments. The sellers are Legend Capital Management Co. Ltd., Hillhouse Investment Management Ltd. and CD Capital.

For further private equity deals, read our latest In Play report, which looks at potential private equity-backed M&A, including rumored transactions, each week.