TPG and GIC acquire Techem in €6.7bn deal

BY Fraser Tennant

In what is its largest transaction to date, US asset manager TPG is to acquire German metering firm Techem from Switzerland’s Partners Group in a transaction valued at approximately €6.7bn.

TPG, through its dedicated climate investing strategy TPG Rise Climate, is acting as lead investor, with Singapore’s sovereign wealth fund GIC taking a significant minority stake.

The purchase price for Techem will be paid in two instalments, one at the close of the transaction, which is expected in the first half of 2025, and the remainder in July 2027.

Founded in 1952, Techem has built one of the largest digital energy services platforms in the industry. The company is active in 18 countries and services more than 13 million dwellings, with over 62 million digital measuring devices on its platform.

Techem’s services also help to advance the long-term decarbonisation of the real estate sector, which still drives approximately 40 percent of global CO2 emissions.

“Techem’s technology, transparent consumption statistics, and streamlined solutions for tenants, managers and asset owners alike are essential solutions for lowering costs and improving the environmental impact of real estate assets across Europe,” said Ed Beckley, managing partner of TPG Rise Climate. “There is a tremendous opportunity to reduce energy consumption in built environments by enhancing efficiency and better-managing overall demand.”

As a result of strong development over the past years, Techem has exceeded the €1bn revenue mark – with new digital services and broader decarbonisation services presenting future growth opportunities.

Techem intends to build on this foundation with its new partners TPG and GIC and further expand its ‘One Digital Platform’, leveraging the power of digitalisation to unlock significant energy efficiency potential in the building sector, optimise operational processes, and increase the living comfort of residents.

“With TPG and GIC, we are gaining strong new partners with the digitaisation and platform expertise needed to help us make significant progress in implementing our corporate strategy,” said Matthias Hartmann, chief executive of Techem. Together, we want to further expand and advance our position as a leading platform for digitalising and decarbonising the building sector across Europe and beyond.”

The transaction is subject to customary conditions and regulatory approvals.

Mr Hartman concluded: “We are very grateful to Partners Group and its co-investors CDPQ and Ontario Teachers’ for the trustful exchange and collaboration on the development of the company over the past years and look forward to building on our success with TPG and GIC.”

News: TPG and GIC to lead €6.7bn acquisition of Techem with backing from Canadian pension funds

KKR closes $4.6bn North American focused fund

BY Richard Summerfield

Private equity (PE) powerhouse KKR and Co has announced the final close of KKR Ascendant Fund SCSP, a $4.6bn fund dedicated to investing in middle market businesses in North America.

The fund, which was launched in 2022, is the first KKR vehicle solely focused on opportunities in the middle market and will target established companies with strong growth potential across seven industry verticals: consumer, financial services, healthcare, industrials, media, software and tech-enabled services.

“We are very proud of the strong response we have received from our fundraising efforts and believe that Ascendant is well-positioned to address the robust and attractive opportunities in the North American middle market,” said Pete Stavros and Nate Taylor, co-heads of KKR Global Private Equity. “We have long invested in this space in our Americas Private Equity funds and have found that we can harness KKR’s unique resources and expertise in value creation to deliver highly differentiated business outcomes. We wanted to launch a fund dedicated to this segment so that our investors could directly participate in the compelling outcomes we believe we can continue to deliver in the middle market.”

“Broad-based employee ownership and engagement programs are a key part of how KKR creates and maintains value across our portfolio companies,” said Nancy Ford and Brandon Brahm, co-heads of KKR’s Ascendant strategy. “Having seen the great success of these programs in other areas of KKR’s portfolio, we are thrilled that Ascendant will build on that strong foundation. These programs, which provide both equity ownership to employees and a strategy to enhance employee engagement, are implemented with the goal of creating aligned interests and enabling all employees to participate in the investment outcomes their work creates.”

The Ascendant fund, which was oversubscribed at the time of its closing, received backing from a range of investors, including public pensions, family offices and insurance companies. To date, the fund has struck six deals for companies including software provider Alchemer, dental care chain 123Dentist, and fire equipment provider Marmic Fire & Safety.

In a break from PE tradition, KKR has pledged to offer equity to employees of all its North America portfolio companies from the new fund. Typically, such an offer is usually reserved only for senior executives. However, over the last decade, emboldened by the firm’s investments in the industrial sector which began using the model, KKR has since expanded the employee ownership programme to more than 50 of its portfolio companies, awarding billions of dollars of equity to more than 110,000 employees. The firm believes it leads to higher revenue, improved productivity and lower turnover within its portfolio companies.

KKR, which had $601bn in assets under management (AUM) as of the end of June, has been attempting to raise capital at a difficult time for fundraising for large buyout firms. Limited partners have been unenthusiastic about making new commitments. PE firms have struggled to return capital amid persistently high interest rates, which have made selling companies to other buyout firms or refinancing companies challenging. However, after the Federal Reserve recently cut US borrowing rates, there is an expectation that PE-backed deal volume will begin to climb again.

News: KKR raises $4.6 billion for debut North America mid-market deals fund

L&G exits Cala Group for $1.8bn

BY Richard Summerfield

Legal and General (L&G) is to sell its UK housebuilder Cala Group to investment groups Sixth Street Partners and Patron Capital in a $1.8bn deal, as part of a plan to slim down and focus on its main operations.

The deal will see L&G receive around £500m when the deal closes, which is expected to happen before the end of the year, and the rest of the cash over five years. The company plans to reinvest the funds in its wider operations, as well as supporting future shareholder returns. L&G paid more than £315m to buy Patron’s majority stake in Cala in 2018. Patron formerly owned Cala alongside L&G but in 2018 sold its stake in the company at an equity valuation of £605m.

“Today’s announcement is excellent news for Cala,” said Kevin Whitaker, chief executive of Cala. “This investment by Sixth Street and Patron demonstrates their confidence in Cala’s business plan and further potential. We look forward to developing a strong partnership with Sixth Street and reigniting the excellent relationship we shared with Patron between 2013 and 2018. I would like to thank Legal & General for their support since they first invested in Cala. With their backing, Cala has successfully tripled the number of homes we build each year, whilst revenue and profits have grown five- and ten-fold respectively.”  

“Cala has a bright future and we are proud to be entering this new chapter as stewards of a company with such a deep history and long track record of sustainable growth,” said Julian Salisbury, co-chief investment officer of Sixth Street. “We, together with Patron, look forward to continuing to support Cala and its management team, not only with capital but also with the significant resources of our London-based real estate investment team led by Giulio Passanisi.” 

“We are pleased to be able to back the Cala business once again,” said Keith Breslauer, managing director and founder of Patron Capital. “Cala is one of the UK’s leading housebuilders with a best-in-class landbank and a focus on building high-quality homes, being consistently ranked five-star for customer service. Furthermore, Cala is also a people business with a strong corporate culture and a business we know well, and we look forward to working closely with Cala’s impressive management team and our partner, Sixth Street, to further build the business and help tackle the undersupply of homes in the UK.” 

“This transaction demonstrates continued momentum in executing our strategy, simplifying our portfolio to enable a sharper focus on our core, synergistic businesses,” said António Simões, group chief executive of L&G. “Cala has been an important part of L&G for over a decade, with profits increasing ten-fold since our initial investment in 2013. The sale announced today will provide capital to deliver our strategic goals of sustainable growth alongside enhanced returns for shareholders. I’d like to thank the whole Cala team for their contribution to the Group and wish them every success in the future.”

News: Legal & General sells UK housebuilder CALA Group in $1.8 bln deal

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