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8 March, 2021 – Issue 857 penews.com
Online edition
8 March 2021
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www.penews.com • 8 March, 2021 News 2
CONTENTS
Agilitas amasses €565m for
Cover
its third mid-market fund
GETTY IMAGES Elisângela Mendonça regardless of what is happening in We look forward to capturing the
the wider world. considerable opportunities we cur-
Pan-European private equity firm The firm’s main targets are rently see in the Western Europe
Agilitas has reached the final close mid-market businesses with en- mid-market,” Agilitas’ managing
of its third fund with €565m in terprise values between about partner, Martin Calderbank, said.
commitments. The fundraising, €50m and €300m across Western The firm, set up in 2011, has
mostly conducted amid the pan- Europe in a range of sub-sectors concluded recent deals in sectors
demic, saw the firm surpassing such as environmental technolo- considered resistant to the pan-
l Walking the talk: Meet the most
the initial €425m target, a person gies and services, education or es- demic. In November, it acquired
inclusive PE and VC firms
– Pages 6-7
familiar with the situation told Pri-
vate Equity News.
The vehicle will follow the
sential infrastructure.
The fund attracted capital com-
mitments from a broad range of
Dutch soldier and military vehicle
protection specialist TenCate Ad-
vanced Armour from Royal Ten-
Private equity investing has its cycles.
News
l HIG snaps up KPMG’s UK
firm’s strategy of investing in com-
panies which have limited cyclical
exposure and are defensible and
investors across Europe, North
America, the Middle East, and
Asia, the firm said.
Cate, in a deal expected to close by
the end of this month.
Earlier last year, in March,
Work with a secondary manager who’s
restructuring business in
management buyout
l UK Budget 2021: main takeaways
for finance
sustainable. This means focusing
on assets that are able to navigate
turbulent times and perform well
“The high demand we have
seen is testament to the strength
of Agilitas’s investment strategy.
Agilitas snapped up education and
training specialist Learning Curve
Group from MML Capital.
experienced them all.
l Deals and company news
I Squared Capital and TDR Capital agree
– Pages 4-5
C
Analysis
to buy UK’s Aggreko in £2.3bn deal
M
M
l Shake-up of listing rules will help Y
As leaders of the secondary market, the Lexington Partners team
UK compete for Spacs draws on more than 400 years of private equity experience.
CM
CM
l Review is an overdue promise for Adria Calatayud companies said. The price repre- how Aggreko can both grow prof-
the City’s post-Brexit future sents a 39% premium to Aggre- itably through the energy transi- MY
MY
Through all types of business cycles, we have completed over
l Blank cheque company boom UK-based Aggreko has agreed to ko’s closing share price the last tion and achieve market-leading
could outstrip previous record be bought by a newly-formed com- business day before the approach carbon reduction targets. This
CY
550 secondary transactions, acquiring more than 3,000 interests
– Pages 8-9 pany owned by funds managed by from I Squared Capital and TDR strategy was well-received by our CMY
CMY
I Squared Capital Advisors and in- Capital was disclosed. partners, our customers and in- managed by over 800 sponsors with a total value in excess of
K
Aggreko directors consider vestors, and I Squared Capital and
People vestment funds managed by TDR
Capital for £2.32bn in cash, the the terms of the acquisition to TDR Capital are fully supportive,” $56 billion. Our team has excelled at providing customized
l ‘Before Covid, WFH was seen as companies said 5 March. be fair and reasonable and intend Aggreko chair Ken Hanna said.
a day at the golf course’: How the alternative investment solutions to banks, financial institutions,
As part of the deal, sharehold- to unanimously recommend that The companies said the acqui-
pandemic changed the City forever ers in the UK supplier of power shareholders vote in favour of the sition is expected to become ef- pension funds, sovereign wealth funds, endowments, family offices,
generation and temperature con- deal, the companies said. fective in the summer, subject to
trol equipment will be entitled to “The leadership team set out a satisfaction of conditions. and other fiduciaries seeking to reposition their private investment
receive 880 pence a share, the clear vision in November 2020 for From Dow Jones Newswires
portfolios. If you have an interest in the secondary market, our
Pioneering PE documentary looks at Covid response experience is second to none. To make an inquiry, please send an
email to info@lexpartners.com or call us at one of our offices.
IPEM PRESENTS
A DOCUMENTARY FILM BY ANNE-CHARLOTTE ROUXEL-OLDRÀ
l People moves
REBOOTED
PICTURE AND POSTER FROM THE FILM
– Pages 10-11
Comment
l Could tying executive pay to ESG
goals drive sustainability in PE? PRIVATE EQUITY
l For technology investors, there AND THE GREAT
should be a world beyond exits COVID RESET Innovative Directions in Alternative Investing
– Pages 12-13
New York • Boston • Menlo Park • London
MARCH 3rd
Venture Capital WWW.PE-REBOOTED-MOVIE.COM
Hong Kong • Santiago • São Paulo • Luxembourg
Kalifa Review: main takeaways from One of the first ever documentaries about the KKR’s Johannes Huth, Livingbridge’s Wol
l
www.lexingtonpartners.com
UK’s future of fintech report PE industry made its virtual premiere on Kolade, among others. The 30-minute-long film
– Page 14 3 March, writes Elisângela Mendonça. was shot in January and February this year in
PRODUCED BY WITH THE SUPPORT OF
The film Rebooted: Private Equity and the the UK, France, Luxemburg, the Netherlands
Data Great Covid Reset looks at how the industry
reacted to the Covid-19 pandemic through
and Austria. The production was led by private
capital events producer IPEM and O2B Films.
l Latest Deals Pipeline
interviews with industry heavyweights, such To see more details and the film go to Includes information regarding six funds managed by Lexington’s predecessor formed during the period 1990 to 1995.
– Page 15 This information is provided for informational purposes only and is not an offer to sell or solicitation of offers to purchase any security.
as Eurazeo’s Virginie Morgon (pictured), https://www.pe-rebooted-movie.com
4 News in Brief 8 March, 2021 • www.penews.com www.penews.com • 8 March, 2021 News in Brief 5
PRIVATE EQUITY NEWS
Deals of the week UK Budget 2021: main takeaways for finance
The News Building, Emily Nicolle Sunak said, while larger companies will face
ALAMY
1 London Bridge Street, Verdane banks 20x return with the higher rate in 2023.
London SE1 9GF, sale of stake in e-retailer The Chancellor of the Exchequer Rishi Sunak Around 10% of the UK’s companies are ex-
Northern European growth has delivered his Budget for 2021, announcing pected to pay the full higher rate, but “only on
United Kingdom
equity firm Verdane has pocketed a raft of changes to ensure businesses pay their the larger, more profitable companies, and only
a more than 20 times return way in supporting the UK’s economic recovery. in two years’ time”, he added.
with the offloading of half of its “An important moment is upon us. A mo- The government will also introduce a new
Editorial
GETTY IMAGES
60% stake in the Swedish online ment of challenge and of change, of difficulties, super deduction regime to boost business in-
poster shop Desenio Group. The yes, but of possibilities too. This is a budget vestment. Under the scheme, businesses can
Editor transaction was made through a that meets that moment,” Sunak told the receive tax relief of 130% of the cost of their
Mark Latham private placement followed by the House of Commons on 3 March. investment.
+44 (0) 20 3426 1254 The UK Chancellor Rishi Sunak said the budget
listing of the company’s shares on Here are some of most important announce-
mark.latham@dowjones.com
Nasdaq Stockholm’s First North ments for the finance industry.
meets the moment of challenge and change
Investment in startups and green
@mark_latham_
Growth Market. The listing economy
Reporter valued Desenio at SEK 11bn, Fast-track, global mobility visa schemes ery roadmap for all the new visa schemes will The Treasury will launch Future Fund: Break-
Elisângela Mendonça or roughly €1.1bn, the largest The Chancellor said a “fast-track” visa scheme be published in the summer. through, a follow-on from the pandemic-era Fu-
+44 (0) 203 426 1161 floating for an e-commerce will be announced to help high-growth technol- ture Fund which will invest up to £375m of tax-
Recovery loans
elisangela.mendonca@dowjones.com
@lilimendonca
company in the Nordics. Desenio
is headquartered in Stockholm HIG snaps up KPMG’s UK restructuring ogy companies attract the best foreign talent.
Endorsement from a third party will no longer As the government begins to phase out the
payer money into private but matured startups.
The fund will involve government money
Sub-editor
and sells its products to more
than 35 countries worldwide via business in management buyout be required, making it quicker and more simple
to immigrate to the UK.
existing Bounce Back Loan and Coronavirus
Business Interruption Loan schemes, Sunak
being matched by venture capital firms, with a
particular focus on high-growth companies and
Keith Sellick 20 local websites. KPMG UK has agreed to sell its restructuring unit in a The updated visa scheme was recommend- revealed they will be replaced by the Recov- those in life sciences, quantum computing or
keith.sellick@dowjones.com
management buyout backed by private equity firm HIG ed by the Treasury-commissioned Kalifa Re- ery Loan. clean technology. A similar recommendation
KKR invests $100m in Nordic Europe. The Big Four firm said in a statement that it had view (See page 14), which suggested the UK Under the new scheme, businesses of any was made in the Kalifa Review, which sug-
Bioscience signed an unconditional agreement to sell its restructuring unit was falling behind similar programmes in other size can apply for loans from £25,000 up to gested a £1bn growth fund for startups to gain
SVP of Barron’s Group, Dow Jones KKR has acquired an undisclosed to Interpath Advisory – a newly formed company comprising countries such as France and Canada. Within £10m through to the end of the year. The gov- access to institutional investment.
Mae Cheng minority stake in Nordic KPMG’s current UK restructuring partners backed by HIG. the “elite” points-based visa will be a “scaleup” ernment will underwrite the loans up to 80% The UK will also sell the world’s first sover-
mae.cheng@dowjones.com Bioscience, a Danish biotech KPMG said the sale was motivated by increasing conflicts stream for those with job offers from recog- for participating lenders. eign green savings bond for retail investors, in
business, for $100m, a market between its audit and non-audit clients. The sale is likely to nised UK high-growth companies to qualify for an effort to help boost the country’s transition
Editor, Financial News source has told Private Equity value the unit at £400m, Sky News reported. KPMG declined to fast-tracking. Corporation tax and super deduction towards net zero emissions by 2050.
Shruti Tripathi Chopra News. The investment in the comment on the sale price. The 22 partners and about 528 staff Meanwhile, a new Global Business Mobility Corporation tax will be hiked up across the The Bank of England will receive a new
+44 (0) 758 433 6897. Copenhagen-based biomarker at the restructuring unit will transfer to Interpath, making it visa will be launched by spring 2022 for over- UK’s businesses, rising from 19% to 25% by green and environmental mandate, reflecting
@shrutitripathi6 development company is the largest independent restructuring and turnaround business seas businesses to establish a presence in the 2023. Small businesses with profits below the importance of environmental sustainability
expected to expand its global in the UK. UK, or to bring over staff from abroad. A deliv- £50,000 a year will pay the lower rate of 19%, and transition to net zero carbon economy.
Art Director, Barron’s Group EMEA
research and development
Barry Ainsle
services, diagnostics platform,
Company news
+44 (0) 203 217 5299
patent portfolio and drug conveyor-systems manufacturer A consortium formed by
development pipeline, KKR Dorner in 2017 from Incline Blackstone, Global Infrastructure
said. Founded in 1996, Nordic Equity Partners. The transaction Partners and Bill Gates’
Advertising and Bioscience owns more than 150 is subject to conditions and investment vehicle Cascade
sponsorships patents, has partnerships with approvals and is expected to close Investment agreed to buy Hamilton Lane closes latest private equity firm said it Private Markets Fund, formerly The two utilities are Germany’s
Massimo Valeri pharma companies globally to in the second quarter of 2021. Signature Aviation for $4.73bn. private credit vehicle received $1.5bn in commitments called the Altegris KKR two largest operators of coal-
Client specialist develop new drugs. Hamilton Lane has collected for its OrbiMed Private Commitments Master Fund. The powered generating stations and
+ 44 (0) 778 066 2327 Infront says Inflexion has Arx Equity backs MBO of nearly $900m for its latest private Investments VIII pool, which fund provides access for lignite mines.
max.valeri@wsjbarrons.com Carlyle Group acquires increased takeover bid instrument maker company credit fund, Hamilton invests primarily in accredited investors, or those
distribution centre in Germany Norwegian financial data provider Central Europe-focused ARX Lane Strategic venture capital stage with at least $200,000 in annual UK IPOs off to best start for
900m
Corporate licences/subscriptions Carlyle has acquired a distribution Infront has said that the UK’s Equity Partners has agreed to Opportunities Fund opportunities in income or a net worth of $1m or 15 years
Niall Hickey logistics centre near Munich from Inflexion Private Equity Partners acquire data acquisition and VI, and parallel Europe and North more, to private equity deals. The The London Stock Exchange
Relationship Manager
+ 44 (0) 217 5130
Luxembourg-based Incantada
Capital. Equity for the acquisition
has increased its offer for the
company to 1.72bn Norwegian
processing equipment maker
Instrumentation Technologies,
vehicles. The
firm has closed
$ America, with a
focus on
vehicle had about $430m under
management as of the end of last
has had its strongest start to a
year since 2006. Data from the
niall.hickey@dowjones.com
of the 13,090 sqm facility came kroner (about €167m) in a final investing alongside current the pool, which Amount collected by Hamilton biotechnology, year. KKR is backing iCapital as a LSE Group shows that there
from Carlyle Europe Realty, a bid to win over shareholders. management. The Slovenia-based aims to invest in Lane for its latest private medical devices, minority investor. were 11 initial public offerings
€540m pan-European fund. The Inflexion’s improved NOK40-a- company’s products are used for assets that can be credit fund and and diagnostics raising £3.24bn in the year to 24
No part of this publication may
be reproduced or used in any
acquisition of the Munich facility share bid comes after its initial research in particle accelerators expected to parallel vehicles companies. It German plans to compensate February. It marks the strongest
form of advertising without prior increases the fund’s exposure to NOK34.40 offer, which was and for medical and industrial produce consistent collected $1.2bn for energy company and PE firm start to a calendar year since 2006
permission in writing from the the north European distribution recommended by the board, applications. cash yields, with OrbiMed Royalty & may fall foul of state aid rules when there were 31 floats, which
editor. All rights reserved. logistics segment, following the drew criticism from some of the shorter durations and Credit Opportunities III and German plans to provide €4.35bn raised £4.43bn by the same stage.
ISSN 1741-9085
acquisition of a portfolio of 27 company’s major shareholders. Klar buys Nordic-based attractive risk-adjusted returns. $800m for OrbiMed Asia in compensation to utilities RWE London’s strong start to the
distribution centres in France and infrastructure company Partners IV. and private equity-backed LEAG year looks set to continue with
Germany in October last year. PE target Signature Aviation Klar Partners in London has OrbiMed collects $3.2bn for to encourage them to phase out Trustpilot announcing that it is
Printed by: Pureprint Group
Three further German assets swings to $24m loss acquired building infrastructure three new health funds KKR fund rebrands as part of of coal-fired power plants may aiming for a £1bn London float.
Distributed by: Citipost were added last month. The aviation support services systems company Sandbäckens, Life-sciences investment iCapital Network involve state aid, European Union
Published by: eFinancialNews Ltd©2021 company, which is set to be taken which provides technical specialist OrbiMed Capital has A KKR fund designed to let competition enforcers said as
EQT sells conveyor systems over by a consortium of private installation and servicing of collected $3.2bn across three wealthy individuals invest in they opened an investigation into Contributors
maker Dorner in $485m deal equity firms, said pretax loss sprinkler, heating and sanitation funds from investors that include private equity has been the plan. The government struck Elisângela Mendonça, Mark
Swedish private equity firm EQT was $24.2m in 2020 compared equipment for structures in the medical institutions and rebranded as part of iCapital the deal with RWE and LEAG, Latham, Ted Bunker, Chris
has agreed to sell Dorner Holding with a profit of $23.4m for 2019. Nordic region. The company has university endowments as well as Network’s platform. Units of which is 50-50% owned by Czech Cumming, James Booth,
to Columbus McKinnon in a Revenue fell to $1.41bn from about 800 employees operating pension funds, foundations and iCapital now will manage and energy group EPH and private Dominic Chopping, Anthony
deal worth $485m. EQT bought $2.26bn the year previously. from 30 locations in Sweden. sovereign wealth funds. The distribute the iCapital KKR equity group PPF Investments. Goriainoff
6 Cover Story 8 March, 2021 • www.penews.com www.penews.com • 8 March, 2021 Cover Story 7
Exclusive: meet the most
GETTY IMAGES
inclusive firms in PE and VC
London-based consultancy Equality Group has launched its first inclusion
index to rank the top 20 private equity and venture capital firms
according to their diversity and inclusion efforts. By Elisângela Mendonça
The alternative investments industry remains nies and in the broader industry.
an old boys’ club. Women, for example, still Equality Group’s Inclusive Top 20 PE & VC Index Another essential metric is the level of “When firms make their efforts public, this is
make up only 19.7% of employees, according transparency around internal targets and out- a huge encouragement for minority groups
to data provider Preqin. Rank PE Firm Score Rank VC Firm Score comes, according to the index’s methodology,
But with increasing evidence showing that which relies on publicly-available information and communities… the benefits of being
1 Advent International 71% 1 Kinnevik 76%
a diverse pool of talent leads to better finan-
2 EQT 65% 2 Bethnal Green Ventures 67%
for its assessments. transparent and held accountable outweigh
cial performance, private equity and venture “When firms make their efforts public, this
capital firms have begun to tackle the stark 3 TowerBrook Capital Partners 63% 3 Atomico Partners 63% is a huge encouragement for minority groups the risk of not hitting targets in business”
lack of diversity in their companies and put
4 Investcorp 63% 4 BGF 32%
and communities,” Pemberton points out. Hephzi Pemberton, Equality Group
some effort into improving inclusion. For example, US-headquartered Tower-
Boston-based buyout group Advent Inter- 5 KKR 61% 5 Kleiner Perkins 28% Brook Capital Partners, in the index’s third
national and Swedish VC firm Kinnevik have 6 The Carlyle Group 56% 6 Lightspeed Venture Partners 17% position for private equity, makes its D&I stronger than ever. sity,” he says.
been named the most inclusive firms, accord- metrics, targets and results publicly available Just last month, the Institutional Limited Advent International, the best-ranked PE
7 HarbourVest Partners 52% 7 GGV Capital 17%
ing to Equality Group’s first Inclusive Top 20 on its website. Partners Association (ILPA), a trade group firm, is particularly focusing on the recruit-
PE & VC Index (see table), shared exclusively 8 Blackstone Group 50% 8 General Catalyst Partners 16% Pemberton says many firms are afraid of representing more than 500 large public and ment of under-represented minorities, says
with Private Equity News. 9 Vista Equity Partners 45% 9 Burda Principal Investment 15% talking about their failures or being accused private pension funds, endowments, family of- managing director Nick Rose.
Equality Group, a London-based consulting of “greenwashing”. “But the benefits of being fices and foundations, released a “road map” The firm has restructured its interview
firm that focuses on diversity and inclusion 10 Intermediate Capital Group 44% 10 Andreessen Horowitz 15% transparent and held accountable outweigh of best-practices to improve D&I in the indus- processes to remove bias by introducing in
(D&I) in the finance and technology indus- the risk of not hitting targets in business,” try. It is also consulting on ways to achieve its assessment process “blind case studies”,
Source: Equality Group IES Score. See Methodology box for criteria. A fuller table with firms’ country of HQ will appear online.
tries, analysed 400 global private equity and she argues. those goals. where candidates are not identified during the
venture capital groups each with a minimum Around half of investors recently surveyed application process.
of $1bn in assets under management. Anna Wahlström, global head of human re- mance, the VC firm says without disclosing Slow progress by EY plan to increase their environmental,
The firms were assessed according to sev- sources at Sweden’s EQT, which came sec- figures. social and governance (ESG) guidelines in ‘Diversity is a journey’
en categories across 45 metrics, such as ex- ond in the private equity ranking, adds: “We Private equity and venture capital, however, private equity and venture capital allocations
plicit D&I support, working conditions, lead- have not done enough, early enough, that is ‘Smart thing to do’ have their reasons to remain low key. over the next two to three years, the consult- Meanwhile, Bahrain-based Investcorp, the
ership policies, transparency when reporting for sure. The private equity industry has been Recent diversity figures about the alterna- ing firm said in a report. fourth most inclusive PE firm according to the
diversity data as well as other factors (See box dominated by men for a long time.” Camilla Richards, Atomico’s head of investor tive investment industry show markedly slow Firms will have to change their ways, but it ranking, launched last year its first diversity
on methodology on page 7). Last year, her firm, which has €52bn in as- relations, told PEN that the firm knows that progress. While the current proportion of fe- may take a while, experts agree. and inclusion champion position among a raft
sets under management, rolled out conscious investing in diversity is not only the right male alternative assets employees remains at Charlie Linacre, director at specialist re- of measures designed to improve D&I.
‘Call to action’ inclusion training to its 700 global staff and thing to do, but the “smart thing to do” for 19.7%, in 2017 the figure was a close 18.8%, cruitment firm Finatal, who has served pri- The group, which has more than $34.2bn in
achieved a target that 65% of new recruits the business. Preqin says. vate equity clients for over a decade, says he assets under management, employs approxi-
Hephzi Pemberton, Equality Group’s chief ex- were women in 2020, she says. “If we as a venture capital firm do not have Other aspects in the diversity spectrum, witnessed a change of attitude when firms mately 430 people from 44 nationalities glob-
ecutive, says the ranking is a “call to action” Asked why, Wahlström replies that “diverse a team that is reflective of society’s diversity, such as socioeconomic background, sexual look for new talent in recent years. Focus- ally. Women make up 31% of the workforce.
for the long-term. By tracking firms’ progress teams crush the competition”. we are putting ourselves at a disadvantage in orientation or ethnicity, are not even clearly ing on recruitment now, he adds, is the key to “I can’t tell when we get to a 50-50% gen-
annually, the index aims to shake off the male- Her enthusiasm is backed by decades of discovering and backing the next global cate- tracked yet. Only last year, for example, the transform the future of the industry. der balance that’s the final destination and our
and-white-dominated image of the alternative research linking diversity and inclusion to im- gory-winning companies,” she says. diversity lobbying group Level 20 announced “It takes time for anybody at any level to work will be done. This is about continuing
assets markets. proved financial performance. Atomico, whose 53-people team currently it will collect ethnicity data for the first time get through to leadership positions. What on the path that we’ve started,” says Jordana
“There’s still a long way to go. There are In 2019, financial services companies in the manages $2.7bn in assets, has an investment in private equity. needs to be in place is a focus at the more Semaan, the firm’s head of human resources
only a few companies really talking about top quartile for gender diversity on executive team in which women make up 40%, up from “We are just getting started and need to junior levels. Over the past five years, firms for the Gulf and Asia and the leader of the
the full range of diversity, and very few re- teams were 25% more likely to have above- 20% in 2017. That year, the firm launched a make much more progress in other measures of have paid attention to gender balance, but we firm’s D&I division. “I truly believe diversity
ally understanding what inclusion could mean average profitability than companies in the diversity task force with senior representa- diversity,” Atomico’s Richards acknowledges. are now getting into other aspects of diver- is a journey.”
and what an inclusive culture looks like,” she fourth quartile, according to a report by con- tives from across the firm to address diversity The realisation that more needs to be done
PORTRAIT PICTURES SUPPLIED BY COMPANIES
says. sultancy McKinsey. within its ranks, but also in portfolio compa- seems to be a widespread idea in both PE and
In the case of ethnic and cultural diversity,
the findings were equally compelling. In 2019,
VC. The majority of the alternative invest-
ment community (57%) recognises that diver-
Methodology EG reviewed content that is publicly available on the
company’s website. EG also assessed relevant publicly
top-quartile companies outperformed those in sity of gender, experience and cultural back- The EG Inclusive Employer Score (IES) is a proprietary available information from (6) social media activities,
the fourth one by 36% in profitability, slightly “What needs to grounds in the workplace is a powerful tool scoring methodology that ranks companies on and (7) published reports and news articles in the
“Diverse teams up from 33% in 2017 and 35% in 2014. The be in place is a and improves investment outcomes, a recent inclusion, diversity, and equity results from publicly last 12 months with a maximum of 4 and 6 points
available information sources. Companies are ranked respectively.
crush the likelihood of outperformance continues to be
focus at the more
Preqin survey found. But will the alternative
on a scale of 0 to 100%, with 100% being the best. A total of 45 points can be achieved in the EG
higher for diversity in ethnicity than for gen- assets industry walk the talk when it comes to
competition” der, the research points out. junior levels” diversity and inclusion? The criteria consist of seven categories: (1) IES, which corresponds to a score of 100%. EG has
Anna Wahlström, London-headquartered venture capital
Charlie Linacre, The under-representation of minorities Explicit D&I Support, (2) Inclusive Team, (3)
Working Conditions, (4) Actions and Policies and
applied a proprietary weighting to the scoring of each
criterion based upon the level of long-term impact and
EQT group Atomico Partners, which appears in in alternative investments has irked limited
(5) Leadership with a maximum of 6, 6, 7, 7 and 9 importance to furthering inclusion, diversity and equity
third position in the inclusion index, last year Finatal partners for a number of years, but the busi-
points achievable respectively. For these criteria, in business based upon the latest academic research.
had one of its best in terms of fund perfor- ness case for diversity and inclusion is now
8 Analysis 8 March, 2021 • www.penews.com www.penews.com • 8 March, 2021 Analysis 9
Shake-up of listing rules will help UK compete for Spacs Blank cheque
Paul Clarke and James Booth some other financial centres in Europe have
stolen a march on London, but if there are any
said Lord Hill.
“They are about closing a gap which has
Current UK rules require Spacs to suspend
company boom
A shake-up of UK listing rules will make it eas-
ier for London to compete with other financial
rule changes, hopefully, the UK can catch up
quickly.”
already opened up. All the recommendations
are consistent with existing practices in other
trading once a target is acquired, which
is viewed as a key impediment to Spacs could outstrip
previous record
choosing to list in London
centres including New York, Amsterdam and The capital is under pressure to maintain its well-regulated financial centres in the USA,
Frankfurt after it has missed out on attract- competitiveness in the wake of Brexit and the Asia and Europe.”
ing listings of blank cheque companies, which Hill review has recommended other changes Spacs have exploded in popularity during
have surged in the past 12 months. to the UK listings regime. They include reduc- the pandemic, reaching record highs last year Bérengère Sim
The UK listing review – chaired by Lord ing free float requirements from 25% to 15%, and continuing at breakneck speed so far in
Hill and part of chancellor Rishi Sunak’s plans which has proven to be a deterrent to some 2021. In the first two months of the year, there The boom in special purpose
to reinvigorate the City in the wake of Brexit companies to list, and keep more voting rights have been $61bn worth of Spac IPOs globally, acquisition companies – or Spacs – is
– recommends removing a rule that has seen in the hands of company founders, which is according to data provider Dealogic, almost all set to continue and this year looks on
the UK fall behind other European financial particularly important to convincing more listing in the US, and follows a record $83bn track to be a record one, says
centres as the boom in special purpose ac- high-growth tech companies to go public. worth of deals in 2020. Goldman Sachs.
quisition vehicles, or Spacs, has crossed the Bankers expect the blank cheque compa- In a note on 1 March, “Spac
Atlantic. Suspension rule nies to cross the Atlantic, but there has not Almanac: Bigger, louder, faster”, the
Spacs raise funds on public markets in or- been a single Spac listed on the London Stock US investment bank tracked the
GETTY IMAGES
der to acquire private companies, often in The FCA introduced the suspension rule in Exchange this year, compared to 191 in the recent boom in Spacs – also known as
fast-growing sectors including technology and 2018 to set up barriers to a wave of smaller US. Even in Europe, the UK has fallen behind blank-cheque companies – since the
healthcare. Current UK rules require Spacs Spacs listing in the UK, but it has also put off other financial centres, with Amsterdam and beginning of the pandemic.
to suspend trading once a target is acquired, larger blank cheque companies from choosing Frankfurt the preferred choice for the limited Some 175 Spacs have raised $56bn
meaning investors are locked in even if they London. Spacs have become a more important number of Spacs to emerge in the region this in IPO capital since March last year,
do not approve of a potential purchase. Bank- part of the debate throughout the Hill review, year. confident the floodgates will open for London- funds in New York despite targeting compa- averaging $1.5bn per trading day, the
ers, lawyers and stock exchange executives according to people involved in the discus- “Avoiding a suspension of shares at the time listed Spacs,” added Citi’s Fleming. nies in Europe through their Spacs. note said. In February alone, 90 Spacs
view the suspension rule as a key impediment sions, as the boom swept across the US, of merger is an essential feature of Pegasus Europe, the Spac headed by former raised $32bn in IPO capital – making
to Spacs choosing to list in London. into Europe but has so-far sidestepped the successful US Spac structure, UniCredit chief executive Jean Pierre Mustier Providing flexibility it the largest issuance month on
The Hill review calls for “liberalising” UK the UK. as it provides investors the option and backed by Tikehau Capital and Financiere record.
Spac rules and recommends that the Financial “The recommendations in this to trade shares at the time of deal Agache, has chosen to list in Amsterdam. “Continuing to evolve the UK listings regime
Conduct Authority consults on lifting the sus- report are not about opening a gap announcement,” said Dominic Meanwhile, German tech investor Klaus is key to providing flexibility for companies Unsustainable pace
pension requirement. between us and other global centres Lester, head of European invest- Hommels listed his €275m Spac, Lakestar, who want to list in London while maintaining
“We have not seen a pivot away from Lon- by proposing radical new departures to ment banking at Jefferies. “Until in Frankfurt. The firm is targeting late-stage high standards of corporate governance,” said “The blistering pace of issuance is
PR PHOTOGRAPH
don as a result of Brexit and the UK contin- try to seize a competitive advantage,” that is allowed in the UK, Spacs technology companies worth between €750m David Schwimmer, chief executive of the LSE likely unsustainable,” the authors,
ues to remain an attractive listing location for will naturally look to list on Euro- and €4bn. Group. including chief US equity strategist
IPOs,” said James Fleming, global co-head Lord Hill said the recommendations are pean exchanges that do not High profile dealmakers including former “We look forward to working with the UK David Kostin, wrote. “However, if the
of equity capital markets at Citigroup. “The consistent with existing practices in require suspension.” Barclays executive Makram Azar and ex- Government, FCA and the market on the top- current pace of issuance persists,
one exception has been Spacs, where clearly other well-regulated financial centres “If this changes, I’m Credit Suisse banker Gary Quin, have raised ics highlighted by the report.” 2021 will surpass the 2020 full-year
total before the end of March.”
The US investment bank’s analysts
Review is an overdue promise for the City’s post-Brexit future makes well-trailed recommendations to
reduce the minimum free float requirement
public elsewhere he argues that these changes
will make London more attractive. Whether
said that Spacs could generate more
than $700bn in acquisition activity in
and allow companies to have dual classes of they will make a huge amount of difference the next two years.
David Wighton urges the government and regulators to take a commitment, Hill also recommends that the shares and still quality for a premium listing remains to be seen. What is not in doubt is “We estimate $103bn in Spac
broader look at the competitiveness of the Financial Conduct Authority should have and inclusion in stock indices. that there are much bigger issues surrounding capital is actively searching for an
The review of the UK’s share listing regime City and offers one over-arching supporting the competitiveness of the City as Seeking to address the concerns of UK the competitiveness of the City itself which acquisition target,” the note read.
led by Lord Hill had received such fevered recommendation: that the Chancellor should one of its objectives. Its predecessor, the institutional investors who have opposed such the government is dodging. They’re targeting $700bn of
media coverage in advance that it seemed deliver an annual report to parliament on the Financial Services Authority, had just such a changes, Hill says high corporate governance If the City is going to fill the hole left by the acquisitions on an enterprise value
certain that when it was finally published it state of the City. Setting out the progress remit which critics say encouraged a standards can be maintained by introducing jobs lost to the EU the priority should be to basis, which includes debt, the
would prove an anti-climax. After all, the made on improving the City’s competitive light-touch approach to regulation that safeguards such as limiting the dual class of make it the best place in the world to do analysts said.
briefings suggested he was merely going to position over the last year the report would contributed to the financial crisis. So it was shares to five years. As Hill points out, the financial business. And there is no avoiding Separately, the executive director of
propose a couple of tweaks to the rules also “comment on what has worked or not scrapped when the FCA was formed. There reforms would go no further than those the truth that one of the key factors that Freedom Finance Europe, a Cyprus-
governing company flotations in the hope of worked, and consider areas for further has been stiff opposition within the FCA to already in place in other major jurisdictions. affects the UK’s attractiveness is tax. registered broker, said that Spacs
persuading some technology companies to reform”. If the government is serious about reinstating the objective but Hill is right. As So signalling a steady rise in corporation tax have been gaining popularity because
choose London rather than New York. The the City, the Chancellor should sign up right he points out, maintaining high standards and New worry in the Budget seems to be precisely what the they are “much easier” and faster
idea that the report could be used by the away. being open to the needs of business do not government should not do. It needs to raise transactions to set up, usually taking
Chancellor to launch a post-Brexit fightback To underline the government’s have to be incompatible. Hill also tackles the City’s new worry that the tax from somewhere. Yet as hedge fund mogul around three weeks.
by the City would surely prove a triumph of Also welcome is Hill’s call for the UK is missing out on the Spac party. The Sir Paul Marshall has pointed out it has other In the context of the pandemic
spin over substance. government to consider how technology can boom in companies going public through options, such as scrapping the upper income where companies need to raise capital
be used to improve retail investor special purpose acquisition companies has band relief on pension contributions or quickly, this is important.
“Also welcome is Hill’s involvement in corporate actions. Retail offers largely been limited to the US to date partly introducing a new top band for council tax. “Spacs changed a lot and are now a
Well-judged blueprint
call for the government in share issues are rare these days and Hill’s because regulations elsewhere make them Neither of these would hit inward investment. very viable IPO alternative for many
Well, hats off to Lord Hill and the spin doctors. proposal for a wholesale review of the less attractive. In the UK, the shares in a Spac The problem is, of course, they would be very private companies,” said Evgenii
Not only does it provide a well-judged
to consider how prospectus regime inherited from the EU considering an acquisition have to be unpopular. Tiapkin in a 2 March statement.
blueprint for reform of the listing rules, the technology can be used could remove some of the obstacles though suspended until a prospectus is published, But if the government really wants to “Although they can’t replace
report goes well beyond its brief with to improve retail investor the report could have been stronger in its trapping investors. Hill sensibly says this support the City’s fightback it will need to do a traditional IPOs, they can provide
proposals that could signal an overdue support for retail access to IPOs. could be revised without undermining market bit more than tweak the minimum free float more flexibility and efficiency, and this
commitment by the government to the City’s involvement” On the core issue of encouraging more integrity. requirement. is why some companies choose to go
post-Brexit future. David Wighton growth companies to choose to list in London While Hill acknowledges that there are David Wighton is a columnist at Private public this way.”
Although his main focus is listings, Hill also rather than other jurisdictions, the report other reasons why companies choose to go Equity News’ sister title Financial News.
10 People 8 March, 2021 • www.penews.com www.penews.com • 8 March, 2021 People 11
‘Before Covid, WFH was seen as People moves
GETTY IMAGES
a day at the golf course’: How the Blackstone’s counsel for Emea
to join law firm in London
pandemic changed London forever
Blackstone Group’s managing director
Geoffrey Bailhache, the New York firm’s
general counsel for Europe, the Middle
East and Africa, is leaving to join law firm
Simpson Thacher & Bartlett, where he will
be a partner in the New York firm’s London
In the past year, firms have made huge changes to their working practices office. At Blackstone, Bailhache advises the
private equity, tactical opportunities, energy,
while staff have had to cope with working from home. By Paul Clarke infrastructure and growth equity groups. John
Finley, Blackstone’s chief legal officer, said
the firm looks forward to continuing working
On a cold, wet morning on 5 March 2020 around than 122,000 deaths, one of the worst records “The fact is that we never practiced what we with Bailhache and the rest of the Simpson
100 equity research analysts were ushered against the virus globally. The government preached,” said one bank executive. “We had Thacher team.
down a fire escape at HSBC’s Canary Wharf has unveiled successive lockdowns, turning flexible working arrangements, but they were
headquarters after receiving the news every
City firm had been dreading for weeks – one
London’s financial districts – typically home
to over 500,000 workers across Canary Wharf
bullsh*t. Everyone still thought working from
home meant a day at the golf course.”
Investcorp appoints European
of their team had tested positive for Covid-19.
This was the first case of the virus con-
and the City – into ghost towns.
Covid-19 forced the world’s biggest invest-
In the first few weeks of lockdown, debt
bankers handled record volumes of transac-
ing into the office weekly Covid-19 tests,
while Credit Suisse offers tests twice a
with power shifting to employees. Simon
Cunliffe, founder of tenant advisory firm
investor relationship manager
firmed at a major financial institution in Lon- ment banks to send tens of thousands of people tions from home as firms tapped capital mar- week. JPMorgan, Goldman and Deutsche TA Real Estate told FN previously that of- Bahrain-headquartered firm Investcorp has
don. There had been just 25 confirmed Covid to work from their kitchen tables in an unprec- kets to secure vital liquidity to ride out the cri- all have tests available to employees who fices will become “culture centres”, set up appointed Sanjay Kohli as head of European
cases in London at the time and, as the virus edented move. It grounded high-flying deal- sis. M&A dealmakers refined their bookcases need them, according to people familiar to maximise interaction through creating investor relationship management. In this
raged in other European countries, it was by makers who nonetheless managed to bring in for virtual pitches and traders turned to Insta- with the matter. Senior bankers coming a “city within a building” with gyms, cafes newly created role, Kohli will be responsible
no means certain that the UK would fall to the record-breaking fees in 2020, smashed indus- gram to boast about stacks of monitors known into the office told FN it allows them to and sometimes even bars. for serving the firm’s clients in Europe and
same fate. try myths that flexible working is a soft option as “rona rigs”. escape the chaos of home life, but there Meanwhile, Standard Chartered has of- report to Timothy Mattar, Investcorp’s global
But the case at HSBC was a sign of what and had bank executives asking if the office The working from home movement was so are few other benefits as their teams re- fered up to 80,000 employees the option of head of distribution. Kohli joined Investcorp in
was to come. In tracing the infected analyst’s would survive at all. As Prime Minister Boris successful that by April senior bankers – in- main homebound. working flexibly permanently, while Soc- 2017 as a senior director with responsibility for
moves, it was found that he made a client visit Johnson lays out plans to “cautiously but irre- cluding Barclays boss Jes Staley – were already Under the government’s new roadmap Gen has said that its UK staff could spend European markets. Prior to joining Investcorp,
to S&P Global, sources told Private Equity versibly” lift the UK out of lockdown, bankers calling time on vast City offices that house to lift Covid restrictions, unveiled on 22 up to 90% of their time away from the of- he was a co-founder at 3i Debt Management.
News’ sister title Financial News. It reacted by are now questioning whether the City of Lon- thousands of staff, and banks like JPMorgan February, mass remote working will be fice. Deutsche Bank expects 80% of UK
immediately sending 1,200 employees to work
from home.
don will change forever. and Deutsche Bank were mulling shrinking
their real estate footprints.
in place until at least June. But City firms
will remain cautious about a return.
employees to be able work from home for
up to two days a week.
Ambienta recruits two senior
While life in Canary Wharf continued as nor-
mal, bankers told FN that London’s financial
Overturning attitudes But cracks were beginning to show. Un-
able to switch off, bankers worked even longer
“A big bang office return is unlikely, and
as last summer showed rushing people
But overhauling the workforce in the
wake of the pandemic is fraught with com-
professionals to boost growth
districts were “sleepwalking into an outbreak”. The success of the City’s mass working from hours, stress increased and working parents – back to the office when they are not ready plications. Of the finance professionals Sustainability-focused Ambienta has hired two
Inevitably, more cases emerged in the follow- home move is all the more remarkable because forced to balance huge workloads with home- can come back to bite,” said Simon Clarke, polled by FN, 63% said they wanted flex- senior sales professionals. William Kitchin
ing days. Barclays, Citigroup and Deutsche of pre-pandemic attitudes. A prime example bound children – were feeling the strain. an expert in cellular microbiology at the ible working to remain in place after the joins as head of business development for
Bank also unveiled infections among their City was at BNY Mellon, which in 2019 was forced Stress and mental health is an increasing University of Reading. pandemic, with most hoping for at least Ambienta X, while Michele Romualdi will be
staff, closing floors and rolling out “deep clean” to backtrack on a ban on flexible working after concern as the pandemic has worn on. In a “The aim has to be that we unlock sen- two days a week at home. head of sales Italy. Kitchin joins Ambienta
protocols. then chief executive Charles Scharf – who now February survey of senior finance executives sibly so that when we gradually open up However, some respondents feared a from Titan Capital Management, where
Over the past year there have been over 4 runs Wells Fargo – said employees needed to by FN, 60% said Covid has made their lives our offices, they stay open permanently,” “token gesture” for flexible working ar- he had been director of marketing since
million Covid-19 infections in the UK and more be at their desk. more stressful, while 42% said the crisis, as added JPMorgan’s Raghavan. rangements when the pandemic goes into 2018. Romualdi has more than 20 years’
well as Brexit, has made them reconsider reverse, which would create an uneven experience in financial markets and joins from
GETTY IMAGES
their careers. Junior bankers, often holed up in Longer-lasting impacts playing field. Fidelity International, where he was head of
cramped apartments working 80-hour weeks, Some City workers flagged that those institutional sales in Milan.
have particularly struggled, FN reported. Executives are divided on the longer last- who choose to spend more time out of
One senior City dealmaker said his “meet-
ing count is up 100%” as all client interactions
ing impacts of Covid-19. Barclays’ Staley
said on 18 February that working from
the office than others after the pandemic
could be overlooked for promotions, bo-
Jon Little’s Alderwood Capital
have moved online. “People don’t understand
how stressful it is,” he said. “You’re expected
home was “getting old” and that most of
its London staff would return this year,
nuses and pay rises as they miss out on
subtle office-based relationships.
hires staff as it seeks investors
to be more on the ball than ever, and your prep- while Goldman boss David Solomon said Bank executives are considering asking Alderwood Capital, the fund management
aration time has disappeared.” WFH was an “aberration” and it would re- teams to be in the office on the same days business launched by former Northill Capital
turn to normal as soon as possible. HSBC to avoid this and increase interaction, ac- founder Jon Little, has made a trio of hires as
False starts chief executive Noel Quinn, however, said cording to people familiar with the matter. it begins approaching institutional investors.
that there would be a “very different style Meanwhile, juniors have missed months The business, which was founded by Little
But banks’ attempts to return to the office have of work post Covid” and that the bank was of vital training and on-the-job mentoring, in 2020, seeks to provide equity capital to
been a series of false starts. In September, both making permanent changes. and banks are keen to bring them back to specialist boutique active managers in order
JPMorgan and Goldman were aiming for up to HSBC is cutting 40% of its office space, the office as soon as possible. to replace existing shareholders. Alderwood’s
50% of front line staff back in their UK head- and considering consolidating its London Raghavan said that “some degree of investment strategy, open to institutional
quarters, but a second wave of the Covid-19 offices into its Canary Wharf headquar- flexibility” is here to stay, but it needs to investors only, will be deployed via a Cayman-
virus in the winter and renewed national lock- ters. Deutsche Bank is also upping its be done in a “structured way”. domiciled closed-end fund, which will be
downs have forced all but essential staff back plans to cut real estate by at least 25% “It needs to make sense for both the launched in the coming months, subject to
home. as the pandemic has reshaped the way its team and the business that you work in, regulatory approval.
For the small number still trudging into the staff work, and Lloyds Banking group is and companies need to be careful that they
office, life has changed. Bank of America is of- reducing office space by 20%. don’t accidentally introduce new inequali-
Ted Bunker, Keith Sellick
fering the 10% or so of its UK employees com- The nature of the office will also change, ties from how they roll it out,” he said.
12 Comment 8 March, 2021 • www.penews.com www.penews.com • 8 March, 2021 Comment 13
Could tying executive pay to ESG goals drive sustainability in PE?
There are several measures private equity firms can take to achieve If private equity firms are serious about
GETTY IMAGES
committing to ESG goals, looking to invest
ESG goals at their portfolio companies, writes Mark Jones in businesses that have an employee-owned
framework can help with their long term sus-
tainability aims. In the future, these invest-
ments could be part of a framework, tying their
By 5.30pm on 6 January, the typical FTSE100 can be a leader of change, and those that com- continue to commit more money and cre- ESG success to their pay, showing that we can
CEO had earned the same amount of money mit should be proud to tie their pay to such a ate additional products around sustainable all do well financially, whilst doing good.
as a full-time employee will receive for the positive cause. investing. And if fees are increasing, should
whole of 2021. It’s a glorious little stat you that not be linked to the tangible impact their How do we make it stick?
may have heard on your travels before now. Tools for change ESG goals are having?
It is worth citing again though when we We are now reaching a stage where we Within the boardroom, there is also the op-
consider executive pay in relation to achiev- Commitments within private equity are al- have the right tools for measuring this im- Apple is one of several firms that has tied portunity to strengthen the ties between ex-
executive pay to ESG goals
ing the environmental, social and corporate ready being made. The KKR Global Impact pact. A recent piece of research from Tor- ecutive pay and sustainability goals. I strong-
governance (ESG) goals set out at corporate Fund, a $1.3bn fund investing in firms provid- toise media ranked all 100 companies in the ly believe that the remuneration committee
level. Context is rarely an unhealthy thing to ing solutions to an environmental or social FTSE 100 index against the UN’s Sustain- Elsewhere, we can see that companies are advocate for giving employees more stock of should be able to vote and make decisions
possess for something that may seem binary challenge, closed last year. While this is a able Development Goals. It measures the gap tying executive pay to ESG goals. Apple has industrial and manufacturing companies. He on executive pay and sustainability goals
for many. positive step, it’s just the tip of the iceberg between what companies say and what they announced that in 2021, it plans to add an recently announced that he is raising money enforceable – rather than just recommenda-
Many business leaders talk a strong game for what can be achieved. do, highlighting the range of corporate com- executive bonus metric to measure ESG per- to launch a non-profit called the Center for tions. They should have the power to veto ex-
when it comes to the importance of ESG and As Pitchbook data shows, the five largest mitments to people and the planet. With re- formance. While Apple is currently a leader Shared Ownership, which will focus on pro- ecutives’ pay if they do not believe the goals
driving sustainability, and for those that do, publicly traded private equity firms in the US search such as this in the public domain, the in corporate ESG, labour and human rights viding companies with resources to help them have been achieved.
there is a compelling argument for tying ex- each expanded their stream of fee-related evidence now exists to help tie executives to issues at partners have been a continued adopt employee-ownership programmes, fund- Furthermore, ESG goals do not material-
ecutive pay to ESG goals. earnings last year. Private market investors their ESG goals. source of concern and something that needs ing academic research and potentially pushing ise overnight and can take years to have an
The focus should not just fall on the listed to be addressed when looking at linking exec- for new government incentives. impact on long term sustainability. These
companies that can so often dominate the utive pay to all parts of the “E”, “S” and “G”. We recognise that employee-owned busi- long term ESG goals should be built into the
limelight. Private equity is also well-placed to “Private market investors continue to commit more nesses tend to have an approach that supports executives’ long-term incentive plans in the
use its market position to generate societal money and create additional products around Employee ownership them to do well while doing good. This is why same way as financial goals are. For inves-
change alongside a return for investors. The they’re perfectly placed to lead the way in tors, mapping executive pay to ESG goals is
strength of private equity is to create value sustainable investing. And if fees are increasing, When it comes to reducing inequality, tackling the business community as enterprises that a no brainer as it means more money is being
through accelerated transformation and the should that not be linked to the tangible impact climate change and sustainability, especially as commit to improving society and the environ- held to account and could be injected into the
past year has demonstrated the increased rel- we face the ongoing challenges of Covid-19, ment as well as pursuing economic success. business as a result.
evance of ESG and how it can contribute to
their ESG goals are having?” an employee-ownership business model can The employee-ownership business model has Mark Jones is owner and social
value creation. Mark Jones, Valloop help achieve long term sustainability. Indeed, shown that staff become more engaged and the responsibility officer at sustainable
By deploying this strength, private equity KKR executive Pete Stavros has long been an culture of the business is improved as a result. investment firm Valloop.
For technology investors, there should be a world beyond exits
The software world is too obsessed with venture funds to better manage liquidity. provide is. As an early-stage VC, a primary meant we all have to up the ante in terms of companies, while providing options for are akin to running the same train, with
exits. As investors, we should be the first to There are several reasons for this. consideration for me is how founders and what we offer founders. Those of us who investors. Vehicles such as liquidity funds, some people disembarking and others
say this. After all, we are backing founders First, this is a more sophisticated market their founding teams fare through all of this. pledge to partner with founding teams long which we’ve seen grow in popularity in getting on in their stead, the rise of vertical
that can create category-defining, global than when a lot of us started out 10, 20, 30 The “private for longer” mindset (which also term must also consider what this looks like recent years, are providing good options for private equity, or micro PE, is more of a
titans; we are not optimising for a particular years ago; the nature and processes have fuels “big events”) can see skin in the game post-exit. both founders and investors. These enable “same train, different passengers and
point in time. changed. If you’re invested in software taken to extremes, inadvertently or Options are emerging. First off, at the core earlier-stage investors to exit, while personnel”.
Warren Buffet famously made all his businesses now, you’re invested in a trillion otherwise. Founders – often young – have to of all of this is a strong relationship between transitioning that value to investors This model also provides good liquidity
money by not selling stuff. And social media dollar, growing market. It would be stay invested for years, keeping money on the investor and founder. It is incumbent on all targeting different return profiles. For options for investors, but with a more
tends to snowball news – even talk – into big reasonable to stay in. As the sage of Omaha table even after an investor exit, and more of us to be clear and upfront about what good founders, there are different names on the hands-on, typical private equity-style of
events: a sexy IPO, direct listing, a Spac. said, it is time in the market that matters, often than not becoming increasingly diluted. looks like, in terms of outcome. cap table, but other variables should remain capital, which looks to continue to grow
We’ve had Redditors driving up share prices not timing the market. Moreover, with an Second, there are an increasing number of constant. these businesses while they are still private.
in troubled companies GameStop and AMC abundance of secondary capital available Investor/founder gulf ways to ensure continuity for founders and And third, while the likes of liquidity funds There are some great examples to mention
Entertainment; media urging retail investors (precisely because it’s a trillion dollar here: industry giants like Vista and Thoma
to pause for thought before taking the plunge market) adhering to a paradigm of exits as a This is a good reminder that there is Bravo, and the likes of software-as-a-service
into hot stock (read: Bumble’s IPO); and discrete, one-off event is outmoded. frequently a gulf between exits for investors, focused Scaleworks and Tiny, which has the
79% of IPOs in the US so far this year have In today’s market, the top late-stage and for founders – and why, at the outset, it’s “The investment playbook is changing, and apposite tagline: “We started Tiny to become
been Spacs (up from 55% across 2020, and companies can be exited immediately at a so important for founders to be aligned with with it, the relationship between public the buyer we wish we could have sold to.”
28% in 2019). mark-up to the last round. We get daily investors. When a company goes public in As software saves the world, it’s time we
emails enquiring about secondary particular, the traditional venture investor
and private markets. For those of us all thought more holistically about the telos
Changing relationship opportunities in our top companies – exiting journey ends. We typically cash out our operating across them, we need a deeper of these companies – as individuals, and as a
is no longer the differentiating skill it once investment when liquidity allows; we move understanding between investors and whole. The journey to get there matters; we
Clearly, the investment playbook is was. (The skill is knowing when to exit…). on. should work to optimise it for everyone
changing, and with it, the relationship Second, as a corollary of this, the rules of But for a founder, the journey starts all venture funds to better manage liquidity” involved, and not for a particular moment in
between public and private markets. For engagement have changed. IPOs have over again: life as a public company. And as Haakon Overli, Dawn Capital time.
those of us operating across them, we need a become predominantly marketing events, an increasingly complicated market alters Haakon Overli is a co-founder and a general
deeper understanding between investors and given how late-stage the liquidity they the subtleties of ownership, so too has it partner at venture capital firm Dawn Capital.
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