S&P Global Market Intelligence offers our top picks of global private equity news stories and more published throughout the week.
Recent advances in generative AI and machine learning are expected to drive productivity improvements across a wide swath of industries, from software — where the AI revolution is already well underway — to manufacturing. Private equity is racing to understand what that means for its portfolio companies.
To ensure a successful exit, private equity firms have to do something to add value to their portfolio companies between the time of their acquisition and the time of their sale or IPO. This is especially true now that the rising tide of global economic growth that buoyed corporate valuations between the Great Recession and the pandemic has ebbed. Fund managers are increasingly viewing AI as a potentially powerful value-creation tool.
Expect private equity firms to prioritize AI deployment at portfolio companies in consumer-facing, data-intensive industries like technology and healthcare. Examples may include AI-powered chatbots that make websites and software products more user-friendly and AI assistants that boost the productivity of sales teams.
The key for private equity is to move faster than competitors. In the race to master new AI technologies, the prize for the winners is expanded market share.
Read more about AI's potential to add value to private equity firms' portfolio companies.
CHART OF THE WEEK: PE's reach into Asia-Pacific private markets
⮞ Myanmar's emerging economy has the highest level of private equity and venture capital involvement in its private market in all of Asia-Pacific. Of the country's 1,395 private companies, 5.95% had private equity or venture capital backing as of Sept. 8, according to S&P Global Market Intelligence data.
⮞ South Korea, a developed economy, ranked No. 2 for private equity penetration in the region. Third on the list was Cambodia, another emerging Southeast Asian economy.
⮞ Higher levels of penetration suggest a better risk-to-reward ratio for private equity and venture capital investors.
TOP DEALS AND FUNDRAISING
– Platinum Equity LLC will buy a majority stake in The Cook & Boardman Group LLC, a distributor of commercial doors and security integration solutions, in a deal set to close before the end of 2023. Seller Littlejohn & Co. LLC will remain a significant minority shareholder.
– Trane Technologies PLC agreed to buy Nuvolo Technologies Corp., which provides cloud-based connected workplace and enterprise asset management products and solutions. The sellers include Insight Venture Management LLC, Kaiser Permanente Ventures, GE Ventures LLC, Revelation Partners LLC, New Enterprise Associates Inc. and ServiceNow Ventures.
– Kelso & Co. LP raised $3.25 billion in capital commitments for Kelso Investment Associates XI LP at closing, exceeding the fund's initial target. Kelso partners and employees contributed over $400 million to the fund, reflecting a general partner commitment of more than 12%.
– Brookfield Asset Management Ltd. closed its largest private equity fund, Brookfield Capital Partners VI, with $12 billion in capital raised. The fund includes $3.5 billion in committed capital from Brookfield.
MIDDLE-MARKET HIGHLIGHTS
– The Halifax Group is set to acquire Sodexo SA's Worldwide Home Care division. The transaction is targeted for completion in the fourth quarter.
– Stanley Capital Partners LLP made a strategic investment in Roboyo Group Ltd., joining the hyper-automation company's existing backer, MML Capital Partners.
– Transition Capital Partners Ltd. partnered with Plexus Capital LLC and Texwin Metal Buildings' management team to acquire the company, which manufactures portable and custom metal buildings.
– Trive Capital Management LLC joined forces with BayLink Capital to invest in Veltris, a technology services company formed through the combination of Wavelabs Technologies and West Agile Labs Inc.
FOCUS ON: INDUSTRIALS
– SK Capital Partners LP completed the acquisition of a controlling stake in Milestone Environmental Services LLC , an independent energy waste sequestration company, from Amberjack Capital Partners LP.
– An entity controlled by funds managed by Ember Infrastructure Management LP agreed to buy H2O Innovation Inc. in a transaction that values the Canadian water treatment solutions company at C$395 million. The selling shareholders include BDC Capital Inc. Investissement Québec, Caisse de dépôt et placement du Québec and key H2O executives will roll over some of their shares in the company as part of the transaction.
– Funds managed by Sustainable Growth Management GP SARL sold a majority interest in Aquarion AG, a Swiss industrial wastewater company, to Gradiant Corp.
For further private equity deals, read our latest In Play report, which looks at potential private equity-backed M&A, including rumored transactions, each week.