PE opportunity in the European banking sector; ideal point for information security

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S&P Global Market Intelligence has our top picks of global private equity news and other articles published throughout the week.

Major European banks are likely to consider selling underperforming companies, and buyers of private equity should be at the forefront of recovering assets, market participants say.

Cerberus Capital Management LP, which is used to buying European bank assets, is said to be on the verge of buying the French retail banking business of HSBC Holdings PLC, which was put up for sale following a review strategic in 2019.

According to Christian Kent, managing director of the financial institutions group at investment bank Houlihan Lokey, banks are increasingly moving away from the idea that they are “full service” companies. Lenders aim to downsize and focus on cost reduction and automation. This, in turn, boosts sales from operations in niche markets or that may require a large amount of manual underwriting, he said.

“These can be attractive to private equity because they operate in niche markets and can often generate good margins if well managed. After COVID-19, with greater certainty about the performance of these companies’ existing loan portfolios / loan portfolios, we can see private equity take center stage, ”Kent said.

JC Flowers & Co. LLC, focused on financial services, is considering entering into further deals in the European banking sector, according to Tim Hanford, managing director of the company’s Europe team.

Hanford believes private equity firms are well positioned to absorb underperforming bank assets. “Private equity firms (…) provide strong management, strategic direction and investment in technology that allows these companies to return to independent growth,” he said.

Learn more about Cerberus’ history in European banking transactions and what the involvement of private equity could mean for the region’s banking outlook here.

CHART OF THE WEEK: Hot spot for information security for PE

➤ Although interest in many segments of the system software industry has waned over the past few years, the conclusion of private equity deals in the information security segment has driven the entire industry to serious disasters. near record levels, according to Scott Denne, senior research analyst at 451 Research. .

➤ From the start of the year through June 4, private equity investors have spent approximately $ 24.23 billion in total disclosed value on the acquisition of system software targets. more than double the tally for 2020, according to 451 Research’s M&A knowledge base.

➤ The median transaction value for the cumulative period was $ 225 million, while the median multiple reached 7.5x, according to data from 451 Research. Read the full article here.

FUNDRAISING AND OFFERS

* Funds managed by affiliates of Apollo Global Management Inc. will sell student learning solutions company McGraw-Hill Education Inc. to Platinum Equity LLC, a private equity firm for approximately $ 4.5 billion .

Separately, the entities, clients and funds managed by Apollo affiliates will commit up to $ 500 million in senior secured credit facilities created by Victory Park Capital Advisors LLC.

* The Blackstone Group Inc. and Vista Equity Partners Management LLC have agreed to acquire higher education-focused software company Ellucian Co. LP from TPG Capital LP and Leonard Green & Partners LP.

In a separate agreement, funds managed by Blackstone Real Estate submitted a proposal to purchase a controlling stake in Chinese commercial real estate company Soho China Ltd. for approximately 23.66 billion Hong Kong dollars.

* KKR & Co. Inc. is considering a sale of the suspension systems business of Marelli Corp. to refocus the company on electrification, lighting and other high-end tech products, Bloomberg News reported, citing people familiar with the matter.

The company, together with Altamar Capital Partners and other investors, has also agreed to sell its stake in the Spanish residential real estate platform Elix Vintage Residencial Socimi SA to Allianz SE.

ELSEWHERE IN THE INDUSTRY

* Charterhouse Capital Partners LLP’s portfolio company, Mirion Technologies Inc., has agreed to be combined with GS Acquisition Holdings Corp. II, a blank check company backed by a subsidiary of The Goldman Sachs Group Inc., in a deal that gives the radiation detection company a pro forma enterprise value of approximately $ 2.6 billion of dollars.

* BlackRock Inc.’s real estate and infrastructure investment unit, BlackRock Real Assets, has raised $ 1.67 billion for its first blended fund offering in the infrastructure debt market.

* Waypoint Capital Partners LLC will divest home health care provider One Homecare Solutions LLC to Humana Inc.

FOCUS ON: SPECIALTY CHEMICALS

* EQT AB (publ) plans to list Belgian specialty chemicals company Azelis Holding SA after the summer at a potential valuation of around € 5 billion, people familiar with the matter told Bloomberg Markets.

* SK Capital Partners has partnered with pigment producer Heubach GmbH to purchase the pigments business of Clariant AG in a transaction of approximately CHF 805 million.

* A subsidiary of funds managed by SK Capital has agreed to sell specialist firefighting products Perimeter Solutions to specialist acquisition company EverArc Holdings Ltd. in an approximately $ 2 billion merger deal.


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