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| Tech deals buoy private equity as the crisis recovery continues |
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| Thanks to the coronavirus crisis, the rate of US private equity dealmaking in 2020 continues to lag well behind past years. But there are reasons to think the market is beginning to bounce back after bottoming out during the second quarter—a recovery that’s been driven in part by a stream of tech buyouts that not even a pandemic could halt.
Sponsored by UMB Fund Services and ON Partners, PitchBook’s Q3 2020 US PE Breakdown examines the industry’s insatiable appetite for tech deals, plus 2020’s ongoing SPAC frenzy and other trends defining this time of transition across private equity. Key takeaways include:
- PE firms have capitalized on a swift recovery for public equity markets with a string of multibillion-dollar exits via IPO
- New government guidelines and a potential change to the tax code could lead to an uptick in dealmaking
- Current signs point to a feverish finish to the year for PE fundraising
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| Key Microsoft dealmaker jumps to EQT |
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| Swedish private equity giant EQT has hired seasoned tech dealmaker Marc Brown as a partner and head of its new growth unit, the latest sign of the firm’s ambitions for diversification in the wake of its initial public offering last year.
Brown was previously a vice president of corporate development at Microsoft, where he led more than 185 acquisitions for the tech colossus, including its $26.2 billion acquisition of LinkedIn in 2016 and its $7.5 billion takeover of GitHub in 2018. More recently, Brown was involved in Microsoft’s ill-fated negotiations to acquire TikTok‘s US assets, according to Bloomberg.
EQT and some of the other biggest private equity firms in the world continue to display a building interest in both venture investments and tech deals, chasing the sorts of superior returns that earlier-stage investments can produce. In another notable recent hire, in August, Blackstone brought on Christine Feng as a senior managing director focused on tech investments; Feng had previously been a senior executive at Amazon focused on M&A.
For more on PE’s growing appetite for tech, check out our latest analyst note.
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| A message from Deloitte Private |
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| Iterative design to transform internal talent marketplaces |
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| As internal talent marketplace strategies rapidly evolve, iterative design can accelerate adoption and transform the way organizations think about the future of work, the workforce and the workplace.
Companies like yours are exploring a concept referred to as “the internal talent marketplace.” This relatively new talent operating model offers an innovative and flexible approach to talent acquisition, mobility and management. It connects employees with both internal and external opportunities, enables managers to promote varied roles, and helps organizations quickly deploy, motivate, develop and retain employees.
Done right—through iterative design—the internal talent marketplace can deliver a broad range of benefits across talent acquisition, mobility and management, transforming the workforce and improving organizational agility.
Learn more
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| Conoco expands shale footprint with $9.7B Concho deal |
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A ConocoPhillips refinery in Ponca City, Okla.
(John Elk III/Getty Images) |
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| ConocoPhillips has agreed to purchase fellow oil and gas company Concho Resources in an all-stock deal that values Concho at $9.7 billion and would create a combined entity with an enterprise value of about $60 billion. Investors will receive 1.46 Conoco shares for each Concho share, representing a 15% premium to Concho’s closing stock price on Oct. 13.
The deal expands Houston-based Conoco’s footprint in the Permian Basin and would result in the production of more than 1.5 million barrels of oil equivalent per day. The combination would also represent the largest US oil deal since the pandemic began affecting the energy markets, and would create the largest independent oil company in the country, according to The Wall Street Journal.
Conoco’s planned acquisition of Concho follows a string of energy company consolidations amid low oil prices and weak demand. Chevron closed a $5 billion all-stock deal for Noble Energy earlier this month. And, in late September, Devon Energy agreed to buy WPX Energy for a price tag of $2.6 billion.
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| Since yesterday, the PitchBook Platform added: |
364
Deals |
1374
People |
399
Companies |
13
Funds
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| 2006 Vintage Global Debt Funds |
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| PitchBook Webinar: Sustainable investing in the context of COVID-19 |
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| As private market investors continue to commit more dollars and create additional products around sustainable investing, the field has continued to evolve. From considering investments in the framework of ESG risk factors to newer developments in impact investing today, a lot has changed.
Join us for a webinar on Oct. 21 at 10 a.m. PT that discusses how LPs, GPs and their advisers are thinking about sustainable investing in the context of COVID-19. Takeaways will include:
- Highlights from our 2020 sustainable impact survey, which includes responses from LPs, GPs and service providers
- How investors are considering sustainable investing in light of the COVID-19 pandemic
- How PitchBook is working to serve the needs of investors interested in sustainable investing
Register today
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| Hyperscience hauls in $80M Series D |
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| New York-based startup Hyperscience has raised $80 million in a round led by Tiger Global, with Bond and Bessemer Venture Partners also participating. The company makes software to automate routine business tasks. Earlier this year, Hyperscience raised a $60 million Series C and announced a threefold year-over-year increase in revenue. |
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| Solarea Bio collects $11M+ Series A |
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| Solarea Bio, a developer of microbiome-based therapeutics that use bacteria, fungi and prebiotic fibers to help treat inflammatory diseases, has raised more than $11 million in a round co-led by S2G Ventures and Bold Capital Partners. Founded in 2017 and based near Boston, the biotech company is valued at around $20 million, according to PitchBook data. |
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| Pretium, Ares value home-rental business at $2.4B |
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| Investors Pretium and Ares Management have agreed to acquire Front Yard Residential in a deal valued at $2.4 billion, with the price of $13.50 per share representing a nearly 36% premium to Front Yard’s closing share price on Friday. Based in the US Virgin Islands, Front Yard is an owner of single-family rental homes that currently manages more than 40,000 properties. |
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| Partners Group set for $2.4B Telepass deal |
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| Swiss investor Partners Group has agreed to buy an equity interest in Telepass, giving the Italian provider of toll-collection services an enterprise valuation of around €2 billion (about $2.4 billion). Partners Group will assume a 49% stake, according to Bloomberg, taking joint ownership of the business alongside current backer Atlantia, an Italian infrastructure specialist. Telepass processes some €7 billion worth of annual transactions across 14 European nations. |
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| I Squared inks $2.15B infrastructure pact |
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| Infrastructure investor I Squared Capital has agreed to purchase the infrastructure division of Virginia-based cloud networking specialist GTT Communications for $2.15 billion. The unit provides fiber network and data-center infrastructure services to clients across Europe and North America. |
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| HIG to buy hospice provider from Vistria |
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| HIG Capital has agreed to purchase St. Croix Hospice, a Minnesota-based provider of hospice care services in the US Midwest. The deal is worth some $580 million, according to PE Hub. Vistria Group has owned St. Croix Hospice since 2017. |
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| Kainos set to scoop up Nutrisystem |
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| Kainos Capital has agreed to acquire direct-to-consumer weight management company Nutrisystem from Tivity Health for $575 million. Kainos teamed with MSD Partners on the transaction, which comes less than two years after Tivity acquired Philadelphia-based Nutrisystem in a deal worth $1.3 billion. |
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| Thoma Bravo invests in financial software |
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| Thoma Bravo has acquired a controlling stake in AxiomSL, a developer of risk management and regulatory software for bankers, investment managers and other financial professionals. Based in New York, AxiomSL raised prior backing from TCV in 2017. |
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| Nextdoor mulls options for going public |
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| Nextdoor is exploring options to go public, which include an IPO, direct listing or a reverse merger with a SPAC, according to Bloomberg. The social network for neighbors is reportedly seeking a valuation of $4 billion to $5 billion. Nextdoor was valued at $2.1 billion in 2019 after raising $170 million, according to PitchBook data; its investors include Benchmark Greylock Partners, Kleiner Perkins and Tiger Global. |
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| Ant Group gets approval for Hong Kong listing |
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| Ant Group has received the go-ahead from Chinese regulators for the Hong Kong portion of its dual IPO, according to reports. Approval for the Chinese fintech company’s Shanghai registration is still outstanding, although a decision is expected soon, according to Bloomberg. Ant Group is reportedly seeking a $280 billion valuation and hopes to raise some $35 billion with the dual listing, potentially resulting in the largest-ever IPO. |
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| Networking companies connect with $450M deal |
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| California-based Juniper Networks has agreed to pay $450 million for 128 Technology, a fellow networking specialist. Based near Boston, 128 Technology has raised prior funding from investors including G20 Ventures and Montlake Capital, reaching a valuation of nearly $166 million in 2018, according to PitchBook data. |
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| Cerberus reduces expectations for telecom SPAC |
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| A special-purpose acquisition company sponsored by Cerberus Capital Management has downsized plans for its coming IPO, now aiming to raise $300 million instead of the $400 million target it initially registered. The blank-check company, called Cerberus Telecom Acquisition Corp., still plans to use the proceeds of the listing to conduct a reverse merger with a target in the information and communications technology sector. |
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| Billtrust to go public in SPAC deal |
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| Billtrust, a payments software provider, has agreed to a reverse merger with South Mountain Merger, a special-purpose acquisition company. The deal values the combined business at $1.3 billion; upon closing, the company will change its name to BTRS Holdings and trade on the Nasdaq. |
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| Vestar set for Woodstream exit |
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| Vestar Capital Partners has agreed to sell Woodstream, a maker of various products focused on pest control, animal containment and lawn care, to Bansk Group, a private investment firm that targets growth companies. Based in Pennsylvania, Woodstream has been part of Vestar’s portfolio since 2015. |
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| LLR Partners sees 50% size step-up |
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| LLR Partners has closed its sixth flagship fund on $1.8 billion, with plans to use the capital to pursue lower-middle-market deals in the healthcare and technology sectors. The fund will chiefly target investments of between $25 million and $100 million. LLR Partners closed its fifth fund on $1.2 billion in 2018. |
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| Lee Fixel’s Addition lands $1.4B |
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| Addition, the venture firm formed by Tiger Global veteran Lee Fixel, has brought in a $1.4 billion fund, according to the Financial Times, less than four months after Addition raised $1.3 billion for a separate vehicle. The firm’s portfolio includes Lyra Health and Snyk. Last year, Fixel departed Tiger Global to branch out on his own after more than a dozen years with the firm. |
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| Eureka Equity Partners has closed its fourth flagship buyout fund with a little more than $200 million in commitments, surpassing a predecessor that closed on $175 million in 2014. Based in Philadelphia, Eureka primarily pursues investments in the business and healthcare services, manufacturing and consumer products sectors. |
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| Colonial Consulting rebrands as Crewcial Partners, CEO steps down |
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| Colonial Consulting, an investment advisory firm for philanthropies and other nonprofit investors, has rebranded itself as Crewcial Partners. The New York firm, which was founded in 1980, also announced that chief executive Charlie Georgalas will step down. Dine Grullon, the firm’s chief operations officer, was named interim CEO. |
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| Alibaba lines up $3.6B supermarket deal |
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| Alibaba has agreed to take a majority stake in Sun Art Retail Group, an operator of supermarkets and hypermarkets in China. The Chinese tech giant will acquire a nearly 71% interest in A-RT Retail, which owns 51% of Sun Art’s equity interest, valuing A-RT at approximately HK$28 billion (about $3.6 billion). Alibaba will control a roughly 72% stake in Sun Art upon the deal’s completion. |
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| EU nears approval of Google’s Fitbit deal |
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| Google has made new concessions designed to alleviate European antitrust concerns related to its planned $2.1 billion purchase of Fitbit, adjustments that should allow the deal to win approval from the EU, according to Reuters. The EU’s regulatory arm has also reportedly delayed its deadline for approving the deal from Dec. 23 to Jan. 8. It has been nearly a year since Google and Fitbit first announced plans for a takeover. |
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| “Breaking down activity via region shows the UK & Ireland continued to account for the lion’s share of capital raised and fund count proportions, accounting for 66.6% and 39.1%, respectively, with London dominating fund locations.”
Source: PitchBook’s Q3 2020 European PE Breakdown
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