Blackstone acquires US logistics assets from GLP in $18.7bn deal

BY Fraser Tennant

In a deal which is the largest-ever private real estate transaction globally, multinational private equity (PE) firm Blackstone has acquired three US logistics assets from transportation solutions provider GLP for $18.7bn.

The transaction totals 179 million square feet of urban, infill logistics assets – almost double the size of Blackstone’s existing US industrial footprint. Drilling down, Blackstone will acquire 115 million square feet for $13.4bn and its income-oriented non-listed real estate investment trust (REIT) – Blackstone Real Estate Income Trust (BREIT) – will acquire 64 million square feet for $5.3bn.

One of the leading owners of logistics properties, Blackstone’s real estate business has approximately $140bn in investor capital under management. It operates around the globe with investments and people in North America, Europe, Asia and Latin America. The firm has acquired over 930 million square feet of logistics globally since 2010.

“Logistics is our highest conviction global investment theme today, and we look forward to building on our existing portfolio to meet the growing e-commerce demand,” said Ken Caplan, global co-head of Blackstone Real Estate. “Our global scale and ability to leverage differentiated investment strategies allowed us to provide a one-stop solution for GLP’s high quality portfolio.”

Singapore-based GLP is a global investment manager with $64bn assets under management (AUM) in real estate and PE funds. Its real estate fund platform is one of the largest in the world, spanning 785 million square feet.

“GLP was able to leverage our deep operating expertise and global insights in the logistics sector within four years to build and grow an exceptional portfolio,” said Alan Yang, chief investment officer of GLP. “We are proud of the business our team built and are confident it will continue to flourish under Blackstone’s leadership. We are looking forward to expanding our footprint in the US to continue to seize key opportunities in the US market.”

Frank Cohen, chairman and chief executive of BREIT, concluded: “These properties are a complementary addition to our stabilised commercial real estate portfolio, which is oriented toward our highest conviction themes, such as logistics.”

News: Blackstone bets big on Amazon, e-commerce with $18.7-billion acquisition

PE investment in Europe hits record €80.6bn, reveals new report

by Fraser Tennant

Private equity (PE) investment in European companies reached a new record of €80.6bn in 2018 – a 7 percent year-on-year increase – according to a new report by Invest Europe.

According to the association’s ‘2018 European Private Equity Activity Report’, PE  funds invested in over 7800 companies last year – also a new record – with 86 percent of the total made up by small and medium-sized enterprises (SMEs).

The report also reveals that investment increased across all segments of PE, including larger buyouts, mid-market investments and growth capital, with venture capital backing for European companies hitting an all-time high of €8.2bn.

“Record investment levels show that private equity and venture capital can identify attractive companies with the capacity to grow whatever the broader political and economic climate,” said Michael Collins, chief executive of Invest Europe. “Europe is packed with high-potential and innovative businesses, and private equity is increasingly seen as a supportive partner for companies looking to expand.”

In addition, fundraising remained strong in 2018, with €97.3bn committed to European PE – the highest total since the financial crisis. Investors from outside Europe contributed 46 percent of total fundraising. Pension funds remained the largest investor group, accounting for almost one-third of total fundraising.

In terms of European venture capital fundraising, a new high of €11.4bn was reached, up 11 percent from 2017. Private investor interest increased with family offices and private individuals accounting for 20 percent of capital raised, which was closely followed by funds of funds and other asset managers on 19 percent. The proportion contributed by government agencies fell to 18 percent, the lowest share in a decade.

“European venture capital has truly come of age thanks to a combination of strong returns, a growing band of billion-euro-plus tech and life sciences start-ups, and a string of high-profile exits, including the listing of music streaming service Spotify and the sale of mobile payments platform iZettle,” said Nenad Marovac, chair of Invest Europe. “There are eager strategic buyers and open markets around the world for Europe’s top-quality start-ups. The result is increasing appetite among global institutional investors who see European venture as the way to invest in some of the world’s most dynamic and entrepreneurial companies.”

The report covers PE activity on over 1400 firms, directly verified by the fund managers via the European Data Cooperative (EDC). The EDC holds data from over 3300 European PE firms on 9000 funds, 75,000 portfolio companies and 255,000 transactions since 2007.

Report: 2018 European Private Equity Activity Report

Investor appetite for PE in North America and Europe likely to plateau, says new report

BY Fraser Tennant

Investor appetite for private equity (PE) across Europe and North America is showing signs of reaching a plateau, according to a new report by Rede Partners.

In its ‘1H 2019 Rede Liquidity Index (RLI)’ – an industry benchmark assessing investor sentiment toward the PE asset class – Rede reveals that the overall RLI score has fallen below 60 – standing at 59 for 1H 2019 (a baseline score of 50 represents no change in sentiment, above 50 indicates an expectation to increase and beneath indicates less expectation to deploy less).   

The jurisdiction which saw the greatest decline in overall RLI score was North America, which dropped 13 points to 50, meaning North American limited partners (LPs) are expecting to hold their commitments to PE steady rather than growing them.

In contrast, Europe has remained more stable. Six months ago there was a clear fall in sentiment among LPs in the UK and across Europe – a likely reaction to Brexit – as LPs began to adjust their investment programmes in the face of uncertainty. That said, sentiment has now stabilised, with a RLI score of 64 suggesting modest growth during 2019.

“The divergence in attitudes toward PE  between North American and European-based investors can perhaps be attributed to a more heightened awareness of cycle by the Americans, tied to their more bearish outlook on distributions,” said Scott Church, a partner and co-founder at Rede Partners. “With the decline of North American sentiment being driven by endowments and foundations, it is reasonable to suggest that other LPs may be expected to follow over time.”

In addition, the report – which features the views of 166 global institutional LPs – shows that despite an overall downward trend in PE sentiment co-investments remain an area of significant growth, with 96 percent of LPs stating their intention to maintain or expand co-investment activity.

“Although sentiment may be slightly muted compared to six months ago, PE unquestionably remains an attractive and resilient option for investors,” said Adam Turtle, partner and co-founder at Rede Partners. “Looking ahead, as PE continues to evolve, the overall long term outlook for PE as an asset class remains positive.”

Report: 1H 2019 Rede Liquidity Index (RLI)

Scout24 taken private in $6.4bn deal

BY Richard Summerfield

Private equity firms Hellman & Friedman and Blackstone have agreed to acquire German digital marketplace company Scout24 in deal worth $6.4bn, including debt.

The deal, which will be the largest ever PE buyout of a German company, is subject to a minimum acceptance threshold of 50 percent plus one share, as well as customary closing conditions and merger control review. The transaction is being made through holding company Pulver Bidco, jointly controlled by funds advised by Hellman & Friedman and affiliates of Blackstone, and is expected to close in late May.

Scout24 accepted a revised €46 a share offer from the two US private equity firms after rejecting a €43.50 per share offer in January. The offer represents a 27.4 percent premium to the unaffected share price of €36.1 on 13 December 2018 and a 24.4 percent premium to the unaffected three month volume weighted average share price of €37. The offer values Munich-based Scout24 at almost 18 times 2019 earnings before interest, taxes, depreciation and amortisation (EBITDA).

“We believe this is an attractive offer with a substantial premium, high transaction certainty and a strategic value-add for the company,” said Hans-Holger Albrecht, chairman of Scout24.

“Hellman & Friedman and Blackstone are known to Scout24 as trusted and long-term partners given their prior ownership and familiarity with the company,” said Tobias Hartmann, chief executive of Scout24. “The terms of the offer represent an attractive opportunity for a highly strategic partnership that recognises the quality of the Scout24 platform, its employees, customers and partners. I am delighted about our joint long-term vision and ambition to turn Scout24 into a leading European digital player.”

Scout24 was previously owned by Hellman & Friedman, which acquired a controlling stake from Deutsche Telekom in 2013 for €1.5bn before listing the business in 2015, valuing it at €3.2bn. KKR sold a 50 percent stake in the business to private insurance group Swiss Mobiliar in 2016.

Hellman & Friedman and Blackstone are believed to have defeated rival PE firms to secure Scout24, including EQT Partners, Silver Lake and KKR & Co.

News: Private equity firms win over Scout24 with improved $6.4 billion bid

Investor group acquires Ultimate Software in $11bn deal

BY Fraser Tennant

In a move which takes a global provider of human capital management (HCM) into private ownership, Ultimate Software is to be acquired by an investor group led by private equity firm Hellman & Friedman in a transaction valued at approximately $11bn.

Under the terms of the agreement, all of Ultimate’s stockholders will receive $331.50 in cash for each share of the company’s common stock. Ultimate’s board of directors has unanimously approved the transaction and has recommended that stockholders vote in its favour.

Founded in 1990, Ultimate Software is a leading global provider of cloud-based human capital management and employee experience solutions, with more than 48 million people records in the cloud. The firm delivers HR, payroll, talent, and time and labour management, as well as HR service delivery solutions.

“This transaction will bring meaningful benefits to our employees and customers – both in the long and short terms,” said Scott Scherr, chief executive and founder of Ultimate. “It will also allow us to make additional, prudent investments in our products and services so that our customers will benefit from our ability to bring new features and services to market more quickly, while still enjoying the same high level of service.”

Upon completion of the transaction, Ultimate will continue to operate under the leadership of Mr Scherr and the existing senior management team. The privately held company will be owned by Hellman & Friedman in partnership with significant investors Blackstone, GIC, Canada Pension Plan Investment Board (CPPIB) and other investors, including JMI Equity.

“Ultimate’s impressive track record of growth is built on the outstanding quality of its software and its dynamic and motivated employees,” said David Tunnell, a partner at Hellman & Friedman. “The company deeply understands the essence of human capital management, having itself been recognised with numerous best workplace awards from leading publications for its exceptional mission-driven culture. We look forward to building on Ultimate’s successes, working along with our investment partners.”

The acquisition is expected to close in mid-2019, subject to stockholder approval and other customary closing conditions, including regulatory approvals.

News: Ultimate Software agrees to $11 billion buyout by investor group