Private equity moves cautiously; offers in Japan on the rise


S&P Global Market Intelligence offers our top picks of global private equity news and more released throughout the week.

Private equity fund managers have plenty of capital to invest at their disposal, but they have been slower to put that money to work this year amid high inflation and signs of a global recession.

The total value of private equity inflows worldwide fell more than 60% year-on-year in September to $34.91 billion. The industry recorded $587.99 billion in admissions between January 1 and September 30, about 30% less than the total of $853.01 billion in the first nine months of 2021. In fact , total global private equity inflows have declined every quarter since peaking in the fourth quarter of last year.

It’s not that there aren’t opportunities there. Private equity managers have been talking for months about taking advantage of market dislocation to buy companies on the cheap, and global inflows this year are still well ahead of what they were at this time in 2018, 2019 or 2020.

General partners are also acting cautiously, aware that the same market forces creating buying opportunities, including rising interest rates and slowing economic growth, could harm their investments.

For example, during Blackstone Inc.’s third quarter earnings call, Chairman Jonathan Gray weighed the current opportunity the company sees in Europe and the UK, where a strong dollar meets sector valuations. declining public, in relation to the risks of an emerging energy crisis. and rising housing costs on the continent, as well as rising interest rates and inflation. Gray said Blackstone was closely watching potential targets in Europe, but warned analysts and investors that the deals could take years to materialize.

Get more details on global private equity entry trends, including the most active sector in September, here.

CHART OF THE WEEK: Increase in US PE investment in Japan

⮞ With $11.26 billion in total transaction value recorded between January 1 and September 12, US private equity firms have already invested more in Japanese companies in 2022 than in all of 2021.

⮞ The relative strength of the US dollar against the Japanese yen and falling corporate valuations are two factors driving acquisition activity by US-based companies.

⮞ The country’s low interest rates and stable regulatory environment are also attracting private investment to Japan.

OFFERS AND FUNDRAISING

* General Atlantic acquires investment manager Iron Park Capital Partners LP to create General Atlantic Credit. The deal could close in the first quarter of 2023.

* KKR & Co. Inc. has agreed to buy full-lifecycle digital services transformation company Ness Technologies Inc. from the Rohatyn Group.

* NovaQuest Private Equity management company QHP Capital LP has completed the acquisition of AutoCruitment, a digital patient recruitment company.

* TPG Capital LP’s TPG Real Estate closed its opportunistic real estate investment fund TPG Real Estate Partners IV with $6.8 billion in capital commitments.

* Ridgemont Equity Partners closed Ridgemont Equity Partners IV LP at its all-time high with $2.35 billion in commitments. The fund’s initial target was $2.0 billion.

ELSEWHERE IN THE INDUSTRY

* French platform and digital services company Plus que PRO SAS has received a capital injection from IK Partners.

* MSP Sports Capital has acquired a majority stake in action sports and entertainment brand X Games from ESPN Inc. unit ESPN Productions Inc.

* Sky Peak Capital has completed the purchase of Hicks Machine Inc., a precision machine shop.

* Long Ridge Equity Partners LLC has completed the acquisition of a majority stake in Acqueon, an omnichannel customer engagement software provider, from Everstone Capital Asia Pte. ltd. Everstone will retain a minority stake in Acqueon.

FOCUS ON: FOOD

* Suja Life LLC, a portfolio company of Paine Schwartz Partners LLC, has purchased Vive Organic Inc. The target company produces organic juices.

* Ara Partners Group LLC has committed $65 million in additional capital to BioVeritas, a bio-based ingredients company. Ara already owns a majority stake in the company.

* BRS & Co. and Rosser Capital Partners have agreed to jointly acquire Tumble 22 Holdings LLC. The target business is a hot chicken restaurant concept with five locations in Texas.

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