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PE taps secondary market to hold prize assets; Blackstone-Soho China deal fails


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PE taps secondary market to hold prize assets; Blackstone-Soho China deal fails

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

The rise of general partner-led secondaries has provided GPs a solution to an age-old problem offering a place to house prize assets for longer periods beyond the typical three- to five-year hold period.

Once labeled zombie funds, GP-led secondaries, or fund restructurings, were gaining traction ahead of 2020 as a number of quality managers tapped the market. The coronavirus pandemic was a catalyst for the development of GP-led secondaries as private equity grappled with uncertainty and the slowdown of the exit market.

GP-led liquidity solutions exceeded 60% of secondary market deal volume in the first half of 2021, according to a survey from Evercore Inc., marking the first time it was that high since the company started its secondary market report.

There has been a general realization among the GP community that secondary capital can be used strategically "to help grow their business and their businesses. And I think prior to 2019 it probably wasn't fully appreciated," Nigel Dawn, head of Evercore's private capital advisory group, said in an interview.

Single-asset deals accounted for 41% of GP-led secondaries continuation fund transactions, with the remainder multi-asset deals. This is up from single-asset deals making up 30% of volume over the same period in 2020, according to the report.

A number of sources S&P Global Market Intelligence spoke with labeled single-asset deals another exit option for top-performing assets in a fund, in addition to a sponsor-to-sponsor sale, a trade sale or an IPO.

There are situations where single-asset deals are "completely valid," said Alex Shivananda, head of secondaries and co-investments at Cambridge Associates LLC, adding that his firm has participated in transactions that provided strong returns. The secondaries team invests in and alongside secondaries funds and is also the recipient of GP-led secondary opportunities in an LP capacity.

Read more about the evolution of the GP-led secondaries market and what it takes to get such transactions over the line here.


* Blackstone Inc. canceled its planned $3.3 billion acquisition of Chinese commercial property developer Soho China Ltd. in light of a long regulatory review. Funds managed by Blackstone Inc. and Vista Equity Partners Management LLC wrapped up their purchase of higher education technology solutions provider Ellucian Co. LP. Blackstone-managed funds also closed their acquisition of environmental, social and governance technology group Sphera Solutions Inc. from Genstar Capital LLC.

* KKR & Co. Inc. set up a joint venture with Cornerstone Cos. Inc. to acquire over $1 billion of U.S. diversified healthcare real estate assets in the next few years. A KKR-backed company also submitted a 7.2 billion-Norwegian-kroner buyout bid for Norwegian shipowner Ocean Yield ASA. The firm's affiliates are also selling a 20.1% stake in sporting goods retailer Academy Sports and Outdoors Inc., valued at roughly $852.9 million.

* Apollo Global Management Inc. offered to buy pigment manufacturer Tronox Holdings PLC for $4.3 billion in cash, people familiar with the matter told Reuters. Funds managed by the firm's affiliates are also in exclusive discussions to purchase Kem One Group, a European polyvinyl chloride manufacturer.

* Brookfield Asset Management Inc. is seeking to raise as much as $15 billion for its third flagship private equity fund, which is expected to launch later in September, Bloomberg News reported, citing people familiar with the matter.


* Clearlake Capital Group LP will add Mold-Rite Plastics LLC to its portfolio from Irving Place Capital. The deal is in partnership with the packaging component maker's management.

* QED Investors LLC amassed $1.05 billion for its seventh investment vehicle, which will target financial technology companies mainly across the U.S., the U.K., Latin America and Southeast Asia.

* SoftBank Group Corp. launched Softbank Latin America Fund II, a new $3 billion private equity vehicle focused on Latin American technology startups.

* Swedish contact verification company True Software Scandinavia AB, which counts Sequoia Capital India Advisors Pvt. Ltd. as one of its private equity investors, is aiming to raise gross proceeds of about 1 billion Swedish kronor in an IPO on Nasdaq Stockholm.


* Lexington Partners LP is working with an adviser on the potential sale of its business, which could be worth a few billion dollars, The Wall Street Journal reported, citing people familiar with the matter. KKR is one of the potential bidders for the secondaries-focused investor.

* KKR's pending acquisition of a 55% majority interest in Colonial First State Investments Ltd. from Commonwealth Bank of Australia for $1.7 billion is being backed by a roughly $735 million U.S. dollar-denominated first-lien term loan, sources told Market Intelligence's Leveraged Commentary and Data.

* Antin Infrastructure Partners will sell its shares at a price range between €20 and €24 apiece in its upcoming IPO in Paris and global placement of ordinary shares to raise about €550 million.

* CVC Capital Partners Ltd. will buy British secondary-focused alternative asset manager Glendower Capital LLP to create a combined group with roughly €113 billion of assets under management.