Permira raises €16.7bn Europe-focused fund

BY Richard Summerfield

Leading private equity firm Permira has announced the closing of its most recent flagship buyout fund, Permira VIII (P8), with total capital commitments of €16.7bn.

The fund saw strong demand from investors, closing above its target size of €15bn, which represents around a 50 percent increase in size compared to its predecessor, P7, which closed at €11bn in 2019.

The new fund has already deployed capital across four deals: Mimecast, Zendesk, Reorg and Acuity Knowledge Partners. According to Permira, the new fund will “aim to adhere to specific, fund-level targets relating to climate, gender diversity and governance”, which will be reported on annually throughout the fund’s lifecycle.

With a re-up rate of over 90 percent and over 50 new investors, P8 secured investment from a globally diversified base of leading international investors, including public and private pension funds, sovereign wealth funds, endowments and foundations, institutional fund managers and family offices of entrepreneurs.

“This fundraise is testament to the close relationships we have built with investors over nearly four decades, and an investment strategy that backs rapidly growing companies and highly resilient market leaders,” said Kurt Björklund, managing partner at Permira. “Across both P8 and PGO II, we now have committed capital of more than €20 billion to invest across both our buyout and growth equity strategies. I’d like to thank all of our investors for their continued and unwavering support."

“P8 comes at an exciting time, when we can continue to execute on our thematic, growth-focused investment strategy, whilst also applying it through the lens of values-based investing,” he continued. “We believe the four investments from P8 so far are a clear demonstration of this. We look forward to partnering with outstanding entrepreneurs and management teams to build the leading companies of tomorrow.”

The fund’s close follows the $4bn closing of Permira’s second growth equity fund, Permira Growth Opportunities II, in December 2021, which also beat its target of $2.5bn. The firm believes that the two funds will “enable Permira to invest flexibly across the most compelling investment opportunities globally, whilst leveraging the breadth of expertise available from Permira’s wide network and deep sector expertise”.

The firm has a strong track record of investing in businesses where technology is, or is expected to be, a significant part of their growth trajectory. As such, P8 is expected to see investments in the technology, consumer, healthcare and services sectors.

News: Permira raises €16.7bn for one of Europe’s biggest-ever buyout funds

Tech investment in Asia rapid in 2022, reveals new report

BY Fraser Tennant 

Tech investment has grown to represent the majority of private capital activity in Asia, even amid the global correction in 2022, according to a new report by the Global Private Capital Association (GPCA).

In its ‘2023 Trends in Global Tech’ data report – which examines some of the contours of the changing tech investment landscape with a focus on emerging trends and cross-border insights – the GPCA states that investment in tech across China, India and Southeast Asia has steadily expanded since 2017.   

“While Asia was not immune to global tech and venture corrections in 2022, tech remained a dominant theme for private capital investors in the region,” said Ethan Koh, Asia Research Director at GPCA and co-author of the report. “Despite a pullback from 2021 highs, tech investment was on par with pre-pandemic levels at $146bn in 2022.

Of all the investment activity in Asia, the GPCA notes that it is Chinese investment in deep tech that received the lion’s share of interest from investors in 2022, accounting for 71 percent of deal value (up from 40 percent in 2020).

In comparison, investment in China in other tech areas was much less prolific, with enterprise software & IT services receiving 16 percent of capital investment and consumer tech 8 percent.    

Additional key findings in the report include: (i) Western and Chinese money is moving to Southeast Asia; (ii) over half of 2022 deals include US or European investors; (iii) Chinese investors now participate in one quarter of Southeast Asian tech deals; (iv) consumer tech and FinTech dominate investment landscape in Southeast Asia; and (v) deep tech is benefitting from regulatory shifts and growing investment from local and international investors alike.

However, according to Rebecca Xu, co-founder and managing director of Asia Alternatives and a contributor to the report, despite a decisive shift toward deep tech, many investment opportunities in this key area remain untapped.

“Deep tech is underdeveloped, like consumer tech was 15 years ago,” said Ms Xu. “There are not many fund managers who have established a proven track record in deep tech. With plenty of room for development, finding professionals who have experience and specialised expertise involving science and technology is more essential than ever.”

Report: ‘2023 Trends in Global Tech’

CD&R acquires Focus Financial Partners in $7bn transaction

BY Fraser Tennant

In a deal that will take it private, fiduciary wealth management firm Focus Financial Partners Inc is to be acquired by affiliates of US private equity firm Clayton, Dubilier & Rice (CD&R) in an all-cash transaction valued at $7bn.

Under the terms of the agreement, Focus’ stockholders will receive $53 in cash per share, representing an approximately 36 percent premium to Focus' 60-day volume weighted average price as of the close on 1 February 2023.

“Focus represents an outstanding collection of leading registered investment advisers (RIAs) and business managers,” said David Winokur, a partner at CD&R. “Our investment is predicated on having greater financial and operating flexibility as a private company in order to support and drive collaboration amongst these entrepreneurial partners.”

Funds managed by Stone Point Capital LLC have agreed to retain a portion of their investment in Focus and provide new equity financing as part of the transaction.

“We are excited to be continuing the journey with the Focus partnership,” said Fayez Muhtadie, managing director of Stone Point. “We firmly believe in the secular tailwinds supporting the wealth management industry and that Focus, as a private company, will be even better positioned to capitalise and continue its track record of growth.”

The board of Focus has approved the proposed transaction on the recommendation of a special committee of all the independent directors of Focus.

“This transaction represents an important evolution in the resources we will have to invest, enabling us to increase the value we deliver to our partners and their clients,” said Rudy Adolf, founder and chief executive and chairman of Focus. “Our diverse and growing partnership creates enduring advantages and we are pleased to have reached an agreement with CD&R that delivers significant immediate cash value to Focus’ stockholders.”

Closing of the transaction – which is expected in the third quarter of 2023 – is subject to stockholder approval, regulatory approvals and other customary conditions.

Mr Adolf concluded: “We are uniquely positioned to capitalise on industry trends while offering the expertise and resources that help our partners provide differentiated service to their clients.”

News: CD&R to take Focus Financial private in over $7 bln deal

Failed battery firm gets a Recharge

BY Richard Summerfield

Recharge Industries, an Australian portfolio company of privately owned US firm Scale Facilitation, has been successful in its bid for ownership of Britishvolt, the battery manufacturer which collapsed into administration in January.

Under plans presented by Recharge Industries, the Britishvolt project will make the UK’s first gigafactory a reality, creating a strategic economic and security asset which will play a critical role in the UK’s industrial and net-zero strategies. The newly acquired Britishvolt will provide thousands of green, skilled and local jobs that will drive local and national benefits, according to a statement announcing the deal.

“We are thrilled to have been successful in our bid for ownership of Britishvolt; our plans are the right ones for the local community and the UK economy,” said David A. Collard, founder and chief executive of Scale Facilitation. “Our proposal combined our financial, commercial, technology and manufacturing capabilities, with a highly credible plan to put boots and equipment on the ground quickly. Our technology – including an exclusive license for the intellectual property and battery technology – has been developed and validated over the last decade through C4V in the US and will be the backbone of both gigafactories in Geelong and Cambois. Backed by our global supply chain, strategic delivery partners and a number of significant customer agreements in place, we’re confident of making the Cambois Gigafactory a success and growing it into an advanced green energy project.”

The original Britishvolt was intended to create a home-grown EV battery industry that can support domestic car production, but the company collapsed in January after failing to raise enough funding for the factory in northern England. The company was a much-heralded part of the UK government’s ‘levelling up’ agenda, however Britishvolt had only raised around £200m by summer 2022 and had pushed back its production timeline. The government had offered £100m to the former Britishvolt owners if they hit certain construction milestones, but they were not met.

The company was planning to build its 30GWh factory in phases to take advantage of rising EV demand ahead of the UK’s 2030 ban of new petrol and diesel cars. The plant, located near Blyth in Northumberland, was expected to employ about 3000 people when operating at full capacity.

Going forward, the new owners will keep the Britishvolt brand name but will focus on batteries for energy storage and hope to have those products available by the end of 2025. Recharge also plans to build a battery factory in Geelong, a former car manufacturing hub in Australia, free from Chinese and Russian materials.

News: Australia's Recharge Industries buys failed battery firm Britishvolt

Starry files for Chapter 11 bankruptcy

BY Richard Summerfield

Boston-based internet service provider Starry Group Holdings Inc. has filed for pre-packaged Chapter 11 bankruptcy protection in an attempt to reduce its debt load while maintaining customer and network operations in five cities.

The company, which filed for Chapter 11 restructuring in the US Bankruptcy Court for the District of Delaware, has filed various motions with the Court, including one for approval of a $43m debtor-in-possession (DIP) financing facility to give it the liquidity to continue operations throughout the process. Starry has approximately $270m in assets versus $310m in total debt, according to a court document.

The bankruptcy filing comes on the back of a bruising period for the company. In January, Starry announced its decision to pull out of one of its markets – Columbus, Ohio – and lay off staff. 2022 was a challenging year as the company defaulted on the opportunity to pick up government funding and found itself the subject of endless speculation on its financial position. In October 2022, Starry laid off around half of its workforce - about 500 people - as the company did not “have the capital to fund our rapid growth”, according to Chet Kanojia, chief executive of Starry. As such, the company was going to focus on its core business of serving multitenant buildings in bigger urban markets.

“Over the last several months, we’ve taken steps to conserve capital and reduce costs in order to put Starry in the best position to explore various financing paths for the company,” said Mr Kanojia. “Our next step in this journey is to continue to strengthen our balance sheet through a Chapter 11 restructuring process. With the support of our lenders, we feel confident in our ability to successfully exit this process as a stronger company, well-positioned to continue delivering an affordable, high-quality broadband experience to our customers.

“The Restructuring Support Agreement provides us with the funding needed to continue operating as normal, through this restructuring process and as we guide the company to profitability. We have a strong and experienced team in place and look forward to moving through this process quickly so that we can continue expanding essential broadband access and #HappyInterneting to more communities across the country,” he added.

Starry currently operates in Boston, New York City, Los Angeles, Denver and Washington, DC, and reported nearly 91,300 customers at the end of September - an increase of 66 percent year-on-year.

News: Starry’s troubles continue as it files for Chapter 11