S&P Global Market Intelligence offers our top picks of global private equity news stories and more published throughout the week.
Private equity professionals have been stewing over it for years, but whispered predictions have failed to come to fruition. Top of the market conditions have retained their grip, and strong fundraising, record levels of dry powder, high valuations and fierce competition have been the order of the day.
So when will we see a correction? Within the next two years, according to 72% of the private equity funds surveyed by professional services firm BDO. To prepare for this potential recession, half of the managers surveyed are being more selective with their investments, and 46% are holding current investments for longer periods. In addition, 41% of private equity firms are raising more capital, and there was support for lowering terminal value assumptions and exiting current investments.
Private equity firms are looking for defensive investments ahead of changing market conditions. Top of the list is technology, with financial services and energy and natural resources investments taking second and third spots on both wish lists.
BDO's U.S. private equity group leader, Scott Hendon, said the expectation of an economic contraction has sent private equity and venture capital "to the markets in droves as they look for liquidity to strengthen their stockpiles during a down economy," adding that this has created unbridled competition and historic valuation levels. "Though we expect this trend to continue, we are seeing private capital funds deploying more creative ways to put their capital to use," he added.
Whether 2020 brings a long-anticipated correction, the firms that have exercised discipline and foresight will be well prepared to weather the storm.
* An investor group led by Francisco Partners Management LP affiliates and including Evergreen Coast Capital Corp. is acquiring LogMeIn Inc. in an all-cash transaction that gives the cloud-based connectivity company a roughly $4.3 billion valuation.
* Hellman & Friedman LLC affiliates will purchase German car classifieds platform AutoScout24 GmbH from Scout24 AG for approximately €2.9 billion.
|The Univision Communications facility in Los Angeles.
Source: AP Photo
* A consortium led by The Blackstone Group Inc.'s infrastructure unit is purchasing all of the outstanding class A shares of Tallgrass Energy LP for $22.45 per share in cash, up from a prior offer of $19.50 apiece. The acquisition will be funded with about $3 billion of equity and is set to be finalized in the second quarter of 2020.
* A newly created entity indirectly owned by funds managed by Blackstone affiliates agreed to buy London-based industrial real estate investment trust Hansteen Holdings PLC for 116.5 pence per share, reflecting a valuation of approximately £500 million on a fully diluted basis.
* Fortress Investment Group LLC is looking to sell marine chassis provider Trac Intermodal LLC for about $1 billion, including debt, Bloomberg News reported, citing people with knowledge of the matter.
* EIG Global Energy Partners and China Petroleum & Chemical Corp. submitted nonbinding offers to buy the Gabriel Passos Refinery in Brazil from state-run oil company Petróleo Brasileiro SA, Reuters reported, citing three people with knowledge of the matter.
* Platinum Equity LLC is among the potential suitors of Univision Communications Inc., The Wall Street Journal reported, citing people familiar with the matter.
|A view of the British Telecom headquarters in Milan.
Source: AP Photo
* Capvis AG agreed to purchase healthcare services platform Tertianum AG from Swiss Prime Site AG.
* Funds managed by Portobello Capital Gestión SGEIC SA agreed to acquire British Telecom's Spanish managed information and communications technology services business.
* Ardian will buy Audiotonix Ltd. from Astorg Partners through a share buyout, with the latter reinvesting in the U.K.-based audio mixing consoles provider.
* Gaw Capital Partners reached the $2.2 billion hard cap for its sixth Greater China/Asia-Pacific real estate fund at final close.
* Sapphire Ventures LLC collected more than $1.4 billion of new capital commitments to invest in technology startups in the U.S., Europe and Israel.
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S&P Global Market Intelligence will not publish the Private Equity Pulse on Dec. 27, 2019, and Jan. 3, 2020. The next article in this feature will be published Jan. 10, 2020.