Ultra-rich individuals and families worth more than $150bn are helping drive a resurgence in private equity buyouts, providing capital for some of the year’s biggest acquisitions to overcome a tough dealmaking environment.

Wealthy clans that built their fortunes in industries from children’s toys to household boilers have been co-investors on nearly $20 billion of listed company takeovers this year, according to data compiled by Bloomberg. They’ve made a mark on Wall Street as go-to sources of capital for investment firms like KKR & Co. and Silver Lake, helping them get acquisitions over the line at a time when borrowed money remains expensive.

Germany’s Viessmann family, flush with cash after a major divestment, teamed up with KKR for its $3 billion acquisition of renewable energy firm Encavis AG announced in March. The century-old dynasty has an estimated net worth of $13.7 billion after completing the sale of their heating and cooling business to Carrier Global Corp. in January, according to the Bloomberg Billionaires Index.

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Meanwhile, Michael Dell’s family office partnered with Silver Lake on the biggest private equity buyout this year, a $13 billion deal for talent agency Endeavor Group Holdings Inc.

Goldman Sachs Asset Management closed its purchase of Norwegian e-learning platform Kahoot! ASA in January with funding from Denmark’s Kirk Kristiansen dynasty, the owners of Lego Group. In April, Morgan Stanley’s infrastructure arm agreed to buy Milan-listed construction firm Salcef Group SpA with the Salciccia family, who have controlled it for decades.

Direct Investments

Many pension funds and endowments have hit the limit for how much they can allocate to private equity, leaving buyout firms to turn to increasingly sophisticated wealthy families or sovereign funds. Roping in a co-investor allows private equity firms to reduce the money they front themselves for a deal, a welcome prospect at a time when high borrowing costs are crimping the amount of leverage they can use.

The shift is catching the eye of major investment banks. Darren Allaway, a London-based managing director in Goldman Sachs Group Inc.’s family office unit, said he’s spent more time engaging with private equity investors within the past year than in his entire finance career of more than two

Zuber Issa has exited Asda after selling his 22.5% stake in the supermarket to existing owners private equity firm TDR Capital, the company said today, in signs the billionaire Issa brothers’ are separating a significant chunk of their close business interests.

The deal brings the ownership of Asda to 67.5% by TDR Capital, 22.5% by Mohsin Issa, and 10% by Walmart. The transaction is set to complete in Q3 2024. Asda did not disclose the terms of the sale.

Zuber Issa will also step down as Co-CEO of EG Group after reaching an agreement to buy its remaining UK forecourt business and standalone foodservice locations for £228 million. EG Group said it will use the proceeds from the divestment to repay debt and strengthen its balance sheet. Zuber will retain his existing shareholding in EG Group while his brother Mohsin will become sole CEO.

The two deals, announced simultaneously, mark the latest step in the splitting of assets held jointly between billionaire brothers Mohsin and Zuber Issa, who over the past two decades have built a multinational retail and petrol forecourt business from scratch via a series of debt-fueled acquisitions. Asda CFO Michael Gleeson had previously said the Issas are committed to running the supermarket ‘for the long haul’ and in an interview with the BBC Mohsin Issa has denied any rift with his brother.

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A surge in interest rates over the past two years has put strain on the pair’s business empire, who undertook a major debt reorganisation in a bid to deleverage. EG Group said it has now refinanced all of its debt due to have matured in 2025 “against a backdrop of a very challenging leveraged finance and high-yield corporate bond market.”

Last month supermarket Asda, which took on significant debt after acquiring much of EG’s UK forecourt business, said it had refinanced £3.2 billion in loans, including the biggest Sterling high-yield bond this year and the second-largest sterling bond in the European leveraged finance market – only behind Asda’s original £2.25 billion Sterling bond tranche in 2021.

Source: Yahoo Finance

India Inc saw resilient private equity (PE) investments amid elections as the month of May witnessed 145 deals worth $6.7 billion, a report showed on Thursday. The key sectors like real estate, e-commerce, healthcare, and financial services saw a surge in investments, according to the report by Grant Thornton Bharat Dealtracker.

“The surge in PE deal values, driven by investments in select sectors despite stable volumes, signals resilience in the market,” said Shanthi Vijetha, Partner, Growth at Grant Thornton Bharat.

“The policy and reform direction of the new government will be pivotal in shaping the investment climate and driving future deal activity,” Vijetha added.

The mergers and acquisitions (M&A) landscape saw 38 deals at $1.1 billion. The top deal was Google’s investment in Flipkart for $350 million.

The PE landscape saw 99 deals and deal values surged by 49 per cent to $4 billion, the second-highest monthly deal value after January, driven by nine high-value deal exceeding $100 million each.

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The top PE deal was Brookfield India Real Estate Trust’s substantial investment of $723 million in Bharti Enterprises. In May, the IPO landscape saw significant activity, with five IPOs raising a total of $1.2 billion.
Additionally, the QIP (qualified institutional placement) landscape included three QIPs, which collectively raised $0.5 billion.

The retail sector topped in deal volumes, primarily due to two high-value e-commerce deals totalling $625 million, the report mentioned.

Ultra-rich individuals and families worth more than $150bn are helping drive a resurgence in…

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Zuber Issa has exited Asda after selling his 22.5% stake in the supermarket to existing owners…

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Lower middle market-focused private equity firm American Discovery Capital has held the final…

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