Carlyle exits Cogentrix for $3bn

BY Richard Summerfield

The Carlyle Group has agreed to sell US independent power producer Cogentrix Energy in a deal worth around $3bn. The company will be acquired by Quantum Capital Group and its affiliates.

The transaction, which is subject to customary regulatory approvals, is expected to close between the fourth quarter of 2024 and the first quarter of 2025.

Carlyle initially bought the company from Goldman Sachs in 2012 for an undisclosed sum. Over the last 12 years, Carlyle has roughly doubled Cogentrix’s assets by purchasing new power plants and expanding its business. Today, Cogentrix owns 11 natural gas power plants across the US, including in key markets such as Texas, Pennsylvania and New England. The Cogentrix platform is comprised of 5.3 gigawatts of natural gas-fired power plants.

Following the closing of the transaction, Cogentrix will continue to be led by current chief executive John Ragan and the existing management team. “We are grateful for Carlyle’s partnership, which has provided us with the tools and capabilities to capture a growing opportunity set within the US power market,” said Mr Ragan. “As we look to the future, we are confident Quantum’s deep knowledge of the energy markets, successful track record of business building, and risk management capabilities will drive significant long-term value for our customers, employees, investors, and other stakeholders.”

“We are at a critical juncture in the evolution of the domestic power market,” said Wil VanLoh, founder and chief executive of Quantum. “Electricity demand is rapidly increasing thanks to explosive growth in data centers and AI, the reshoring of manufacturing, and the electrification-of-everything. This growth is occurring at the same time our grid is becoming more unstable with additions of intermittent renewable power and continued retirements of coal-fired generation. Now more than ever, we need reliable and efficient power infrastructure. This is what the Cogentrix assets provide.”

“This is a win-win transaction for everyone involved as Cogentrix begins its next chapter of growth with Quantum,” said Matt O’Connor, a partner at Carlyle. “We are proud of the significant transformation Cogentrix has achieved under our ownership. We wish John and his team continued success as they expand their platform and seize numerous opportunities in the rapidly evolving US power sector.”

“We are pleased to have supported Cogentrix’s efforts to establish decarbonization objectives for its fleet of natural gas-fired power generation assets while continuing to support grid reliability, a critical balance required to effectuate the energy transition,” said Pooja Goyal, chief investment officer of global infrastructure at Carlyle. “This successful transaction is a testament to the deep sector expertise of our energy and infrastructure platform at Carlyle. We look forward to continuing our investment activities in this rapidly growing area, including partnering with our management teams on growth opportunities and deploying capital in new investments.”

News: Quantum Capital to buy Cogentrix for $3 bln in bets on rising US power demand

Technology provider R1 RCM sold in $8.9bn deal

BY Fraser Tennant

In a purchase that takes the technology-driven solutions provider private, R1 RCM is to be acquired by investment funds affiliated with TowerBrook Capital Partners and Clayton, Dubilier & Rice (CD&R), in an all-cash transaction valued at approximately $8.9bn.

Under the terms of the definitive agreement, TowerBrook and CD&R will acquire all the outstanding common stock that TowerBrook does not currently own for $14.30 per share. The transaction is expected to be financed with a combination of committed debt financing and equity from investment funds affiliated with TowerBrook and CD&R.

Upon completion of the transaction, Utah-based R1, which provides services for billing and revenue collection to hospitals, physician groups and other healthcare organisations, will become a private company and its shares will no longer trade on Nasdaq.

The acquisition comes a month after R1 had received a buyout proposal from New Mountain, its largest shareholder, that valued the company at nearly $6bn.

“TowerBrook has been an outstanding long-term investor and partner to R1 and shares our vision of being the automation platform of choice for the provider industry,” said Lee Rivas, chief executive of R1. “We believe the transaction represents the best path forward for R1 at an attractive valuation to our stockholders that reflects the company’s position as a leading provider of technology-driven solutions for its customers.”

The transaction has been unanimously approved by a special committee of the R1 board of directors comprised solely of independent directors which was formed to evaluate strategic alternatives.

“As a long-term, responsible investor in R1, TowerBrook has supported the development of R1 as a leader in healthcare provider revenue management since 2016,” said Ian Sacks, managing director at TowerBrook. “Together with CD&R, we look forward to continuing to invest in the R1’s core operations to drive customer performance and value while also continuing to build the company as a leader in intelligent automation and in the use of guaranteed annual income in revenue management.”

The transaction is expected to close by the end of 2024, subject to customary closing conditions, including receipt of stockholder approval and regulatory approvals.

Ravi Sachdev, a partner at CD&R, concluded: “R1 is a trusted partner in healthcare technology and automation, and we are excited to work alongside TowerBrook and the talented team at R1 to continue setting the standard for healthcare performance.”

News: Health tech company R1 RCM to be taken private in $8.9 bln deal

Cognizant makes $1.3bn Belcan acquisition

BY Richard Summerfield

In a move that will expand its presence in the aerospace, defence, space and automotive sectors, Cognizant Technologies has agreed to acquire digital engineering firm Belcan for nearly $1.3bn in cash and stock.

The transaction is expected to close in Q3 2024, subject to the receipt of required regulatory approvals and other closing conditions. The total purchase price of approximately $1.29bn comprises $1.19bn in cash consideration and a fixed 1.47 million Cognizant shares, with a current value of $97m based on Cognizant’s closing share price on Friday 7 June 2024. The cash consideration is expected to be funded through a mix of cash on hand and debt.

Cognizant said it intends to increase its share repurchase plan to maintain current share count guidance of 497 million for the full year 2024.

“We believe that acquiring Belcan will strengthen Cognizant’s position in the sizable and fast-growing ER&D services market,” said Ravi Kumar, chief executive of Cognizant. “Belcan’s deep engineering capabilities and domain expertise across the aerospace & defense market will be complemented by Cognizant’s scale and own multi-decade digital engineering expertise, providing Belcan’s blue-chip client roster access to our advanced AI, Cloud and Data technologies. We see the opportunity to immediately accelerate revenue growth and create compelling shareholder value through our combined engineering capabilities. Belcan’s clients would gain access to Cognizant’s full suite of technology services, while Cognizant’s clients across the manufacturing, automotive, energy, and high-tech sectors we believe will benefit from Belcan’s engineering skills.”

Lance Kwasniewski, the current chief executive of Belcan, is expected to continue to lead the company, which will operate under the Belcan name as an operating unit of Cognizant.

“We are excited about this unique combination and the value creation it will bring to our customers, along with the opportunities it will provide for our employees” said Mr Kwasniewski. “Cognizant will better position our team to capitalize on compelling tailwinds, including increasing outsourced ER&D spend, the transformative impact of digital engineering adoption rates, robust commercial aerospace demand, and favorable long-term defense and space spending. Belcan’s experienced team has built a growth-oriented business delivering highly complex, mission-critical, scalable services to our long-standing customer base. I look forward to continuing to lead our team as we unite and leverage Belcan’s and Cognizant’s comprehensive services and cross-industry clientele to execute on our collective strategy, ultimately earning the role of our clients’ most trusted partner in intelligent engineering.”

Belcan has been owned by private equity firm AE Industrial Partners since 2015.

Cognizant expects the Belcan deal to deliver over $100m in annual revenue synergies within three years, with additional cost synergies expected over time.

News: Cognizant to acquire Belcan for $1.3 billion

Bain Capital acquires PowerSchool in $5.6bn deal

BY Fraser Tennant

In a deal that takes the K-12 education software and cloud-based solutions provider private, PowerSchool Holdings is to be acquired by US private investment firm Bain Capital in a transaction valued at $5.6bn.

Under the terms of the definitive agreement, PowerSchool stockholders will receive $22.80 per share in cash upon completion of the proposed transaction, which represents a premium of 37 percent over PowerSchool’s unaffected share price of $16.64 as of 7 May 2024.

Upon completion of the transaction, PowerSchool’s common stock will no longer be publicly listed on the New York Stock Exchange, and PowerSchool will become a privately held company.

A global education technology company supporting over 55 million students and over 17,000 customers in more than 90 countries, PowerSchool brings together the best of K-12 educational and operational technology to support every step of the learning journey.

“PowerSchool is uniquely positioned to provide differentiated, mission-critical solutions that drive better education outcomes, empower educators and help district operations run more efficiently,” said Hardeep Gulati, chief executive of PowerSchool. “With Bain Capital’s support, PowerSchool will have access to additional resources and the flexibility to deliver even more growth and innovation.”

“PowerSchool’s innovative software solutions in and out of the classroom provide a strong foundation for K-12 academic success. said David Humphrey, a partner at Bain Capital. “Their products are highly respected by administrators, educators, students and parents because they foster active collaboration and offer actionable insights needed to support positive learning outcomes.”

The transaction – which has been approved by the PowerSchool board of directors – is expected to close in the second half of 2024, subject to customary closing conditions, including receipt of regulatory approvals.

“As demand for K-12 educational technology grows, we believe there are significant opportunities to expand access to PowerSchool’s best-in-class product suite around the world,” concluded Max de Groen, a partner at Bain Capital. “We look forward to working with PowerSchool to accelerate the company’s growth while strengthening its commitment to help educators and students realise their full potential.”

News: Bain Capital to take PowerSchool private in $5.6 bln deal

CCP, Global Infrastructure Partners to acquire Allete for $6.2bn

BY Richard Summerfield

US utility group Allete is to be acquired by the Canada Pension Plan Investment Board (CPP Investments) and Global Infrastructure Partners (GIP) in a deal worth $6.2bn, inclusive of debt.

Under the terms of the deal, the firms will make a cash payment of $67 per share to take Allete private, a 19.1 percent premium over the company’s closing share price on 4 December 2023, the day before media reports that the power company was exploring a sale began to appear.

Allete’s board of directors has unanimously approved the transaction, which is set for completion in mid-2025, subject to shareholder approval and regulatory consents. Following completion, Allete will withdraw from the New York Stock Exchange and revert to private ownership.

“Our ‘Sustainability-in-Action' strategy has secured ALLETE’s place as a clean-energy leader,” said Bethany Owen, chair, president and chief executive of Allete. “Through this transaction with CPP Investments and GIP, we will have access to the capital we need while keeping our customers, communities and co-workers at the forefront of all that we do, with continuity of our day-to-day operations, strategy and shared purpose and values.”

She added: “CPP Investments and GIP have a successful track record of long-term partnerships with infrastructure businesses, and they recognize the important role our ALLETE companies serve in our communities as well as our nation’s energy future. Together, we will continue to invest in the clean-energy transition and build on our 100 plus-year history of providing safe, reliable, affordable energy to our customers.”

“Together with GIP, we look forward to bringing our sector expertise and long-term capital to support ALLETE’s strong management team as they continue to deliver safe, reliable, affordable energy services to their customers,” said James Bryce, managing director and global head of infrastructure at CPP Investments. “ALLETE is at the forefront of the clean energy transition and we are thrilled to support the delivery of the company’s ‘Sustainability-in-Action’ strategy, which we believe will generate substantial value both for ALLETE’s customers and CPP contributors and beneficiaries.”

“GIP, alongside CPP Investments, look forward to partnering to provide ALLETE with additional capital so they can continue to decarbonize their business to benefit the customers and communities they serve,” said Bayo Ogunlesi, chairman and chief executive of GIP. “Bringing together ALLETE, with its demonstrated commitment to clean energy, with GIP, one of the world’s premier developers of renewable power, furthers our commitment to serve growing market needs for affordable, carbon-free and more secure sources of energy.”

Allete’s existing management team, including Ms Owen, will continue to lead the company upon completion of the deal. The company’s headquarters will remain in Duluth, and commitments have been made to retain the workforce and maintain current compensation and benefits programmes.

News: US utility Allete goes private in $6.2 billion deal