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US PE catches up to Europe peers on ESG, but obstacles remain


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Using ESG Analysis to Support a Sustainable Future

US PE catches up to Europe peers on ESG, but obstacles remain

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

U.S. private equity firms are catching up to European counterparts in advancing environmental, social and governance strategies, but obstacles to implementation remain.

Many newer funds now have "ESG provisions and covenants baked in," and large banks and financial institutions are mandating ESG as a component in their lending criteria, Hameer Vaid and Hunt Holsomback of Alvarez & Marsal Holdings LLC's private equity performance improvement service said in an interview. But a lack of comparative data, evolving global standards on requirements, variability in reporting impact across alternative investment asset classes, and implementation cost and time are hurdles for the asset class.

There is some evidence that private equity involvement has a positive impact on the ESG profile of portfolio companies. S&P Global Trucost data, which assigns ESG scores to publicly listed companies, shows that between 2017 and 2020 the highest-scoring companies largely improved their ratings after private equity investment.

Ecolab Inc. and Republic Services Inc. grabbed the first and second spots in terms of ESG scores in 2020 at 77 and 65, respectively, beating the average of 21 in their respective specialty chemical and commercial service industries. Both companies are backed by Cascade Investment LLC, an investment firm founded by Bill Gates. Also on the list are two companies backed by KKR & Co. Inc. and TPG Capital LP, both of which have impact strategies. Ingersoll Rand Inc. has a score of 61 and Cushman & Wakefield PLC's score is 34, both above the average score of 17 in their respective machinery and real estate industries, Trucost data shows.

Read more about what the asset class is doing to combat the difficulties around ESG implementation here.


* Blackstone Inc. agreed to acquire a majority interest in Spanx Inc. in a deal that values the women's shapewear brand at $1.2 billion. Spanx founder Sara Blakely will keep a significant stake in the business.

* Clayton Dubilier & Rice LLC will sell IT service provider Sirius Computer Solutions Inc. to CDW Corp. for $2.5 billion in an all-cash transaction, The Wall Street Journal reported, citing an investor memo. The private equity firm also agreed to acquire PricewaterhouseCoopers LLP's global mobility tax and immigration services business in a deal expected to close in the first half of 2022.

* KKR & Co. Inc. and partner Dundee Partners LLP bought the KMR Music Royalties II portfolio from Kobalt Music Group Ltd. for about $1.1 billion, Dow Jones Newswires reported.

* EQT AB (publ)'s EQT IX fund will provide significant capital to cyber insurance provider CFC Underwriting Ltd., together with Vitruvian Partners LLP, Dow Jones Newswires reported. The firm also launched the EQT Future fund, a €4 billion impact-driven vehicle that will seek long-hold investments in mature companies.


* Antin Infrastructure Partners is purchasing a majority stake in Origis Energy USA Inc. from Guy Vanderhaegen, president and CEO of the renewable energy platform, and Global Atlantic Financial Group Ltd.

* New Mountain Capital LLC obtained approximately $1.15 billion for New Mountain Guardian III BDC LLC, its latest direct lending vehicle.

* Jab Holding Company SàRL signed an agreement to buy insurance technology company Figo Pet Insurance LLC and take a majority interest in BNP Paribas Cardif SA's pet insurance unit, Cardif Pinnacle.

* Eldridge Industries LLC-sponsored blank-check company Horizon Acquisition Corp. closed its merger with online ticketing company Vivid Seats LLC, which is backed by GTCR LLC and Vista Equity Partners Management LLC.


* Advent International Corp.-backed industrial maintenance and repair services company Rubix Group Holdings Ltd. is aiming for an IPO in London to raise about €850 million in proceeds.

* Advent also sold Distribution International Inc., which markets thermal and acoustical insulation supplies, to TopBuild Corp. in a $1.0 billion all-cash deal.

* BBH Capital Partners provided growth investment to The Granite Group Wholesalers LLC, together with the water distributor's management and the Condron family.