S&P Global Market Intelligence offers our top picks of global private equity news stories and more published throughout the week.
Private equity continues to show keen interest in wealth management, an industry where private capital has stoked an ongoing consolidation trend.
Wealth managers and related businesses accounted for at least three of the 10 largest deals so far in 2023 in a recent S&P Global Market Intelligence analysis of private equity- and venture capital-backed transactions in the asset management industry. Topping the list was the $4.2 billion take-private deal for wealth manager Focus Financial Partners Inc., backed by private equity firms Clayton Dubilier & Rice LLC (CD&R) and Stone Point Capital LLC.
The Focus Financial transaction on its own should put private equity on track for another strong year of dealmaking in the wealth management sector. As recently as 2021, when private equity-backed investments in the space totaled $6.25 billion, consulting firm DeVoe & Co. estimated private equity was behind six out of every 10 deals for wealth managers.
CD&R and Stone Point cited Focus Financial's relatively large size and active acquisition strategy — in an industry made up of thousands of small firms — as key drivers for their investment.
Read more about surging private equity and venture capital investments in the asset management sector.
CHART OF THE WEEK: PE investments in AI bounce back
⮞ Private equity and venture capital investments in AI and machine learning appear to be on the upswing again in 2023 after fading in the second half of 2022.
⮞ Private equity investments in the sector totaled $5.81 billion in the first quarter, up nearly 50% from the previous quarter's $3.88 billion total.
⮞ Still, that first-quarter figure represents a 61% year-over-year decline from the $14.74 billion private equity invested in AI and machine learning companies in the first quarter of 2022, and private equity-backed deal activity in the sector remains well below the levels seen through 2021 and the first half of 2022.
TOP DEALS AND FUNDRAISING
– Funds advised by Apax Partners LLP agreed to buy a significant minority interest in IBS Software Private Ltd., an India-based provider of software solutions to the global travel and logistics market, from Blackstone Inc. in a $450 million deal.
– A fund managed by KKR & Co. Inc. reached a deal to take a further 20% stake in Japanese supermarket chain Seiyu GK from Rakuten Group Inc. The fund's shareholding in Seiyu will increase to 85% following the transaction.
– Pantheon Ventures (UK) LLP raised $590 million in commitments at the final close of Pantheon Credit Opportunities Fund II. The fund targets secondary investments in credit portfolios, mainly in the US.
– Atomic Management LLC launched Atomic Fund IV, a $320 million fund for startups.
MIDDLE-MARKET HIGHLIGHTS
– Francisco Partners Management LP closed the purchase of Sumo Logic Inc., a cloud-based machine data analytics company.
– Globant SA will acquire digital transformation company Pentalog France SA, marking an exit for Marlin Equity Partners LLC, according to Market Intelligence data.
– Black Bay Energy Capital LLC sold NexGen Chemical Technologies, which specializes in alternative natural gas sweetening solutions, to Foremark Performance Chemicals, SK Capital Partners' portfolio company.
– ONCAP Management Partners LP agreed to invest in medical-device contract manufacturer Biomerics LLC and merge it with the medical business of ONCAP IV's portfolio company, Precision Concepts Group LLC.
FOCUS ON: APPLICATION SOFTWARE
– Funds managed by ABRY Partners LLC and Castik Capital Partners GmbH sold UK-based employee engagement company Reward Gateway (UK) Ltd. to Edenred SE for £1.15 billion.
– Alleaves Inc., which provides point-of-sale, payments and enterprise resource planning software solutions to the cannabis market, integrated with Green Check Verified Inc., Market Intelligence data shows.
– Auction.io bought real estate transactions platform Doorsey Inc. Liquid 2 Venture LLC and Agya Ventures were the sellers, according to Market Intelligence data.
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.