PE and VC investment in UK business hit £22bn in 2019, reveals new report

BY Fraser Tennant

Private equity (PE) and venture capital (VC) investment into UK businesses reached more than £22bn in 2019 – an increase of £1.6bn on the previous year  – according to a new report by the British Private Equity & Venture Capital Association (BVCA).

In its annual ‘Report on Investment Activity’ the BVCA reveals the full breadth of the impact of PE and VC on the UK economy, with a total of 1530 companies across the country having received backing in 2019, an increase of 15 percent on 2018 figures.

“As long-term, responsible investors, PE and VC have a key role in supporting the recovery post-COVID-19, said Michael Moore, director general of the BVCA. “What these 2019 figures demonstrate is the size of our industry’s economic impact, building businesses and jobs across the UK.”

The report’s key highlights include: (i) VC investment increased by 67 percent year-on-year to £1.65bn, with 821 companies backed, an 18 percent increase; (ii) the South West of England received the largest amount of PE and VC capital investment (11.6 percent) outside of London and the South East, followed by the North West (9.6 percent) and the West Midlands (7.8 percent); (iii) the technology sector saw the largest number of deals and investment in 2019, accounting for 37.1 percent of all companies, and 26.8 percent of total investment; (iv) UK PE and VC funds raised £47.59bn in 2019; and (v) pension funds provided 38 percent of all capital raised followed by sovereign wealth funds (14 percent) and fund of funds (11 percent).

That said, while the level of investment is welcome, the BVCA is under no illusions that there are tough times ahead for the UK. “This year’s report clearly illustrates how important PE and VC are to UK businesses big and small, providing them with the long-term capital and the investment expertise they need to thrive,” said Neil MacDougall, chair of the BVCA. “As the country emerges from coronavirus, these attributes are needed now more than ever.”

Mr Moore concluded: “I am supremely confident that PE and VC , and the companies they back, are well-positioned to support growth, sustainability and innovation throughout the UK.”

Report: BVCA Report on Investment Activity 2019

KKR to acquire Roompot Group for $1.1bn

BY Richard Summerfield

Private equity giant KKR has agreed to acquire Roompot Group, a provider of holiday parks in Western Europe and the number one holiday park operator in the Netherlands, from European private equity firm PAI Partners for $1.1bn.

PAI reportedly began looking for a buyer in October of last year. In March 2020, it planned to launch a formal sale process but that was postponed due to the ongoing COVID-19 pandemic. However, a deal for the company has now been reached.

Since being acquired by PAI for $673m in 2016, Roompot has invested significantly in upgrading and expanding its accommodations and opening new parks, and developed a strong digital marketing and distribution platform. It has also increased real estate ownership and grown revenue and earnings before interest, taxes, depreciation and amortisation (EBITDA) at double digit growth rates.

“As we change to new ownership we would like to thank PAI, who have been a hugely supportive partner to our team since 2016, and welcome KKR for the next phase,” said Jurgen van Cutsem, chief executive of Roompot Group. “Our focus, as always, will be providing a great service for our leisure customers and third-party providers. We continue to see growing demand from our guests and from our corporate partners due to the leading platform we have put in place, providing a solid foundation to scale the business, also on an international level.”

“Roompot is already a leading player in the region with a best-in-class management team and a strong recent track record,” said Daan Knottenbelt, partner and head of the Benelux region at KKR. “We see significant further growth potential based on a very strong development pipeline, continued expansion of Roompot’s owned assets and new corporate partnerships. KKR is investing in Roompot through our Core Investments strategy, which is our pool of capital for longer-term investments, and we look forward to working with Jurgen and his team over the coming years.”

Joerg Metzner, a director at KKR, added: “We have been looking for a platform to invest behind in the fragmented European holiday parks market for some time. Our support for Roompot and its management team fits perfectly with our broader investment theme in the leisure space.”

Operating across its 33 parks in the Netherlands, Belgium and Germany, Roompot has over 2100 employees catering for approximately 3 million guests per year. The company generates around €400m in annual sales.

News: KKR buys vacation parks firm Roompot in $1.1 billion deal

58.com to be taken private in $8.7bn deal

BY Richard Summerfield

A consortium of investors backed by private equity firms Warburg Pincus and General Atlantic have agreed to acquire Chinese online classifieds company 58.com in a deal worth $8.7bn.

The deal has been unanimously approved by the company’s board and is expected to close in the second half of 2020.

The take-private consortium includes Warburg Pincus Asia LLC, General Atlantic Singapore Fund Pte Ltd, Ocean Link Partners Ltd, 58.com chief executive officer Jinbo Yao and Internet Opportunity Fund LP, an entity controlled by Yao, which has about 42 percent of the voting power in 58.com, the Chinese equivalent of  Craigslist.

The consortium plans to fund the merger through a combination of cash contributions, rollover equity contributions from certain shareholders and $3.5bn in term loans from Shanghai Pudong Development Bank Co, Ltd.

According to a statement announcing the deal, 58.com shareholders will get $56 in cash for each American depositary share, a premium of nearly 20 percent from when the company got the first take-private proposal in April.

The deal would make 58.com the latest in a recent string of Chinese companies to delist from New York and comes just days after online car information provider Bitauto announced it had entered into a similar deal. Bitauto agreed to be taken by private by an investor group backed by gaming and social media firm Tencent Holdings Ltd for $1.1bn in cash.

Chinese companies have been pulling out of the US markets at the fastest pace since 2015 this year. Prior to the announcement of 58.com’s sale, US-listed Chinese companies have announced four go-private deals with a combined value of $8.1bn including debt, according to Bloomberg.

Interest in Chinese take-private deals has increased as Sino-US tensions have risen in recent years. Many companies have been forced to consider the merits of maintaining a New York listing rather than relocating to Shanghai or Hong Kong.

News: China’s 58.com to go private in $8.7 billion deal

Alnylam secures $2bn Blackstone investment

BY Richard Summerfield

Private equity firm Blackstone Group Inc is to invest $2bn in Alnylam Pharmaceuticals through an equity-and-debt deal, the firms announced on Monday.

Under the terms of the deal, Blackstone will acquire $100m in Alnylam stock and pay $1bn for 50 percent of Alnylam’s royalties and commercial milestones for inclisiran. The drugmaker could pick up another $150m from Blackstone Life Sciences for its cardiometabolic programmes vutrisiran and ALN-AGT, as well as a loan worth up to $750m.

“Alnylam is focused on building a top-tier biopharmaceutical company, advancing RNAi therapeutics as a whole new class of medicines with transformative potential for patients around the world,” said John Maraganore, chief executive of Alnylam. “This exciting new relationship with Blackstone brings us much closer to that goal, securing our bridge towards a self-sustainable financial profile that we believe can now be achieved without any need for Alnylam to access the equity markets in the future.”

He continued: “A central component of this strategic relationship is a partial monetization of our royalty for inclisiran. If approved, we believe this therapy holds enormous promise as a potential game-changer in hypercholesterolemia management. We are pleased to retain half of the royalties we receive from Novartis, allowing Alnylam to benefit from inclisiran’s anticipated future success. We couldn’t be more pleased to enter into this highly innovative arrangement with Blackstone, which has shown a significant commitment to Alnylam’s future and alignment with our long-term vision.”

“Blackstone is uniquely positioned to provide customized, one-stop-shop financing solutions at scale while establishing development collaborations with the world’s leading biotech companies,” said Nicholas Galakatos, global head of Blackstone Life Sciences. “Alnylam’s RNAi technology represents one of the most promising and rapidly advancing frontiers in biology and drug development today, and aligns perfectly with our investment strategy.

“Our collaboration with Alnylam provides non-dilutive access to capital to advance important new medicines in development across several disease indications including heart disease, the leading cause of death in the U.S. and globally,” he added.

Alnylam had been in talks with several buyers to sell its royalty rights for its cholesterol therapy inclisiran months before the global COVID-19 outbreak.

News: Alnylam's gene-silencing efforts get $2 billion Blackstone backing

PE giant Lone Star acquires hotel operator Unizo for $1.9bn

BY Fraser Tennant

Following months of negotiations and counter bids, global private equity (PE) firm Lone Star Funds has won the race to acquire Japan-based company Unizo Holdings Co Ltd for $1.9bn.

The transaction will see Lone Star, in tandem with a number of Unizo employees, acquire all 29,618,824 shares tendered in the offer at ¥6000 apiece in cash. The tendered shares – including those of Unizo shareholders Elliott International and Liverpool Limited Partnership – represent 86.55 percent of Unizo’s outstanding shares.

Furthermore, Lone Star plans to acquire the hotel operator’s remaining shares that were not tendered in the offer. Throughout the long open-bidding process, Unizo had expressed a preference for its employees to be involved in the deal, a scheme which allows a group of Unizo employees to own 73 percent of common shares, while Lone Star would hold the remainder.

Principally engaged in the real estate sector, Unizo has two core business divisions: a real estate business and a hotel business. The company owns and leases office buildings located in central areas of Japan and prime locations in large cities in the US, as well as operating several hotels located in prime locations of major cities in Japan.

In a statement, Unizo said that it had rejected a number of bids due to concerns over securing employment. The hotel operator also stated that it had made a rare request to bidders for Unizo employees to be able to control the new owner’s power to sell assets – a request with which Lone Star concurred and which helped seal the deal.

Based in Dallas, Texas, Lone Star invests globally in real estate, equity, credit and other financial assets. Since the establishment of its first fund in 1995, the firm has organised 17 PE funds with aggregate capital commitments totalling over $70bn.

To acquire Unizo, Lone Star had to outpace a number of fellow bidders, including Fortress Investment Group and Blackstone, which made a sweetened bid for Unizo in January 2020 after its initial October 2019 offer was rejected.

News: Lone Star succeeds in $1.9-billion buyout of Japan hotel chain Unizo