Blackstone Group LP is working on a higher takeover bid for industrial conglomerate Gates Global Inc after its previous offer of US$5.5 billion was turned down by Gates' owners, people familiar with the matter told Reuters. Blackstone, which submitted its binding offer in partnership with TPG Capital LP, is in negotiations with Gates' owners — Onex Corp and the Canada Pension Plan Investment Board — about raising its bid to clinch a deal for the auto parts and building products maker. If final terms are agreed, a deal for Gates could come in the next two weeks. Previously known as Tomkins Plc, Gates was taken private for US$5 billion in 2010.
Canadian private equity firm Annapolis Capital confirmed that it has to date secured $200 million in commitments for its seventh partnership, Annapolis Energy Fund VII LP. That’s effectively two-thirds of the way to the fund’s $300 million hard-cap target — a target that should be met no later than the fall of 2014. In that event, Fund VII will close at double the capitalization of Fund VI (2011). That’s quite an achievement for the young Calgary-based firm, founded in 2006 by managing partners Peter Williams and Jody Forsyth. And it augers well for a domestic oil and gas sector that has hefty investment spending requirements over the long run but relatively few sources of risk financing.
Thomson Reuters has struck a deal with consulting firm Cambridge Associates to provide the latter’s private equity benchmarking data to subscribers of the Thomson Reuters' Eikon service. The deal marks the end of an era: Thomson Reuters (publisher of peHUB Canada) and its predecessors, including Venture Economics, collected and published buyout and venture capital return data and statistics for more than two decades.
Montréal professional services consultant WSP Global is in acquisition-based growth mode. And the public company's two largest investors, the Caisse de dépôt et placement du Québec and Canada Pension Plan Investment Board, are once again stepping up to help fund its deal-making. WSP has announced plans to buy Focus Corp, a Calgary-based provider of engineering and geomatics services to clients in the oil and gas industry. The price tag: just over $366 million. To finance the transaction, WSP will rely in part on the Caisse de dépôt and CPPIB, to make a private investment totaling $80 million.
Private equity firms are going underground, Reuters reports. In the past, they have largely shunned mining acquisitions, as the volatility of commodities prices and cash flow made it difficult to structure leveraged deals. However, many are now predicting a flurry of global transactions this year, mainly in the US$50 million to US$800 million range, with the possibility of a few substantially larger deals. "Last year, we were active but maybe not as active as I would have liked to see us," said Isser Elishis, chief investment officer at Waterton Global Resource Management, a boutique, mining-focused private equity firm based in Toronto. "This year I think it will pick up dramatically."
In the early weeks of 2014, Eric Margolis, long-time owner of vitamins, minerals and nutrition supplements wholesaler Jamieson Laboratories, sold the Toronto-based business to U.S. private equity firm CCMP Capital Advisors. The deal, valued at over $300 million, was at once a succession event and a transition to new owners who are able to assume risk and effectively position the company for its next phase of long-term growth. CCMP managing directors Joe Scharfenberger and Rich Zannino and executive adviser Doug Cahill recently shared the details of their growth strategy for Jamieson with peHUB Canada.
Direct investments by two of the world’s largest pension funds have generated strong returns, suggesting that a recent Harvard Business School paper showing that directs do no better than fund investments won’t end debate on the question. OMERS Private Equity, which manages just more than $7 billion in private equity assets for the $65 billion Ontario Municipal Employees Retirement System, has averaged generating about a 20 percent IRR on directs over the last five years. That is well above the 14 percent net IRR generated on fund commitments, according to Paul Renaud, president and CEO of OMERS Private Equity.
Private equity funds face increasing deal-making competition in 2014, Bain & Company consultants said this week, with a record US$1 trillion cash pile adding to the pressure to find strong investments, reports Reuters. While surging equity markets helped funds to cash out on their investments in 2013, high asset prices have also forced down the number of buyouts by 11 percent as funds struggled to identify bargains. But investors are still pouring money into the industry, whose undeployed capital, or "dry powder", rose 12 percent last year to a record US$1 trillion, higher than levels before the financial crisis.
It’s an unsettling paradox that many of Canada’s First Nations communities are resource-rich and yet live in poverty. Might private equity have a positive role to play here? John Jurrius, president and CEO of the Calgary-based Native American Resource Partners LLC (NARP), thinks so. In the second quarter of 2014, Jurrius plans to go to market with a new fund focused on aboriginal economic self-sufficiency, peHUB Canada has learned. Targeted to raise capital commitments of between $500 million and $1 billion, the fund will invest in parallel with traditional PE firms in resource projects that create long-term ownership interests and income streams for First Nations in Canada.
As lenders, co-investors and limited partners, a number of insurance companies are placing big bets on the high-risk, high-reward middle market. Canada’s third-largest insurance company, Sun Life Financial Inc, earlier this month rolled out an alternative investment management business, including a fund ear-marked in part for mid-market senior loans, expected to grow to the billions of Canadian dollars over the next few years.