CEE region records strong year for VC investment and PE exits

BY Fraser Tennant

Fuelling the coronavirus (COVID-19) recovery and underpinning the region’s long-term economic and social development, 2020 saw private equity (PE) invest heavily in Central and Eastern Europe (CEE), reveals a new report by Invest Europe.

In its ‘2020 Central and Eastern Europe Private Equity Statistics’, Invest Europe reports that PE firms invested in 566 companies last year – an increase of 15 percent on 2019 – with venture capital (VC) the driving force. Drilling down, PE firms backed 474 start-ups and scale-ups with total investment of €358m.

In terms of key jurisdictions, Poland was the leading destination, with a quarter of the region’s total investment value – €431m – and home to almost a fifth of the companies receiving funding. By investment value, it was followed by Estonia with 21 percent of the CEE total.

Additionally, the report notes that Hungary was the leading destination for investment by deal number, with 236 companies receiving €226m in funding, 220 of which were VC. Poland reported a total of 105 new investments, of which 82 were venture deals.

“PE is supporting more companies than ever across CEE,” said Bill Watson, chair of the Central and Eastern Europe taskforce at Invest Europe. “These are fast-growing businesses that can help drive the region’s recovery from the effects of the pandemic, as well as its long-term economic and social development.”

Across the CEE and all investments, information and communication technology was the leading sector, accounting for almost half of companies backed, while consumer goods and services ranked second.

“PE-backed companies in CEE are developing into local, regional and global champions,” said Eric de Montgolfier, chief executive of Invest Europe. “They are highlighting not only the talent, skills and entrepreneurship inherent in the region, but also the vast opportunity still to come as experienced managers work with businesses to take them to the next level.”

However, PE fundraising for investment in CEE did fall in 2020, dropping to €1bn, as fundraising cycles meant that the region’s large fund managers were not in the market raising new funds. In contrast, the VC sector raised €667m last year, the second-highest total on record, positioning the sector for a sustained high level of investment activity in the coming years.

Mr Watson concluded: “CEE is on a path that converges with the rest of Europe and PE can play an essential role in enabling companies in the region to achieve their full potential.”

Report: 2020 Central and Eastern Europe Private Equity Statistics

Blackstone seals $6bn Home Partners deal

BY Richard Summerfield

Private equity giant Blackstone Group has agreed to acquire Home Partners of America in a deal worth $6bn. The transaction is expected to close in the third quarter of 2021.

Home Partners of America is no stranger to private equity investment, having previously received backing from KKR & Co. and BlackRock. In recent years, Home Partners had explored the option of an initial public offering, but instead opted to sell to Blackstone Real Estate Investment Trust, known as BREIT, a non-public real estate investment trust externally managed by a Blackstone subsidiary.

The deal is a substantial bet on the US property market. In 2020, US home sales grew at their fastest pace in 14 years, when low mortgage rates and the rise of remote work during the pandemic drove market activity. Home Partners owns more than 17,000 houses in the US that it rents out to tenants who are eventually given the opportunity to buy them. Blackstone intends to continue this programme.

“The fundamental premise of the HPA platform is to provide residents with the opportunity to live in their chosen home with the option to purchase it – we intend to build on that goal and expand access to homes across the US,” said Jacob Werner, senior managing director of Blackstone Real Estate. “We look forward to working with HPA’s leadership team to further invest in the properties and continue its role as a valuable resource for people considering home purchases.”

“This partnership with Blackstone Real Estate and its consistent support of our business will ensure we are well-positioned to expand the reach of our program to provide access to more homes while also delivering on our commitments to our current residents for the long-term,” said Bill Young, co-founder and chief executive of HPA. “Our goal has always been to make homeownership a reality for more people, and now we can continue that mission, while providing even more flexibility and services for our residents.”

Blackstone previously owned Invitation Homes, currently the largest owner of single-family homes in the US with 80,000 homes, until it sold the last of its shares in the company in 2019 at $30.10 per share. Blackstone made about $7bn on its stake in Invitation, more than doubling its money, but shares in the company have increased by 25 percent since then, indicating the growing demand for suburban housing across the US.

News: Blackstone to buy Home Partners of America in $6 billion deal

Datavant and Ciox Health to merge in $7bn deal

BY Richard Summerfield

Health data companies Datavant and Ciox Health have agreed to merge in a deal valued at $7bn.

The deal is expected to close in the third quarter of 2021, subject to regulatory approval and customary closing conditions. The newly merged company will be known as Datavant and will be led by Pete McCabe, chief executive of Ciox, the companies said in a statement.

The new company will be the largest health data ecosystem in the US, enabling patients, providers, payers, health data analytics companies, patient-facing applications, government agencies and life science companies to securely exchange their patient-level data. The company will have a network of more than 2000 US hospitals and 15,000 clinics as well as data analytics companies and government agencies.

“The fragmentation of health data is one of the single greatest challenges facing the healthcare system today,” said Mr McCabe. “Each of us has many dozens of interactions with the healthcare system over the course of our lives, and that information is retained in siloed databases across disparate institutions. Every informed patient decision and every major analytical question in healthcare requires the ability to pull that information from across the health data ecosystem while protecting patient privacy.”

He continued: “We are thrilled to join forces with the Datavant team to connect health data to improve patient outcomes. Together we are well positioned to navigate the technical, operational, legal, and regulatory challenges to doing so, and are committed to acting as a neutral connectivity solution for our many customers and partners.”

“Every decision made in healthcare should be informed by data,” said Travis May, chief executive of Datavant. “Our goal is to create a ubiquitous, trusted, and neutral data ecosystem where parties across the healthcare system can seamlessly and securely exchange data – unlocking better outcomes, faster research, and healthcare at a lower cost. The combined company is positioned to transform America’s health infrastructure and power the health data economy.”

The transaction is being supported by an existing investor group of private equity, venture capital and strategic investors led by New Mountain Capital, Roivant Sciences, Transformation Capital, Merck Global Health Innovation Fund, Labcorp, Cigna Ventures, Johnson & Johnson Innovation – JJDC, Inc., and Flex Capital. It also includes a significant new investment by Sixth Street with participation from Goldman Sachs Asset Management’s West Street Strategic Solutions fund. Sixth Street will join the new company’s board of directors on completion of the transaction.

News: Datavant and Ciox Health Announce Merger, Creating the Largest Neutral and Secure Health Data Ecosystem

Primavera acquires child nutrition business from Reckitt in $2.2bn deal

BY Fraser Tennant

Further enhancing its positioning and growth prospects in China's large infant nutrition market, investment firm Primavera Capital Group is to acquire consumer health, nutrition and hygiene company Reckitt Benckiser’s Mead Johnson business in a transaction valued at $2.2bn.

Under the terms of the definitive agreement, Reckitt will retain a shareholding in Mead Johnson of 8 percent and anticipates net cash proceeds to be approximately $1.3bn. The transaction follows Reckitt’s comprehensive review of its infant formula and child nutrition business in China announced in February 2021.

The deal is another milestone for Primavera in the consumer industry. Going forward, the investment firm intends to support Mead Johnson's growth in China through innovation, operational improvement, channel optimisation and digital transformation, to further enhance its positioning and growth prospects in China’s RMB150bn infant nutrition market.

"We are pleased to acquire the Greater China business of Mead Johnson, a long-established and renowned multinational infant and children nutrition brand,” said Dr Fred Hu, founder and chairman of Primavera Capital Group. “As the controlling shareholder, Primavera is committed to serve tens of millions of Chinese mothers and babies and safeguard their wellbeing.”

Following the completion of the transaction, Primavera will have a royalty-free perpetual and exclusive license of the Mead Johnson brand in Greater China.

“After a thorough review of our infant formula and nutrition business in China, we have found an excellent home for the business under the ownership of Primavera,” said Laxman Narasimhan, chief executive of Reckitt. “As a result of this transaction, Reckitt's Nutrition business going forward will have a better and more consistent growth and margin profile.”

Founded in 1905 in the US, Mead Johnson is a world-renowned premium infant milk formula brand. In 2009, the company successfully listed on the New York Stock Exchange, and in 2017 was acquired by Reckitt .

The transaction is expected to close in the second half of 2021, subject to customary regulatory approvals.  

Mr Hu concluded: “We look forward to collaborating with Reckitt management, and to continuing to provide customers the highest-quality nutritional products through world-class scientific innovation and R&D capabilities, as well as the strictest safety and quality control.”

News: Reckitt to sell China baby formula business for $2.2 bln

A new era for Cloudera as the firm is taken private

BY Richard Summerfield

Data analytics firm Cloudera Inc. is to be taken private by private equity firms KKR & Co and Clayton Dubilier & Rice LLC (CD&R) in a $4.7bn deal.

According to a regulatory filing announcing the deal, Cloudera shareholders will receive $16 per share in cash, a premium of over 24 percent to Cloudera’s last close on Friday and a 30 percent premium to the company’s 30-day volume weighted average share price.

The deal is expected to close in the second half of 2021, subject to shareholder and regulatory approval. The board of directors of Cloudera has unanimously approved the transaction and recommends that the Cloudera shareholders approve the transaction and adopt the merger agreement.

Cloudera, which has activist investor Carl Icahn as its largest shareholder, has been exploring a potential sale since mid-2020 after receiving takeover interest from several parties.

“This transaction provides substantial and certain value to our shareholders while also accelerating Cloudera’s long-term path to hybrid cloud leadership for analytics that span the complete data lifecycle - from the Edge to AI,” said Rob Bearden, chief executive of Cloudera. “We believe that as a private company with the expertise and support of experienced investors such as CD&R and KKR, Cloudera will have the resources and flexibility to drive product-led growth and expand our addressable market opportunity.”

“We very much look forward to working with Cloudera as it continues to execute its long-term transformation strategy,” said Jeff Hawn, operating partner at CD&R, who will also serve as chairman of the company upon close of the transaction. “The company has made significant progress establishing the Cloudera Data Platform (CDP) as a leader in hybrid and multi-cloud analytics, and we believe that our experience and capabilities can offer valuable support to accelerate expansion into new products and markets.”

“We have followed the Cloudera story closely for a number of years and are pleased to be supporting its mission of helping companies make better use of their data in the ever-evolving hybrid IT environment,” said John Park, partner and head of Americas technology private equity at KKR. “We are excited to contribute to Cloudera’s accelerated innovation efforts as a private company.”

Cloudera provides cloud-based software and a platform to enterprises for data management and insights generation. The firm caters to several industries including finance, healthcare and government agencies.

News: KKR, CD&R take data analytics firm Cloudera private for $4.7 bln