Sycamore Partners, which counts Staples among its investments, has raised its third fund at $4.75 billion. The New York-based PE firm now has about $10 billion in assets. "We believe the successful closing of fund III following strong investor demand reflects the power of our investment strategy," says Sycamore managing director Stefan Kaluzny, who co-founded the firm in 2011. Kalzuny is a former managing partner at Golden Gate Capital. "We partner with management teams to enhance the profitability and value of their consumer, distribution and retail-related businesses and provide capital tailored to help them succeed." Sycamore paid about $6.9 billion for Staples in 2017. The firm has also invested in department store chain Belk, women's apparel brand Coldwater Creek and apparel retailer Hot topic. Acalyx Advisors was Sycamore's placement agent on the fund raise. Kirkland & Ellis provided legal advice.
Actor Leonardo DiCaprio, who is known for his roles in films such as "Titanic" and "The Wolf of Wall Street," has invested in eco-friendly shoe company Allbirds. The investment comes on the heels of Allbirds rolling out a new sole, Sweetfoam, that is made out of renewable sugarcane and will be used on the company's debut flip-flop. Sweetfoam will also be available for other companies to use. “Creating sustainable consumer products requires a deep commitment from brands that understand the role they have in helping solve our environmental crisis,” DiCaprio told People magazine. “Allbirds is on the forefront of developing new materials that will serve as a model for the footwear industry. This kind of innovation is crucial for creating a more sustainable future. I am proud to join the company as an investor.” DiCaprio is a known environmental activist. In 2017, he announced plans to donate $20 million to help combat climate change.
M&A activity in the credit information sector is poised for global growth, according to a report from Houlihan Lokey Inc. (NYSE: HLI) called A CEO’s Guide to the Changing Face of the Credit Information Sector. Some of the factors expected to drive deal activity include: competition between companies looking to leverage modern technology; a growing demand for data for businesses that are expanding internationally; and the opportunity to offer data to information providers that are diversifying. “As a result of credit information firms enhancing their capabilities, they can now utilize their advanced analytical tools and expansion into new areas such as supply chain management, employee screening, compliance and healthcare to upsell to their existing customers," says Andrew Adams, the global head of data and analytics at Houlihan.
American International Group, Inc. (NYSE: AIG) and the Carlyle Group LP (Nasdaq: CG) have formed a strategic partnership to help build up insurance company DSA Re. As a part of the deal, Carlyle is buying a near 20 percent stake in DSA. The three companies have also entered a strategic asset management relationship where DSA and AIG will allocate $6 billion of assets into various Carlyle managed strategies across corporate private equity, real assets, and private credit. Goldman Sachs & Co. (NYSE: GS) and Sidley Austin are advising AIG on the minority stake sale. Citi (NYSE: C) and Debevoise & Plimpton LLP are advising Carlyle.
AE Industrial Partners-backed Belcan LLC has acquired Omega Engineering Services Ltd. from Passionate About People Ltd. Omega offers service contracts covering design, sourcing, purchasing and testing for the aerospace and defense sector. Mishcon de Reya and PricewaterhouseCoopers advised Belcan. BPE and Shaw & Co. advised Passionate About People.
NexPhase Capital has acquired Brandt Information Services LLC, a provider of recreational licensing software, including Software-as-a-Service, for local, state and federal government agencies to administer the issuance of fishing, hunting and other recreational licenses and permits. VRA Partners is advising Brandt and Lowenstein Sandler LLP is advising NexPhase.
San Francisco Equity Partners has purchased a majority stake in Brazi Bites, a producer of Brazilian-style cheese bread. The target is known for making "Pão de Queijo", a Brazilian snack that is popular throughout South America.
Tritium Partners has formed an investment platform with Mark Parise, the former CEO of background check First Advantage. The new company will seek investments in the information services sector.
Jean-Michel Aubertin has joined Clayton, Dubilier & Rice as an operating advisor. Aubertin is the former CEO of CG Power and Doosan Power Systems.
Elizabeth Flisser Rosman has been promoted to head of Cowen investment management at Cowen Inc. (Nasdaq: COWN). She joined the firm in 2017 as a managing director and head of strategy. Before joining Cowen, Rosman was with private investment company Reservoir Capital Group.
Henry Yin has joined Cooley's Beijing office as a partner. Most recently with Kirkland & Ellis, Yin focuses on cross-border M&A and private equity, particularly in China.
Mergers & Acquisitions has announced the Rising Stars of Private Equity. These 11 up-and-coming investors are expected to play significant leadership roles in the future. Congratulations to:
Daniel Hopkin, Partner, Kainos Capital
John Kos, Principal, GTCR
Erik Latterell, Director, Stone Arch Capital
Ethan Liebermann, Principal, TA Associates
Jaime McKenzie, Director, Monomoy Capital
Jennifer Roach, Vice President, Yellow Wood Partners
Joseph Rondinelli, Principal, Frontenac
David Shainberg, Vice President, Balmoral
Tom Smithburg, Vice President, Shore Capital Partners
Nicholas Stone, Managing Director, Cyprium Partners
Afaf Ibraheem Warren, Senior Associate, Siris Capital
For profiles of the emerging leaders, see Meet Mergers & Acquisitions' 11 Rising Stars of Private Equity.
Exponent, a new group of women dealmakers, brought together 200 women from private equity funds, investment banks, entrepreneurs and advisors for the Exponent Exchange, featuring Sallie Krawcheck as the keynote speaker. Previously the CEO of Wall Streetbanks, including Merrill Lynch Wealth Management and Citi Private Bank, Krawcheck serves as the CEO of Ellevest, an online investing platform for women. Mergers & Acquisitionsparticipated in the event as an in-kind sponsor, and editor-in-chief Mary Kathleen Flynnmoderated Spotlight Panel, From Startups to Showtime: Investment Case Studies. Check out our slideshow, Exponent drew 200 women dealmakers to event featuring Sallie Krawcheck.
The newly enacted tax act presents asset buyers, both large and small, with a new opportunity to increase post-transaction cash flow via tax savings. This opportunity results from the very generous expansion of an old rule with no prior significant relevance to asset acquisitions: bonus depreciation. Read the full guest article by Frank Vari of FJV Tax: Tax reform: how buyers and sellers can benefit from expanded bonus depreciation.
High valuations and abundant use of debt continued to mark completed deal activity in the first quarter of 2018, according to GF Data. Two hundred and eight private equity groups and other deal sponsors reported on 52 transactions closed in the quarter. The overall average valuation mark for the quarter was 6.9x valuation multiple, a marked retreat from the torrid 8.0x valuation multiple average in the prior quarter. At first blush, valuations in 2018 seem to have retreated to pre-2017 levels. However, GF Data gravitates to the view that the random fall of completed deals in 4Q 2017 versus 1Q skewed artificially high in the first period and low in the second. Averaged together, the result is a continuation of already unprecedented aggregate valuations attained in the middle quarters of GF Data. Read the full story: Valuations dropped slightly but are still higher than average.
Summer reading list: From stories of star athletes Arnold Palmer, Keith Hernandez and Tiger Woods to advice from entrepreneurs Bridgewater Associates’ Ray Dalio, KPCB’s John Doerr, Nike’s Phil Knight and Brava Investments’ Nathalie Molina Niño, plus strategies to help business leaders in general, and female dealmakers in particular, the 15 books on Mergers & Acquisitions’ list entertain, instruct and inspire. Check out our listicle: Dealmaker’s guide to summer reading: 15 new books.