M&A wrap: Corsair, Blackstone, Goldman Sachs, Seabury, McAfee, Wynnchurch, Audax, Coronavirus

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Business and financial services-focused private equity firm Corsair Capital has closed its fifth fund at $1 billion and an additional $264 million of co-investment capital that has been invested alongside the fund. Corsair seeks businesses "that combine financial services complexity with transformational technology" in payments, software and financial services. "Through our performance and partnership-driven philosophy, we help our portfolio companies flourish by leveraging our team’s sectoral perspective, deep network of relevant industry relationships and impactful resourcing for value-add initiatives" says Corsair managing partner Ignacio Jayanti. Corsair's latest fund has made six investments in: Jackson Hewitt Tax Service; identity verification services company IDnow; Axo AS, a independent distributor of financial services products in the Nordic region; digital transformation insurance firm RGI; and Zedra Group, which offers trust, corporate and fund services. PE fundraising is expected to remain healthy in 2020. About three-quarters of PE managers raising fund in 2020 expect it to be larger than the prior money pool, according to an EY survey. In 2019, the average fund size increased by 32 percent to $846 million, according to EY's PE Pulse report. In other fundraising news, Ridgewood Water & Strategic Infrastructure Fund reached has raised its first fund at $600 million, which will invest in water and other infrastructure in the U.S. lower middle-market. For more on fundraising, see PE fundraising scorecard: Lakeshore, Pamlico, Water Street.

The Dow Jones Industrial Average rose 400 points Wednesday morning after falling a total of 1,800 points Monday and Tuesday, underscoring fears that manufacturing shortages caused by the coronavirus will have far-reaching global ramifications. To get a sense of the impact on the middle market, Mergers & Acquisitions examines several factors, including the current impact on China’s economic growth; how the virus was discussed in the earnings calls of U.S. public companies in January and February; and the views of two prominent dealmakers who are based in Hong Kong. As this is an ongoing story, we’ll continue evaluating the economic and business effects. Analysts are already forecasting slowed growth for China, due to COVID-19. While the country’s economic growth was 6.0 percent in the fourth quarter of 2019, it may fall to as low as 3.5 percent in the first quarter of 2020, if the spread of the virus is not contained fast enough for manufacturing production to resume to normal levels, Morgan Stanley analysts wrote in a Feb. 19 report. While factories had started to come online, analysts found that production had only reached 30 to 50 percent of normal levels. We asked executives from the Riverside Co. and Paul Hastings about the impact of the coronavirus on middle-market dealmaking. Read our full coverage: Viral impact: How COVID-19 is affecting M&A and private equity

DEAL NEWS
Blackstone Group Inc. (NYSE: BX) is buying the iQ student accommodation business from Goldman Sachs Group Inc. (NYSE: GS) and the Wellcome Trust in the largest-ever private real estate deal in the U.K. Funds managed by Blackstone will pay 4.66 billion pounds ($6 billion) for the business, which owns and manages properties with more than 28,000 beds in the U.K. Private-equity firms are betting heavily on U.K. real estate, which has lagged other western European markets since the Brexit referendum in mid-2016. Student housing has been a particularly popular bet, as students vastly outnumber the rooms available in purpose-built accommodation, reports Bloomberg News. Read the full story by Bloomberg: Blackstone buys U.K. dorms from Goldman.

Seabury Capital, an investment bank that focuses on the aviation, aerospace & defense, maritime sectors has acquired Structured Finance International to form Seabury Aircraft Capital. The combined company will expand Seabury's services in aircraft financing. Seabury CEO John Luth says the acquisition is a "further expansion of our current and related business lines, which have deep familiarity with and established presence in the global airline market."

Angeles Equity Partners and Clearlake-backed construction supplies distributor American Construction Source has bought building materials supplier Homewood Holdings from Building Industry Partners. Simpson Thacher & Bartlett LLP advised the buyer. KeyBanc Capital Markets and Holland & Knight advised Homewood.

McAfee is buying web security company Light Point Security. “Web browsing is one of the most common threat vectors for endpoints to get infected," says McAfee chief product officer Ash Kulkarni.

Wynnchurch Capital has acquired Pennsylvania Machine Works, a manufacturer of high pressure fittings parts for the energy, industrials and shipbuilding sectors.

One Equity Partners-backed PS Logistics has completed its acquisition of Southeast Logistics.

Goldman Sachs Merchant Banking and Summa Equity have acquired a stake in EcoOnline, which provides workplace health and safety software. Arma Partners advised EcoOnline.

BV Investment Partners has purchased a minority stake in cloud software company TopBloc. The target offers help desk technical and functional support along with managed payroll services

PEOPLE MOVES
Shane Sealy has joined investment bank Houlihan Lokey (NYSE: HLI) as a managing director. Sealy was most recently with Intrepid Financial Partners, and concentrates on M&A in the oil and gas sector.

Christopher Bellavia has joined law firm K&L Gates as a partner, where he is focusing on M&A. Bellavia most recently served as general counsel and corporate secretary for consumer goods and lifestyle brand Bulletproof 360.

FEATURED CONTENT
Audax, HarbourVest and Genstar ranked as the top three most active private equity firms in 2019, based on the volume of completed deals in the U.S., according to PitchBook. Three companies tied for fourth place: Abry, Carlyle and Shore Capital. Where were these PE firms looking for deals? Eight of the firms on our list name the software and technology sector among their top investment targets, and seven put healthcare companies on their priority list. Financial services and consumer services are each named by five of the firms as industries they focus on, with four naming business services companies. Fundraising from investors in 2019 led to two notable fund launches earlier in 2020: KKR’s Global Impact Fund and HarbourVest’s $2.6 billion HarbourVest Fund XI. See our full coverage: Top private equity firms in U.S. deals in 2019: Audax Private Equity ranked No. 1.

M&A in the manufacturing industry is flourishing, despite many challenges in the sector - or rather, because of those challenges. The Institute for Supply Management said that its manufacturing index fell in December 2019 to 47.2. That’s its lowest level since June 2009, when it hit 46.3. This, in addition to a tight labor market, China’s retaliatory tariffs and the upcoming presidential election, has made manufacturing a tricky sector to do business in these days. But M&A remains active. Interest rates are low, and companies as well as investors have cash to invest. Additional factors come into play, including the need for consolidation and globalization in the manufacturing industry. Robots are playing a role as well, and manufacturing automation has become appealing. “The tight labor market and increasing wages have led us to pursue a number of different initiatives at our companies to counteract the resulting pressures created,” says Brad Roberts, a partner with the Riverside Co. “Where economical, we are investing in increased automation to enable us to meet growing sales volume amidst this difficult hiring environment.” Read our full coverage: 5 trends driving manufacturing M&A.

Artificial intelligence in healthcare saw about $4 billion in funding across 367 deals in 2019, according to data and research firm CB Insights. Amazon.com Inc. (Nasdaq; AMZN) is no exception. The tech conglomerate is using its recent deals for Health Navigator and PillPack to launch new software services in healthcare. Health Navigator works with companies like Microsoft Corp. (Nasdaq: MSFT) in offering services such as remote diagnoses, and with triage to help patients figure out whether to stay at home, see a doctor or go straight to the emergency room. Read our full coverage: How Amazon is using M&A to revolutionize healthcare.

Pushed by a groundbreaking California law mandating it, more companies are putting women on their public corporate boards. The law faces pressure in court and may not stand, but its rippling effect has already started to increase the visibility and awareness of the important benefits of board diversity. Investors are taking notice and trying to get ahead of the curve. According to a study published by MSCI in March 2018, having three or more women on a company’s board of directors translates to a 1.2 percent median productivity above competitors. Read the full guest article by Venable's Belinda Martinez Vega: Why businesses are adding women to their boards.

If there’s anything M&A professionals dislike, it’s uncertainty. And heading into 2020, there’s more than enough uncertainty to go around, including questions about the economy, international trade, impeachment, domestic politics and more. The funny thing is, the lack of clarity may actually make the first half of the year a great time for M&A, as dealmakers push to close transactions before the looming uncertainty of Election Day and its outcome. We conducted interviews with 8 investment bankers and other M&A advisors. Some said the first half of the year will be robust, while others said the uncertainty may have a negative impact throughout 2020. Read the full story, What’s ahead for M&A in 2020? We ask 8 advisors.

Mergers & Acquisitions has named the 2020 Most Influential Women in Mid-Market M&A. This marks the fifth year we have produced the list, which recognizes female leaders with significant influence inside their companies and in the wider dealmaking world. It’s been gratifying to watch the project evolve over the years – and become more influential itself. This year, we received more nominations than ever before. As a result, we expanded the number honored to 42 in 2020, up from 36 in 2019. Many dealmakers are new to our list, including Rockwood Equity Partners' Kate Faust, William Blair's Shay Brokemond and Avante Capital Partners' Ivelisse Simon. Read our full coverage of all the champions of change on our list, including Q&As with each individual.

To celebrate deals, dealmakers and dealmaking firms, Mergers & Acquisitions produces three special reports every year: the M&A Mid-Market Awards; the Rising Stars of Private Equity; and the Most Influenital Women in Mid-Market M&A. For an overview of what we're looking for in each project, including timelines, see Special reports overview: M&A Mid-Market Awards, Rising Stars, Most Influential Women.

EVENTS
ACG New York is hosting the 12th annual healthcare conference and bourbon tasting at the Metropolitan Club in New York on Feb. 27.

ACG Raleigh Durham's 18th annual capital conference is being from March 31-April 1 at the Raleigh Marriott Crabtree Hotel in Raleigh, North Carolina.

InterGrowth 2020 is taking place at the Aria Resort & Casino in Las Vegas from April 20-22.

The 4th annual Emerging Manager Connect conference is taking place at the Harvard Club in New York on July 22.

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