S&P Global Market Intelligence offers our top picks of global private equity news stories and more published throughout the week.
Private equity portfolios held by the four largest publicly traded alternative asset managers were losing value in the middle of last year, but the fourth quarter of 2022 appears to have marked a turning point.
KKR & Co. Inc. reported no change in value for its private equity investments in the fourth quarter, halting a yearlong slide for its portfolio. Its peers Blackstone Inc., The Carlyle Group Inc. and Apollo Global Management Inc. all saw the value of their private equity portfolios appreciate in the fourth quarter, led by Apollo at 5.4%.
That made the fourth quarter the only quarter in 2022 when not one of the Big Four reported a lower value for its private equity investments.
Things looked much different in the second quarter, the first full quarter after Russia's invasion of Ukraine supported a global wave of post-pandemic inflation. The macroeconomic picture quickly shifted as central banks countered with interest rate hikes. Already shaky supply chains wobbled. Concern about a potential recession was on the rise.
Apollo, Blackstone and KKR wrote down the value of their respective private equity portfolios in the second quarter, up to 7% in the case of KKR. Each firm did it again in the third quarter. Carlyle was the only one of the four to stay out of negative territory all year, holding the value of its private equity investments flat in the second quarter and reporting 1% appreciation in the third quarter.
Clearly, it was a rough year for private equity and the global economy, but KKR co-CEO Scott Nuttall dismissed macroeconomic tumult as "a lot of noise" on the firm's fourth-quarter earnings call, focusing instead on the brighter prospects ahead. Even if KKR's private equity portfolio turned in the worst full-year results of the four, shedding 14% of its value in 2022, it still managed to beat the S&P 500, which was down more than 18% over that same stretch, executives said on the call.
Read more about KKR's fourth-quarter and full-year 2022 earnings.
CHART OF THE WEEK: Geopolitical tensions curb US investments in China
⮞ Investments in China by U.S.-based private equity and venture capital firms declined 76% year over year in 2022 to $7.02 billion.
⮞ Rising tensions between the U.S. and China and the latter's pandemic lockdowns factored into the pullback.
⮞ M&A deals and fresh funding rounds involving U.S. private equity firms totaled just $530 million in the fourth quarter of 2022, the lowest quarterly total in at least two years.
TOP DEALS AND FUNDRAISING
* Sycamore Partners Management LP completed the acquisition of home improvement retailer Lowe's Cos. Canada ULC Inc., which will be renamed Rona Inc.
* Ara Partners Group LLC acquired majority ownership in Wattstor Ltd., a British provider of automated carbon reduction and electricity cost-saving technology for small and medium-sized enterprises. Wattstor, which operates in the U.K., Czech Republic, Slovakia, Croatia and Poland, plans to use the capital to expand its European footprint, launch an energy as a service finance offering and enlarge its team by over 50% over the next year.
* French private equity firm Ardian purchased a stake in Theradial SAS, a medical solutions provider backed by UI Investissement SAS, formerly known as UI Gestion SAS.
* Greenbriar Equity Group LP raised about $3.48 billion at the final close of Greenbriar Equity Fund VI LP. The vehicle will invest in targeted subsectors that support the global industrial and consumer economy.
* Kainos Capital LP raised more than $1 billion at the close of Kainos Capital Partners III LP. The fund is the firm's largest investment vehicle to date and will invest in food and consumer companies.
MIDDLE-MARKET HIGHLIGHTS
* AE Industrial Partners LP entered into an agreement to sell its stake in Enercon Services Inc., an engineering and environmental services firm, to funds managed by Oaktree Capital Management LP. AE Industrial will continue to own a minority stake in Enercon.
* Raven Capital Management LLC agreed to be sold to MetLife Inc.'s institutional asset management arm, MetLife Investment Management LLC. Raven, which specializes in direct asset-based investments, had total assets under management of $2.1 billion as of the end of 2022.
* Investindustrial agreed to buy Standex International Corp.'s Procon Pumps business at an enterprise value of $75 million, subject to post-closing adjustments. The deal is expected to close in February.
* Deutsche Beteiligungs AG is selling its stake in broadband telecommunications equipment and services company BTV Multimedia GmbH to ETC Group SAS in a deal expected to close in the next four months.
FOCUS ON: SOFTWARE
* Craftsman Capital Partners acquired MSB School Services LLC, which provides special education software for K-12 educators.
* Columbia River Partners invested in Business Solution Partners Inc., a software development firm. Centerfield Capital Partners and Everside Capital Partners LLC provided funding for the transaction.
For further private equity deals, read our latest In Play report, which looks at potential private equity-backed M&A, including rumored transactions, each week.