Carlyle’s Japan-focused fund

BY Richard Summerfield

Private equity giant Carlyle Group has raised $2.3bn (¥258bn) for its fourth Japanese buyout fund, Carlyle Japan Partners IV ( CJP IV).

The fund will focus on targets shed by conglomerates as well as succession deals. Specifically, it will focus on upper mid-market investment opportunities in Japan across consumer, retail and healthcare, general industries and technology, media and telecoms. It will also pursue large-cap investments on an opportunistic basis.

The fund received strong backing from domestic and global investors and is more than double the size of its predecessor fund, CJP III, which raised ¥120bn.

“Our investments over the past 20 years have earned us the trust and support of our investors, who we would like to thank for their continued confidence in our ability to create value and drive performance,” said Kazuhiro Yamada, head of Carlyle Japan in a statement. “We are seeing growing opportunities in Japan across succession and carve-out deals, and with this larger fund and strengthened leadership, we believe we are well-positioned to capture these.”

“We have been a driving force in the development of the Japanese private equity market for two decades, combining our deep local knowledge with our global platform to create significant long-term value for our investors and for Japanese companies,” said Kewsong Lee, co-CEO of The Carlyle Group. “We are excited about how the market is evolving and will strive to further build out our Japan business by partnering with strong management teams and high potential companies to drive growth and value over the long-term.”

Corporate asset acquisitions are likely to range between ¥20bn and ¥40bn, though for larger deals the firm will also use money from other funds in Asia, Europe and the US.

News: Carlyle raises $2.3 billion for its biggest Japan fund to date

Pennon to sell Viridor to KKR in $4.2bn deal

BY Fraser Tennant

In a deal valued at $4.2bn, water utility and waste management company Pennon Group Plc has agreed to sell its recycling and residual waste business Viridor to investment firm Planets UK Bidco.

Pennon has stated that the sale of Viridor will be done on a cash-free, debt-free basis. There is also the potential for additional consideration of up to £200m contingent on future events and outcomes.

The Pennon board – which unanimously agreed the transaction – intends to use the deal’s £3.7bn net cash proceeds to reduce its borrowings and make a return to shareholders, while retaining some funds to pursue operational excellence and growth within the UK water industry.

Planets UK Bidco is a new company established by funds advised by global investment firm Kohlberg Kravis Roberts (KKR), a leading global investment firm that manages multiple alternative asset classes, including private equity, energy, infrastructure, real estate and credit, with strategic partners that manage hedge funds.

“Following a detailed review of the Group's strategic options, we are pleased to announce the proposed sale of Viridor for an enterprise value of £4.2bn,” said Chris Loughlin, chief executive of Pennon. “The transaction is great news for shareholders as it recognises the strategic value that Pennon has developed and nurtured in Viridor over many years and accelerates the realisation of that value for shareholders.”

A company at the forefront of the resource sector in the UK, Viridor transforms waste into energy, high-quality recyclates and raw materials. It provides services to around 150 local authorities and major corporate clients as well as around 32,000 customers across the UK.

Expected to complete in summer 2020, the transaction is conditional on approval from Pennon shareholders, merger control clearance from the European Commission and certain other conditions.

Mr Loughlin concluded: “On completion of the transaction, Pennon will continue to focus on its sector-leading water and wastewater businesses and will consider further growth opportunities that create value for customers, employees and shareholders."

News: British utility Pennon to sell waste management unit for $5 billion, including debt

Far Point goes Global

BY Richard Summerfield

The blank cheque FinTech firm Far Point Acquisitions has agreed to acquire shopping tax refund company Global Blue in a $2.6bn deal. The deal is expected to close in the second quarter of 2020.

Far Point’s majority owner, private equity investor Silver Lake, will retain around 42 percent of the combined company, according to a statement announcing the deal. Under the terms of the deal, Far Point will invest $650m in cash, while Ant Financial and Third Point have agreed to invest a total of $350m in the newly combined company.

Far Point is a special purpose acquisition company (SPAC) established by hedge fund Third Point LLC and ex-New York Stock Exchange president Thomas Farley. Going forward, Global Blue’s chief executive Jacques Stern will continue to lead the combined company, and Mr Farley will become chairman of the firm.

“Global Blue is the clear market leader in the attractive and growing Tax Free Shopping ecosystem worldwide,” said Mr Farley. “The company has achieved remarkable progress in digitalization, geographic expansion and strategic value creation under Jacques’ leadership and the stewardship of its existing shareholders, including controlling shareholder Silver Lake, whose principals I have known personally and professionally for years. I look forward to working with Global Blue to capitalize on favorable trends in the business, including the growth of the emerging markets middle-class, positive VAT dynamics, and further digitalization.”

“I am delighted about this collaboration with Far Point and Tom, as I believe it will help create long-term value for Global Blue and its shareholders,” said Mr Stern. “In recent years, we have built a true leader in our industry, powered by a cutting-edge integrated technology platform. We strongly believe that continued investment in innovation will bring value to all our partners and customers, and we look forward to accelerating our strategic collaboration with Ant Financial as a showcase of such innovation.”

The new public company will be incorporated in Switzerland and will trade as Global Blue upon closing.

News: Far Point to buy tax-free shopping firm Global Blue at $2.6 billion valuation

Thoma Bravo secures Sophos deal

BY Richard Summerfield

Software-focused private equity firm Thoma Bravo is to acquire UK cyber security firm Sophos for $3.8bn.

Thoma Bravo’s takeover offer of $7.40 pence per share represents a 37 percent premium over Sophos’s closing price on Friday, the last day of trading before the deal was announced.

The board of directors of Sophos have stated their intention to unanimously recommend the offer to the company’s shareholders and the deal is expected to complete during the first quarter of 2020, pending customary closing conditions and regulatory approvals.

Thoma Bravo raised billions for its latest private equity fund this year, and has increasingly focused on the cyber security space. In 2018, the firm bought Imperva and Veracode. Though the firm has acquired more than 200 software and technology companies during its 40-year history, including holding stakes in other cyber security firms such as Tripwire, Blue Coat, Sonicwall, Digicert and Entrust, Sophos will be its first acquisition outside the US.

"We are excited by the opportunity to partner with the Sophos management team and employees as we further develop Sophos as a best-in-class software franchise and nextgen security leader,” said Seth Boro, a managing partner at Thoma Bravo. “The acquisition fits with our strategy of investing in and growing software and technology businesses globally. The global cybersecurity market is evolving rapidly, driven by significant technological innovation, as cyber threats to business increase in scope and complexity. Sophos has a market-leading product portfolio and we believe that, by applying Thoma Bravo’s expertise, operational framework and experience, we can support the business and accelerate its evolution and growth.”

“Today marks an exciting milestone in the ongoing journey of Sophos,” said Kris Hagerman, chief executive of Sophos. “Sophos is actively driving the transition in next-generation cybersecurity solutions, leveraging advanced capabilities in cloud, machine learning, APIs, automation, managed threat response, and more. We continue to execute a highly-effective and differentiated strategy, and we see this offer as a compelling validation of Sophos, its position in the industry and its progress.”

“It is the view of the Sophos Board that this is a compelling offer for Sophos shareholders which secures the delivery of future value for shareholders today,” said Peter Gyenes, chairman of Sophos. “Thoma Bravo has deep sector expertise in cybersecurity software as well as a long and successful track record of partnering with and investing in its portfolio companies to support long-term growth and success. Under Thoma Bravo’s ownership we expect Sophos to accelerate its evolution and leadership in next-generation cybersecurity. The Sophos board believes that this recommended offer delivers a significant opportunity for all stakeholders – our shareholders, customers, partners, and employees.”

News: Buyout firm Thoma Bravo adds Sophos to cybersecurity chest in $3.8 billion deal

Vista acquires Acquia for $1bn

BY Fraser Tennant

In a deal which highlights its preference to purchase undervalued tech companies and turn them around for a big profit, US investment firm Vista Equity Partners has acquired web content management and digital experience company Acquia for $1bn.

Following completion of the transaction, Acquia will continue to operate independently.

According to Acquia’s chief executive Michael O’Sullivan, Vista’s investment will enable Acquia to grow its presence in the digital experience platform (DXP) market, as it continues to innovate and serve the world’s most ambitious brands. Acquia currently serves more than 30 companies in the Fortune 100.

“Vista shares our belief that the DXP market is ripe for disruption and we are excited to partner with them to accelerate our plans,” said Mr O’Sullivan. “Over 4000 Acquia customers crave faster innovation, greater agility and better integrations than legacy marketing cloud providers can deliver. Vista’s support will allow us to invest more in R&D, expand faster, and get products to market quicker.”

With Vista’s backing, Acquia will maximise recent investments to take on legacy DXP providers and capture new market share. Vista’s portfolio of more than 60 companies and more than 70,000 employees, combined with its operational expertise, provides Acquia access to a vast community of resources, peers and practice experts.

A value-added investor with a long-term perspective, Vista exclusively invests in enterprise software, data and technology-enabled companies. “The world’s leading and most innovative digital brands understand that their ability to deliver a seamless digital customer experience is essential to their success,” said Robert F. Smith, founder, chairman and chief executive of Vista. “Acquia understands this and is leading the way in providing innovative solutions to its customers while, at the same time, giving back to the open source community.”

The Vista/Acquia transaction is expected to close in the coming weeks and is subject to customary closing conditions and regulatory approvals.

Mr Smith concluded: “We are thrilled to partner with Acquia and believe the company is well-positioned to capitalise on the tremendous opportunity in the DXP marketplace.”

News: Vista Equity Partners buys Acquia for $1B