| | | | | The Daily Pitch: VC, PE and M&A | February 17, 2021 ![]() | | Like our newsletter? The data comes from the PitchBook Platform — our data software for VC, PE and M&A | | | | | | | | | | PE powerhouses focus on fee earnings, perpetual capital | |  | | (Andriy Onufriyenko/Getty Images) | | | A private equity firm's earnings come from two primary routes: Management fees, where LPs pay a set fee based on the size of their investment, and performance fees, where firms take a cut of their investment returns. Lately, the five largest publicly traded PE firms have been more focused than ever on the former as a way to boost their overall earnings.
Our latest analyst note examines the recent earnings reports from Apollo Global Management, Ares Management, Blackstone, The Carlyle Group and KKR to see how all five managed to grow their fee-related earnings in 2020 on a year-over-year basis. Some key takeaways: - Perpetual capital vehicles have become a popular tool for helping firms boost their AUM and collect more management fees.
- Large insurance transactions have proven particularly useful, with Apollo and KKR leading the way.
- Pandemic uncertainty contributed to a healthy fundraising year, as many LPs focused on existing relationships.
| | | | | | | | | | A startup made of startups: Centessa launches with $250M | |  | | (MicrovOne/Getty Images) | | | British VC firm Medicxi has joined with General Atlantic and other investors to create Centessa Pharmaceuticals, a drug development company with an unconventional origin story. - To form Centessa, Medicxi combined 10 biotech companies in its portfolio: ApcinteX, Capella BioScience, Janpix, LockBody, Morphogen-IX, Orexia Therapeutics, Palladio Biosciences, PearlRiver Bio, Pega-One and Z Factor. Each will continue to develop their own assets.
- Cambridge, Mass.-based Centessa is launching with $250 million in Series A funding led by General Atlantic, with participation from Vida Ventures and Janus Henderson Investors, among others. The financing is one of the largest Series A rounds for a biotech company, according to PitchBook data.
- Former Bristol Myers Squibb executive Saurabh Saha has been named CEO of Centessa. The company's chief scientific officer is Moncef Slaoui, a partner at Medicxi and former chief scientific adviser of Operation Warp Speed, the US government's coronavirus vaccine program.
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Connect with us to learn more | | | | | | | | | | NestlĂ© to sell water brands to PE for $4.3B | |  | | Nestlé Pure Life is one of several brands owned by Nestlé Waters North America. (Getty Images/Dia Dipasupil) | | | Swiss food and drink giant Nestlé has agreed to sell a portfolio of North American bottled water brands to One Rock Capital Partners and Metropoulos & Co for $4.3 billion. - Brands included in the sale are Pure Life, Poland Spring, Deer Park, Ozarka, Zephyrhills, Arrowhead, Ice Mountain and Splash. It will also sell its water delivery service ReadyRefresh.
- The deal—which does not include premium brands Perrier, San Pellegrino and Acqua Panna—is part of a strategic review launched by Nestlé last year. The multinational is looking to focus more on its international brands while making its entire water portfolio carbon neutral by 2025.
- Nestlé Waters North America employs 7,000 people in the US and over 230 in Canada. It has 27 production facilities across the region.
| | | | | | | | | | Sixth Street wants to block Dyal Capital's SPAC merger | | Special situations investor Sixth Street has sued Dyal Capital Partners in a bid to block the firm's proposed combination with direct lender Owl Rock Capital through a unique reverse merger that would be valued at around $12.5 billion, according to reports. - Dyal Capital, a division of Neuberger Berman that acquires passive, minority stakes in other private equity firms, agreed in December to merge with Owl Rock and a special-purpose acquisition company called Altimar Acquisition Corp., going public under the new name Blue Owl Capital.
- Sixth Street, which spun out from TPG Capital last year, has raised objections because Blue Owl Capital would be a direct competitor to Sixth Street in the lending space, Axios reported. Sixth Street alleges that would violate a non-compete clause Dyal signed when it acquired a minority stake in Sixth Street in 2017.
- The complications and potential conflicts of the deal continue. Altimar Acquisition was formed by HPS Investment Partners, another lender in which Dyal Capital has owned a stake since 2018.
| | | | | | | | | | An interview with Bill Gates about his history of clean tech investing and his new book, which does nothing more or less than lay out the billionaire's plan for how to save the world. [The Wall Street Journal]
More and more cities across the US are struggling to make ballooning pension payments. To fill the gap, some are resorting to a strange new sort of financial maneuver. [The New York Times]
In the asset management industry, artificial intelligence isn't just for quants anymore. [Institutional Investor] | | | | | | | | | | | Since yesterday, the PitchBook Platform added: | | 378 Deals | 1510 People | 412 Companies | 18 Funds | | | | | | | | | | | | | | | | | | | | 2009 Vintage Global Funds-of-Funds | | | | | | | | | | | | | SK Capital adds senior director | | | SK Capital Partners, a New York-based private equity firm focused on the specialty materials, chemicals and pharmaceuticals sectors, has hired Daniele Ferrari as a senior director. Ferrari was most recently the CEO of European chemicals company Versalis, and he has worked in the chemicals industry for more than 35 years. | | | | | | | | | | | | | | | | | | | | | | | | | | | Redefine Meat cooks up $29M funding | | | Redefine Meat has raised a $29 million Series A co-led by Happiness Capital and Hanaco Ventures. The Israel-based startup is a developer of 3D printing technology that produces animal-free meat by replicating the texture and flavor of meat products. Redefine Meat plans to use the funding in part to launch its product in Europe, Asia and North America. | | | | | | | | Menlo Ventures leads $11M round for Strata | | | Strata, the developer of a multi-cloud platform that lets companies manage identity and security policies in a central location, has raised an $11 million Series A led by Menlo Ventures. Founded in 2019, the Boulder, Colo.-based company has added Menlo Ventures partner Venky Ganesan to its board of directors. | | | | | | | | | | Hedge fund seals $630M deal for Tribune Publishing | | | Alden Global Capital has agreed to acquire the remaining stake it doesn't already own in Tribune Publishing Company for $17.25 per share. The deal reportedly values the company at $630 million. Alden had already built a roughly 32% stake in the Chicago-based newspaper company, which owns a range of publications including The Chicago Tribune and The New York Daily News. Alden has also agreed to sell The Baltimore Sun to the Sunlight for All Institute, a public charity. | | | | | | | | Apax, BC Partners among potential suitors for Carlyle's Logoplaste | | | | | | | | | Dorel calls off $370M take-private deal with Cerberus | | | Dorel Industries, a Canadian maker of bicycles and other recreational products, has terminated an agreement to be acquired by Cerberus Capital Management for C$470 million (about $370 million). Dorel cited a belief among shareholders that the company has more potential if it remains publicly traded. Cerberus had increased its offer to C$16 per share earlier this month after a pair of Dorel shareholders objected to the firm's original bid of C$14.50. | | | | | | | | Bregal-backed Corcentric takes over Vendorin | | | Corcentric has acquired Vendorin, a Hattiesburg, Miss.-based provider of payment software, from telecom expense management company Juvo Technologies for $100 million. Bregal Sagemount has backed Corcentric, which creates software to help businesses manage expenses and revenue, since May 2020. | | | | | | | | ZMC nears deal for famed Chicago comedy company | | | ZMC, a private equity firm led by media investor Strauss Zelnick, is in advanced negotiations to acquire Second City in a deal worth around $50 million, the Financial Times reported. Second City is a Chicago-based comedy group where stars such as John Belushi, Tina Fey and Steve Carrell got their starts. | | | | | | | | PSG to own newly combined HR software provider | | | | | | | | | JLL Partners, IBM back Breakwater's launch | | | JLL Partners has provided equity funding to support the launch of Breakwater Solutions, a provider of data-powered risk mitigation services to clients in the governance, legal and risk sectors. The company also has a partnership with IBM, and a number of IBM products are included in Breakwater's software suite. | | | | | | | | Warburg Pincus pledges $75M to Personetics | | | | | | | | | | | Freshworks exceeds $300M in annual subscription sales | | | Freshworks, a provider of customer engagement software, has surpassed $300 million in annual recurring revenue. The Bay Area-based Salesforce rival has grown its business 40% year-over-year during the pandemic. Freshworks has raised nearly $400 million in venture funding and was valued at $3.5 billion in 2019, according to PitchBook data. Its investors include Accel, Capital G, Tiger Global and Sequoia India. | | | | | | | | | | Cable One lands $2.2B deal for Hargray | | | | | | | | | Battery recycling startup inks $1.7B SPAC deal | | | Li-Cycle, a lithium-ion battery recycling startup, has agreed to go public via a merger with blank-check company Peridot Acquisition Corp., which is sponsored by Carnelian Energy Capital. The deal values the combined company at $1.67 billion and will provide it with $615 million in gross proceeds. Based in Toronto, Li-Cycle has raised prior funding from investors including Moore Strategic Ventures. | | | | | | | | Owlet Baby Care plans SPAC merger | | | Owlet Baby Care has agreed to merge with blank-check company Sandbridge Acquisition Corporation in a deal that will value the combined entity at around $1 billion and provide it with up to $325 million in cash, including a $130 million PIPE investment. The Utah-based startup provides healthtech for babies; its flagship product is a "smart sock" baby monitor that tracks vital signs. Owlet has received prior backing from Trilogy Equity Partners, Eniac Ventures and Formation 8, reaching a valuation of $150 million in 2018, according to PitchBook data. | | | | | | | | Amazon to buy ecommerce startup Selz | | | Amazon has agreed to buy Australian ecommerce startup Selz. Financial terms of the deal were not disclosed. Selz offers features that help small businesses build ecommerce capabilities and process payments. The startup received prior funding from Adcock Private Equity and Macdoch Ventures. | | | | | | | | HIG Capital to exit Whitney, Bradley & Brown to Serco | | | UK outsourcing group Serco has agreed to acquire US defense consultancy Whitney, Bradley & Brown from HIG Capital for $295 million. The deal is intended to bolster Serco's North American defense business. HIG acquired the company via an affiliate in 2017. WBB, which provides technical and engineering services to the US military, is expected to generate revenue of around $230 million in 2021. | | | | | | | | Warburg Pincus to sell Hygiena | | | Warburg Pincus has agreed to sell its stake in Hygiena to EW Group, a German holding company focused on animal breeding, health, nutrition and diagnostics. Based in California, Hygiena is a provider of food safety and environmental diagnostics services. Warburg Pincus has backed the company since 2016. | | | | | | | | Baird Capital offloads lighting specialist | | | Baird Capital has sold Collingwood Lighting to Ambienta, a European investor focused on environmental sustainability. Collingwood is a UK-based designer and supplier of lighting products for the residential, commercial and exterior markets. Baird purchased the company in 2018. | | | | | | | | | | Hamilton Lane hauls in $3.9B | | | Hamilton Lane has closed its fifth namesake private equity secondaries fund on $3.9 billion, topping a $3 billion target. The Pennsylvania-based asset manager raised $1.9 billion in 2017 for the prior fund in its secondaries series. Hamilton Lane operates in offices throughout the US, Europe, Asia, Latin America and the Middle East. | | | | | | | | Wind Point wraps up $1.5B effort | | | Wind Point Partners has closed its ninth flagship fund with $1.5 billion in total commitments, including $1.4 billion from outside LPs. The Chicago-based private equity firm closed its previous fund in the series on $985 million in 2017. Wind Point pursues middle-market deals across the consumer products, industrial products and business services sectors. | | | | | | | | Ironspring Ventures raises $61M to invest in industrial tech | | | Ironspring Ventures has closed its debut fund with $61 million in commitments, TechCrunch reported. The Austin-based firm targets early-stage startups in sectors including construction, transportation, mining and resources, and energy. Thus far, Ironspring has invested in Mercado, Icon, Fast Radius and GoContractor, the report said. | | | | | | | | Former a16z partner launches Atelier Ventures | | | Li Jin, a former partner at Andreessen Horowitz, has launched a new $13 million fund called Atelier Ventures. The fund's investing thesis is derived from an essay Jin published in 2019 describing the "passion economy," in which people build and sustain businesses based on their personal passions. The fund has already invested in startups including Substack, Patreon and Dumpling. | | | | | | | | | | Khosla Ventures looks to create trio of SPACs worth $1.2B | | | Khosla Ventures has filed to launch three blank-check companies that will seek to raise a combined $1.2 billion. Khosla's plans mirror VC investors like Ribbit Capital and G Squared, which recently launched SPACs of their own. Several of Khosla's portfolio companies, including real estate tech company Opendoor and solid-state battery startup QuantumScape, agreed to merge with SPACs in recent months. | | | | | | | | | | | | | | Who's in the newsletter today? | | People | | | | Investors | | | | Companies | | | | | | | | | | | | | | | | | |
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