M&A wrap: Genstar, Novartis, Alcon, Macquarie, Foresters
Investors' concerns about a potential economic downturn may be good news for the private equity industry. “Early 2019 represents a pivotal point in time for the alternative assets industry,” finds a report from Preqin published earlier in April. Preqin surveyed more than 400 investors back in November to understand their current views on each asset class, the challenges they are facing and their plans for the next 12 months. “With asset valuations currently at record levels, fund managers and investors we spoke to largely agree that we are at the peak of the equity market cycle and are due a correction.” PE may prove to be a silver lining. While the public markets already began showing signs of weakening in late 2018, Preqin points out that “alternative assets weathered the storm of the last recession well.” As asset classes go, private equity is perceived as a safer haven in bad economic times. PE firms are likely to see increasing interest from investors who are preparing for a downturn, according to the survey. “Private equity is clearly delivering for institutional investors, providing strong returns that are meeting and often exceeding expectations,” said the report. “Investors remain committed to private equity, and the outlook for 2019 is positive.” Preqin released its Q1 fundraising update on April 10. "Historically, the first quarter of the year is a quieter period for fundraising; this was certainly the case for Q1 2019, as both the number of funds closed and the total capital raised declined from Q4 2018. Appetite for the asset class remains strong, though, despite concerns about a potential market downturn: 219 funds raised a combined $100 billion in Q1, in line with the $95 billion secured in Q1 2018. Where figures differ, though, is the number of funds closed in each period, with 340 funds closed in Q1 2018. Capital is becoming more concentrated among a small number of large funds."
Genstar Capital ranked as the most active U.S. private equity firm of 2018, based on volume of completed deals, according to PitchBook. The San Francisco firm in February announced it had raised its largest fund ever. Genstar recently invested in Ohio Transmission Corporation (OTC), an industrial automation equipment distributor and technical service provider, from Irving Place Capital. Check out Mergers & Acquisitions' profiles of 21 firms that led the league tables. Top private equity firms: Genstar, Audax, HarbourVest and more
Swiss pharmaceutical giant Novartis AG (NYSE: NVS) has completed the spin-off of the Alcon Inc. (NYSE: ALC) eye care devices business into a separately-traded standalone company through a dividend-in-kind distribution to holders of Novartis shares and American Depositary Receipts, with each holder receiving 1 Alcon share for every 5 Novartis shares or ADRs held on April 8. Cravath represented Novartis in connection with the transaction, which is valued at approximately $29.8 billion, based on first day trading of Alcon.
Macquarie Investment Management has entered into a definitive agreement to purchase the assets related to the mutual fund management business of Foresters Investment Management Co. Inc., the investment advisor of the First Investors funds, with approximately $12.3 billion in assets under management. The acquired assets will become part of the Delaware Funds by Macquarie family of funds. In addition, Macquarie has been chosen by Foresters to manage a portion of Foresters’ general account supporting its life insurance business. The transaction is expected to close in the fourth quarter. Foresters Financial has also entered into a definitive agreement to sell its U.S. broker dealer and advisory business to Cetera Financial Group. Foresters Financial will continue to focus on and invest in its core life insurance business. Foresters Financial was advised on the transactions by Oppenheimer & Co. Inc. and Skadden, Arps, Slate, Meagher & Flom LLP.
Stanadyne LLC, a supplier of fuel management systems and components and a portfolio company of Kohlberg & Co. LLC, has acquired Pure Power Technologies Inc., a portfolio company of Kensington Capital Partners LLC and investors advised by The Smithfield Group Ltd. The target specializes in air and fuel management components for the automotive aftermarket. “Pure Power’s experience and expertise in high-precision engineering, testing and manufacturing of diesel fuel injectors and turbos is a perfect fit for our business,” said David Galuska, Stanadyne CEO. “This transaction provides us the opportunity to better leverage our market-leading technologies, global presence, business processes and products to our customers across all channels.” Investment bank Harris Williams and law firm Hughes Hubbard & Reed LLP advised Pure Power.
Private equity firm Renovus Capital Partners has acquired a majority interest in KSM Consulting, a technology services and data analytics consultancy. Accounting firm Katz, Sapper & Miller will retain a significant minority ownership in KSMC and a seat on the board of directors. KSMC said it will immediately hire up to 30 new employees out of its Indianapolis headquarters to support the firm’s growth.
Excelled. Innovated. Inspired. That’s what the eight winners of Mergers & Acquisitions’ 12th Annual M&A Mid-Market Awards did in 2018. Our awards honor the leading dealmakers and deals that set the standard for transactions in the middle market. In addition to Nike, award winners include: Nike, Fortive, TA Associates, the Riverside Co., Harris Williams, Monroe Capital, Goodwin and Luminate Capital Partners' Hollie Haynes. Read our full coverage: Meet the winners of the M&A Mid-Market Awards: Nike, Fortive, TA, Harris Williams.
Related: Read more about Mergers & Acquisitions' three annual special reports, including the M&A Mid-Market Awards, the Rising Stars of Private Equity, and the Most Influential Women in Mid-Market M&A.
Mergers & Acquisitions has produced a wealth of compelling content recently. In case you missed any of it, we've put together a short list of 5 M&A stories you don't want to miss, including the winners of the 2018 M&A Mid-Market Award winners, top investment banks and PE firms doing tech deals. Here are more details on our recent coverage: 5 M&A stories you don't want to miss
Technology M&A is thriving, and private equity firms are hot on the trail of innovations that will drive sustainable value to customers and make companies more efficient, more effective and less expensive to run. Among the developments appealing to PE investors are: artificial intelligence, data management, data virtualization, digital marketing, healthcare IT, industrial automation, the Internet of Things, machine-to-machine learning, payment processing and Software-as-a-Service. To gain more insights into what kinds of tech deals will dominate the field in 2019, Mergers & Acquisitions reached out to 10 private equity firms that are active investors in technology: Francisco Partners, Genstar, Great Hill, HGGC, Insight, LLR, Riverside, Silver Lake, TA and Vista. Related: 10 private equity firms share strategies for tech M&A.
Mergers & Acquisitions has named 36 leaders the 2019 Most Influential Women in Mid-Market M&A, including Kainos Capital's Sarah Bradley, Kayne Anderson Capital Advisors' Nishita Cummings and Pelham S2K Managers' Venita Fields. All 36 are outstanding dealmakers both inside and outside of their firms. This year, we asked the featured dealmakers to tell their own stories through Q&As, including their advice for women. Related: Meet the 2019 Most Influential Women in Mid-Market M&A.
ACG Boston hosts a 40th Anniversary Celebration and inaugural awards reception at the Boston Harbor Hotel's Wharf Room on April 24.
InterGrowth 2019 takes place May 6-8 at the Waldorf Astoria & Hilton Bonnet Creek in Orlando, Florida.
Innovation Works holds its second annual AI/Robotics Venture Fair in Pittsburgh May 15-16.
ACG Chicago hosts the Midwest Capital Connection, at The Marriott Downtown Magnificent Mile, May 21-22.
ACG New York, ACG Boston and ACG Philadlephia are holding the Industrial Conference with Value Creation at the Infor in New York on June 6. The event is part of the Northeast Industry Tour.
ACG Minnesota hosts the The Upper Midwest ACG Capital Connection at the Renaissance Minneapolis Hotel, The Depot, June 10-11.
ACG Boston brings together 700-plus dealmakers for DealFest Northeast and DealSource Select 2019 at the Cyclorama & The State Room, June 12-13.