M&A wrap: NovaQuest, Wellington, Asterion, KKR, CD&R, Broadridge, Advent, GF Data

drugdiscovery

NovaQuest Capital Management, a healthcare and life sciences-focused private investment firm, has raised its first private equity fund at $275 million. The fund started investing in March 2018 and made three investments along with two add-ons, including: drug delivery services company Azurity Pharmaceuticals; eclinical services provider Clinical Link; and Clinicial Research, which offers outsourced clinical services for clinical trials. NovaQuest targets businesses that help reduce the total cost of care, meet unmet medical needs and reduce unnecessary procedures. We are grateful for all the support we have received in achieving this great milestone to create a differentiated specialist investor in the healthcare and life sciences sectors and in successfully raising our first dedicated private equity fund," NovaQuest said in a release. The firm was formed in 2000 and manages $2.5 billion through product finance and private equity. Eaton Partners served as placement agent.

In another healthcare-related fundraise, Wellington Management, an independent investment management firm, has closed its first biotechnology fund at $393 million. The fund will invest in private biotechnology companies that are focused on drug discovery and development, and are seeking capital to advance their scientific programs. “This new sector-focused fund is the next step in expanding our private investment capabilities as we look for new opportunities to create long-term value for our investors," says Chris Kirk, president of Wellington Alternative Investments. Willkie Farr & Gallagher represented Wellington Management.

DEAL NEWS
Asterion Industrial Partners, a Spanish infrastructure fund launched by former KKR (NYSE: KKR) executives, has raised about $1 billion for its inaugural fund. Asterion focuses on infrastructure investments across Europe, and has recently closed three investments, including energy services company Proxiserve and a portfolio of data centers from Telefonica. Asterion was formed by Jesús Olmos Clavijo, who was previously the global co-head at KKR infrastructure; Winnie Wutte, who was most recently a director at KKR client and partner group in Europe; and Guido Mitrani, a former director at KKR infrastructure.

Clayton, Dubilier & Rice is buying medical aesthetics company Cynosure from Hologic Inc. (Nasdaq: HOLX) for $205 million. Cynosure makes medical aesthetics treatment systems for dermatologists, plastic surgeons and healthcare spas. CD&R says the sector will see robust growth, as people increaslingly focus on their appearances. UBS, Credit Suisse, Barclays and Debevoise & Plimpton are advising CD&R. Goldman Sachs (NYSE: GS) and Wachtell, Lipton, Rosen & Katz are advising Hologic. UBS is providing financing.

Broadridge Financial Solutions Inc. (NYSE: BR) has acquired ClearStructure Financial Technology, a provider of portfolio management services for the private debt markets. Jefferies and Marlin & Associates advised ClearStructure.

Advent International is buying haircare brand Olaplex. Financo is advising Olaplex, and Goldman Sachs (NYSE: GS) is advising Advent.

HomServe plc, a home repairs and improvement company, is buying a majority stake in LLR-backed Elocal, a performance-based advertising platform.

Kinzie Capital Partners has acquired Colony Display, a manufacturer of customized fixtures and displays for the home improvement, retail and hospitality industries.

Foodservice equipment maker Middleby Corp. has purchased Brave Home Inc., which offers residential cooking technology. Skadden, Arps, Slate, Meagher & Flom LLP advised Middleby.

Tecum Equity Partners has purchased crane service dealership Pinnacle Cranes. Smith, Gambrell & Russell LLP advised Tecum.

DEAL TRENDS
Lower middle-market valuations for the third quarter “averaged 7.4x – at the upper end of the 7.1-7.4x range that has characterized the market since the second half of 2017,” GF Data CEO Andrew Greenberg said in a report about the third quarter. “That is not to say all businesses are valued as they would have been 18 months ago – we see less desirable sectors losing some altitude and more desirable sectors finding new headroom. But in aggregate, multiples are remaining on an elevated plateau.” GF Data’s private equity contributors reported on 50 3Q transactions with total enterprise value (TEV) between $10 and 250 million and TEV/Ebitda multiples of 3 to 15 times. The report suggests favorable conditions are reaching more selling businesses in the smallest deal size tier. “The average valuation mark in the $10-25 million TEV bracket is 6.2x for 2019 year to date,” said co-founder Graeme Frazier. “This is on the high side, but it’s even more notable that the average for deals of that size with favorable pricing is nearly a full turn higher at 7.1x. Smaller deals generally experience a double discount – marked down for size, and then less likely to be rewarded for factors like above average financials, continuing management or institutional ownership prior to sale."

PEOPLE MOVES
Andrew Claerhout was hired by private investment firm Searchlight Capital Partners as a partner to co-lead infrastructure investments. He was most recently with Ontario Teachers’ Pension Plan.

Darrick Ginkel and Jason Starr have joined middle-market lender Monroe Capital as managing directors. Joseph Valickus has joined the same firm as a director, and Chris Spanel was hired as assistant vice president.

April Kim and Homin Lee have joined law firm Greenberg Traurig as of counsel. Kim was previously with Morgan, Lewis & Bockius LLP, and focuses on M&A in the energy sector. Lee was most recently with Paul Hastings, and represents financial institutions on lending transactions.

FEATURED CONTENT
As the retail industry's busiest season begins, Mergers & Acquisitions is covering many M&A trends in the sector. We've launched a weekly series on the 7 technologies retailers are investing in: The Internet of Things enables enhanced personalization, such as custom drive-thru menus. Artificial intelligence applications predict customers’ needs. Modern data centers and warehouses fill orders quickly. Robots assist with sorting and packing consumer goods. Voice- and text-assisted technology provides customers with hands-free shopping experiences. Analytics give retailers a better understanding of consumer behavior and habits. Mobile payment processing provides consumers with on-the-go convenience. This week, we're focusing on AI and Why Walmart and other retailers are buying artificial intelligence startups. We've also written about the role warehouses are playing. See: Amazon and Walmart open more logistics centers, driving warehouse M&A. Check back each Friday from now until Christmas for another installment.

Esteemed M&A attorney Martin (“Marty”) Lipton was honored at a black-tie event hosted by the Institute of International Education at The Pierre in New York on Oct. 30. Called the “the king of M&A,” the co-founder of New York law firm Wachtell, Lipton, Rosen & Katz, is well known to dealmakers as the architect of the anti-takeover defense strategy known as the “poison pill.” Lipton was awarded the IIE Stephen P. Duggan Award for Mutual Understanding “in recognition of his lifetime of extraordinary achievement and his lasting contribution to international higher education. Read the full story: Martin Lipton, inventor of the “poison pill” anti-takeover defense honored by IIE.

It’s a milestone year for the Blackstone Group Inc. (NYSE: BX), which transitioned from a publicly traded partnership to a corporation on July 1. The New York firm announced the final close of its latest global real estate fund recently. With $20.5 billion of total capital commitments, Blackstone Real Estate Partners IX is the largest real estate fund ever raised. Mergers & Acquisitions spoke with Stephen A. Schwarzman, the firm’s co-founder, chairman and CEO. Read the full story: "Complete control" is the beauty of private equity, says Blackstone's Stephen A. Schwarzman.

The private equity model has held up very well over the decades, continuing to outperform the public markets, even as economic cycles come and go. But the rate of growth has slowed, leading PE firms to seek adjacent areas of business to expand. As PE firms face increased pressure to produce higher returns on their investments, many of them are turning to a familiar area of business: lending. Adams Street Partners, Balance Point Capital, Carlyle and VSS are all actively engaged in lending. Read the full story: Private equity firms are becoming lenders. Here’s why.

Prokanga is a unique recruiting firm that offers full-time and flexible recruiting services. Prokanga is managed by co-founders Jamie Cheney and Lesley Finer (pictured). Mergers & Acquisitions spoke with Finer, who has more than 10 years of recruiting for the finance industry and leads the finance practice at Prokanga. For more, see Why financial services pros need flexibility.

Looking for a glimpse of what’s to come in the private equity industry? Meet Mergers & Acquisitions' 2019 Rising Stars of Private Equity. As the PE industry undergoes a generational shift, and many firm founders retire, it’s well worth getting to know these emerging leaders, including Branford's Austin Collier, Sterling Partners' Shawn Domanic and Summit Partners' Sophia Popova. For profiles and video interviews, see Meet Mergers & Acquisitions' 2019 Rising Stars of Private Equity. For Q&As, see 10 Rising Stars of Private Equity tell their tales.

Online retailers, including Amazon.com Inc. (Nasdaq: AMZN), are adding more fulfillment centers to meet consumer demands for faster shipping times. The owners of these properties along with the contractors that build them are becoming prime M&A targets. More local fulfillment centers means faster delivery times and lower last-mile costs to both retailers and customers. Read the full story: Amazon and Walmart open more logistics centers, driving warehouse M&A.

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 Influential Women in Mid-Market M&A. For more on the timeline and nomination process for each, see Special reports overview: M&A Mid-Market Awards, Rising Stars, Most Influential Women.

EVENTS
Exponent Women is hosting a Family Office Event with Owens Group at LX Gallery in New York on Nov. 21. Mergers & Acquisitions editor-in-chief Mary Kathleen Flynn is moderating a panel.

The Annual Winter Conference AM&AA is taking place in Scottsdale, Arizon fron Jan. 8-10.

Deal Wave is being hosted by ACG Orange Country at the Ritz-Carlton-Laguna Niguel in Dana Point, California on Jan. 9.

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