S&P Global Market Intelligence offers our top picks of global private equity news stories and more published throughout the week.
Franklin Resources Inc. is the latest firm to make a plunge into the growing secondaries market, announcing this week that it will acquire Lexington Partners LP for aggregate cash payments of $1.75 billion.
Franklin Templeton expects its alternative assets under management to grow to $200 billion on the close of the transaction. Its acquisition of Lexington Partners, which focuses on secondary private equity and coinvestment funds, follows the purchase of real estate manager Clarion Partners LLC, announced in 2020, and alternative credit manager Benefit Street Partners LLC in 2018.
"Several years ago, we announced our intention to create a full suite of alternative strategies, and we have been very deliberate in building our capabilities," Franklin Templeton CEO Jennifer Johnson said on its third-quarter earnings call following the announcement. "We now have top-tier specialist investment managers in all of the key alternative categories," which also include hedge funds.
Lexington Partners will continue to operate autonomously from Franklin Templeton with no changes to the team or its independent products, Johnson said.
In terms of the overall secondary market, private equity secondaries make up the largest chunk, with AUM at $300 billion at 2020 year-end, up 23.4% on the $243 billion recorded in 2019, according to Preqin's first-half update on the space.
Market participants anticipate secondaries transaction volumes could reach $100 billion or more in 2021, fueled by the popularity of general partner-led solutions.
In a similar transaction, Ares Management Corp. bought secondaries specialist Landmark Partners for $1.08 billion in a deal announced in March.
FUNDRAISING AND DEALS
* Blackstone Inc. purchased a 9.9% stake in American International Group Inc.'s life and retirement business, while entities managed by the private equity giant acquired Allstate Life Insurance Co. and certain subsidiaries from The Allstate Corp. for a total consideration of $4 billion. Funds managed by the firm also bought smart access solutions provider The Chamberlain Group LLC from The Duchossois Group Inc.
* EQT AB (publ)'s EQT Infrastructure fund will exit container terminal Fenix Marine Services Ltd. to shipping line CMA CGM SA in a $2.3 billion transaction, according to Dow Jones Newswires. The firm said it hit its hard cap for the EQT Infrastructure V fund at final close, with €15.7 billion in fee-generating assets under management.
* Carlyle Group submitted a proposal to acquire troubled London-based lender Metro Bank PLC, according to Dow Jones Newswires. The firm separately said it purchased a majority stake in CSS AG, and the German business software provider's CEO Michael Friemel will keep a large minority stake.
* Permira Advisers Ltd. agreed to sell Tricor Group to Baring Private Equity Asia-affiliated funds in a deal that values the Hong Kong-based business service provider at $2.76 billion.
ELSEWHERE IN THE INDUSTRY
* Leeds Equity Partners LLC amassed more than $1.4 billion for the Leeds Equity Partners VII LP fund at final close.
* Guardian Capital Partners PLC divested pet product retailer Cosmic Pet LLC in a deal with Platinum Equity LLC-backed Petmate.
* Middle-market buyout firm Comvest Partners exited its majority investment in RugsUSA.com Inc. to Francisco Partners Management LP while remaining a significant investor in the e-commerce retailer of rugs and home decor.
* Sentinel Capital Partners LLC-managed vehicles will sell Italian restaurant chain Fazoli's to FAT Brands Inc. in a $130 million transaction slated to close by mid-December.
FOCUS ON: MACHINERY: INDUSTRIAL
* KKR & Co. Inc. reached a deal to buy food processing equipment maker Bettcher Industries Inc. from MPE Partners.
* Critical Process Systems Group Inc. was sold by Wynnchurch Capital LP to facility designer Exyte GmbH.
* Berkshire Partners LLC made a majority investment in precision cutting tools maker Harvey Performance Co., marking an exit for Summit Partners LP.