M&A wrap: Carlyle, Victory Innovations, Richard Branson, Uber, Antares, Clearlake, GI


The Carlyle Group (Nasdaq: CG) is acquiring a majority stake in Victory Innovations, a maker of electrostatic sprayers that are used to disinfect offices, airplanes, schools and other businesses. Demand for Victory’s sprayers has grown significantly as a result of the coronavirus pandemic, according to the two companies. “As more and more businesses grasp the need to not just clean surfaces, but disinfect them, we see tremendous growth opportunity for Victory,” says Carlyle managing director Vipul Amin. “Their highly effective technologies are more cost effective, use less disinfectant and operate faster than alternative disinfecting methods.” Victory’s sprayers can cover a large surface area with disinfectant quickly, including wrapping around objects. Schools and hospitals were among the first to use Victory’s products, followed by a number of other businesses and industries, from airlines and hotels to gyms and professional sports. “Victory’s electrostatic sprayers are quickly becoming the new standard in infection control, in particular as businesses plan to reopen following the coronavirus pandemic,” says Victory CEO Chris Gurreri.

The coronavirus pandemic has disrupted entire industries in 2020, but perhaps none so much as healthcare. Contained in one industry is the global competition to develop test, manufacture and distribute a Covid-19 vaccine in record time and the fight to save patients from a virus that has infected more than 5 million people and killed more than 190,000 in the U.S. alone. The healthcare industry is also developing Covid-19 treatments; producing, administering and interpreting tests; and adapting new technologies and better methods for healthcare delivery and interaction with patients. For the full story, see: Covid-19 vaccines, tests and treatments spur healthcare M&A deals.

DEAL NEWS
Richard Branson is on the hunt for his next big business opportunity after staving off a crisis in his empire of travel and leisure-focused companies hit hard by the coronavirus pandemic. Branson is inviting investors to buy shares of a listed shell firm, known as a special purpose acquisition company or SPAC, with the aim of later buying an existing business using proceeds from an initial public offering. His VG Acquisition Corp., as the entity will be known, plans to raise $400 million by selling 40 million units at $10 apiece, according to a filing with the U.S. Securities and Exchange Commission, which said merger options span travel, financial services, media, music and renewable energy. Read the full story by Bloomberg News: Richard Branson seeks $400 million to fund next business foray

Uber Technologies Inc. (NYSE: UBER) is seeking to sell part of its $6.3 billion stake in China’s Didi Chuxing, as it begins to shed minority holdings to raise cash, according to Bloomberg News. The San Francisco-based ride-hailing pioneer is beginning to monetize stakes in other companies in an effort to boost its own share price. Read the full story by Bloomberg: Uber to sell part of $6.3 billion Didi stake.

Antares Capital Advisers LLC, a subsidiary of Antares Capital LP, has raised its first senior loan fund at $3 billion. “The closing of our inaugural fund is a significant milestone in continuing to diversify our investor base, and the ability to do so during the current market environment is a clear testament to the strength of the Antares brand,” says Vivek Mathew, Antares senior managing director and head of asset management. The fund will build a diverse portfolio of sponsor-backed senior secured loans to U.S. and Canadian borrowers, the lender said in a release. “Covid-19 has been a stress test for our asset class, and while the story is not fully written yet, it appears that middle market private debt will perform well,” says Antares CEO David Brackett. “As a result, we anticipate further growth in our asset management platform.”

Clearlake Capital is acquiring Zywave Inc., a Software-as-a-Service provider of front office insurance services, from Aurora Capital Partners. The target serves sover 6,000 brokerages including all of the top 100 U.S. insurance firms. William Blair is advising the sellers.

GI Partners is buying web and identity security company Sectigo from Francisco Partners. UBS Securities is advising the target. Jefferies is advising GI.

Pamlico Capital-backed HelioCampus has acquired education software provider ABC Insights. The latter offers data to college administations to help them better understand their finances so they can operate more efficiently.

Peak Rock Capital has completed its acquisition of Halo Foods, a European-based manufacturer of better-for-you bars and snacks.

PEOPLE MOVES
Ari Edelman has joined Reed Smith where he is focusing on special purpose acquisition company, or SPACs. SPACs have recently gained prominence as a result of the weakening viability of traditional IPOs in the wake of the Covid-19 pandemic and the resulting economic ambiguity. Characterized as a “blank-check” vehicle, a SPAC is a non-operational business formed solely to raise funds through an IPO to acquire another company. Investors in SPACs range from large private equity funds to members of the general public. SPACs have raised more than $30 billion so far this year, versus $13 billion in all in 2019. Edelman was previously with Ellenoff Grossman & Schole LLP.

Apollo Global Management has named its leadership team for Apollo Impact, a new platform dedicated to impact investing. Senior partner Marc Becker will co-lead the platform. Joanna Reiss joins the firm as partner and co-lead of Impact from Cornell Capital. Lisa Hall joins Apollo as chair of Impact from Georgetown University’s Beeck Center for Social Impact and Innovation and will help develop and oversee the platform.

Richard Hoh was hired by investment bank Houlihan Lokey (NYSE: HLI) as a managing director in the firm’s industrials group. He was most recently with BMO Capital Markets.

Karey Witty has joined private equity firm healthcare and technology-focused private equity firm Welsh, Carson, Anderson & Stowe as an operating partner. He was the recently the chief operating officer of Envision Healthcare.

Christopher Freeze was hired by Churchill Asset Management as a senior managing director and head of investor relations. He was previously with Carlye.

Neil Whoriskey was hired by law firm Milbank LLP as a partner where he is focusing on private equity and M&A. He was previously with Cleary Gottlieb.

CORONAVIRUS IMPACT
The pet supply sector is soaring during the pandemic, as demand for companion animals, particularly dogs and cats, is rising with people turning to comfort while quarantined. Consumers continue to spend more money on their pets even while cutting back in other areas, and are treating pets as family members. Earlier in 2020, Petmate acquired Pet Qwerks, a maker of dog chews and toys. Carl Marks Advisors advised the target. Mergers & Acquisitions’ spoke with Carl Marks managing director Chris Parisi about the deal and M&A trends in the sector. Read the full story: Q&A: Rise in pandemic-driven dog and cat adoptions attracts Petmate and other M&A buyers.

Today’s private equity firms face greater risk and uncertainty when evaluating potential portfolio acquisitions, in light of the Covid-19 pandemic. While things like market size and product quality are still important factors, private equity firms must also gauge a portfolio company’s character and ability to withstand economic turbulence. Read the full article: Agility matters: 4 signs PE firms should examine when considering acquisitions.

Car dealerships saw a drop in sales during the height of the pandemic from the slowdown in production with less people driving, and that impacted some deals. For example, Asbury Automotive Group Inc. (NYSE: ABG) originally backed away from its $1 billion acquisition of Park Place Dealerships. However, citing a pickup in business, Asbury revived the deal for $735 million. Now some dealmakers are predicting robust sector dealflow in the second half of 2020. Mergers & Acquisitions spoke with Erin Kerrigan, managing director of auto dealership-focused investment bank Kerrigan Advisors about deal trends in the industry. Read the full story: M&A among car dealers expected to reach record levels in the second half of the year.

With everything from Broadway to indoor dining closed, people are starved for entertainment. Enter mobile gaming. Despite restrictions slowly easing, mobile games are expected to see strong interest in the long-term and game makers are looking for acquisitions to keep their portfolios fresh. “There’s a lot of supply of great companies out there, big, small and different categories in different regions of the world,” Zynga CEO Frank Gibeau recently told investors. He pointed out that Zynga has the cash to make more deals and will continue to look for them. “So, consolidation is obviously underway in the interactive category. We’re actively participating in growth through finding partnerships with companies out there. Scale is going to be increasingly important in mobile.” Read the full story: Quarantine drives M&A in mobile gaming.

Covid-19 and quarantines may lead to an increase in carve-out deals. The Covid quarantines across the globe led to economic disruption. All sectors of the economy are impacted. Many corporations looking to improve their financial situation will likely look to sell non-core units. Read the full article: More carve-out deals ahead, driven by pandemic.

The construction software industry is fragmented, and there is a growing demand for technology that will help contractors, drawing deal activity particularly from strategic buyers. One company that is active in the sector is Autodesk Inc. (Nasdaq: ADSK), which recently aquired Pype. Pype’s software helps automate construction projects. Mergers & Acquisitions spoke with Sidharth Haksar, Autodesk’s director of corporate development about the Pype deal. Read the full story: Autodesk seeks construction software deals during pandemic.

Deal activity in the cybersecurity sector is being driven by a combination of rising cyber threats and more people working from home. Earlier in 2020, Francisco Partners and Vector Capital-backed cybersecurity company WatchGuard Technologies acquired network security provider Panda Security. Mergers & Acquisitions spoke with WatchGuard CEO Prakash Panjwani about the Panda deal and M&A trends in the sector. “The security market will continue to experience significant consolidation throughout 2020 and beyond,” says Panjwani. “This has been and will continue to be driven by customer needs. As the volume and sophistication of security threats continue to grow, vendors will answer with innovative new solutions. At the same time, the security expertise and resources required to deploy and manage those solutions will continue to be scarce.” Read our full coverage: Work from home and increasing cyber threats will drive cybersecurity M&A.

While the novel coronavirus has reshaped the U.S. economy and the healthcare industry, pharmaceutical manufacturing has proven resilient—both in terms of business durability and its increasingly critical role in the global response to the virus. Covid-19 crystalized the U.S. dependence on overseas manufacturing for finished dose products as well as the active pharmaceutical ingredients necessary to produce life-saving medications. Read the full article: Why investors need to consider pharmaceutical manufacturing services.

EQUALITY AND INCLUSION
Bank of America Corp. invested $50 million in three Black-owned banks as part of its $1 billion pledge over four years to advance racial equality. The second-largest U.S. lender took equity stakes of about 5% in three minority depository institutions: First Independence Corp. in Detroit, Liberty Financial Services Inc. in New Orleans and SCCB Financial Corp. in Columbia, South Carolina. The bank also laid out plans for other initiatives aimed at promoting racial and economic equality, including $200 million allocated to direct equity investments in Black- and Hispanic-owned businesses. Read the full story by Bloomberg News: BofA invests $50 Million in black-owned banks in equality drive.

Ten private equity firms have pledged to each create and post five board seats to make them available to minority and women candidates, participating in an initiative to increase diversity on company boards of directors. Aurora Capital Partners, Clearlake Capital, Genstar Capital, Grain Management, Hellman & Friedman, Hg, Insight Partners, K1 Investment Management, TA Associates and Vista Equity Partners have committed to the board initiative announced by Diligent Corp., provider of company governance software and a portfolio company of Clearlake and Insight. Read our full coverage: Clearlake, Insight, Vista and other private equity firms create 50 new board roles for diverse candidates.

Portfolia Rising America Fund “invests directly in early and growth-stage companies in the U.S. led by people of color and/or LGBTQ founders, or products and services that cater to these markets,” says investment partner Lorine Pendleton in a Q&A with Mergers & Acquisitions. “These are founders, ecosystems, products and services historically overlooked by traditional venture capitalists but positioned for significant growth and profitability.” The firm is led by five women of color. In addition to Pendleton, the firm’s leaders are: Noramay Cadena, co-founder and managing partner of MiLA Capital; Daphne Dufresne, a managing partner of GenNx 360 Capital Partners; Juliana Garaizar, an angel investor; and Karen Kerr, executive managing director at GE Ventures. “We believe that strength lies in differences and seek out entrepreneurs and startups who are using shifting demographics and their own diversity of experience and thought to create innovation that offers outsized opportunities for returns and impact.” The fund had its first close earlier in 2020 and has made two investments to date: The first investment is in MoCaFi, a fintech startup founded by Wole Coaxum, a former JPMorgan Chase commercial banking executive and entrepreneur, who is African American. “MoCaFi offers a mobile-first banking platform that brings digital banking products to underbanked or unbanked communities (an 88 million U.S. market), allowing them to build credit and financial mobility,” Pendleton explains. The second investment is in a women’s tele-medicine network. For more, read the full interview: Led by 5 women of color, Portfolia Rising America Fund backs mobile banking and women’s telemedicine startups.

“As stewards of capital we have an outsized role in determining which businesses to support,” says Mina Pacheco Nazemi of Barings Alternative Investments. “As asset allocators, we need to hold ourselves accountable. I can do more. Will you join me?” Dealmakers begin to weigh in, as Gerge Floyd’s death sparked two weeks of Black Lives Matter protests against police brutality and racial injustice. Read the story: “Justice doesn’t just happen. It requires action, dedication and accountability,” says one private equity investor.

MORE FEATURED CONTENT
Mergers & Acquisitions, the oldest trade publication serving the dealmaker community, has been acquired by Middle Market Information LLC from Arizent. Started in 1965 as Mergers & Acquisitions: a Dealmakers Journal, M&A’s print and digital magazine, news website, daily email newsletters and social media channels inform private equity firms, strategic acquirers, investment banks and other deal intermediaries on breaking news, emerging trends, and rising stars in the industry. Middle Market Information, a B2B data and information company, says M&A will retain its core values of providing quality intelligence to discerning professionals in the dealmaking community. “We are delighted to have an opportunity to invest in and grow Mergers & Acquisitions, a brand that’s been trusted by dealmakers for over 55 years,” said Middle Market Information CEO Jim Beecher. “This industry needs an independent voice that can deliver thoughtful analysis and deep coverage of both private equity and corporate deal activity. Through our website, www.themiddlemarket.com, and our publication, we will build upon the foundation of the brand and deliver an even better experience for the community in the coming months and years.” Editor-in-Chief Mary Kathleen Flynn adds: “The new challenges M&A and private equity professionals are facing in 2020 underscore the need for the trusted, insightful editorial content we produce at Mergers & Acquisitions and themiddlemarket.com. We’ve built a great foundation under Arizent, and we’re looking forward to growing and extending our brand further with Jim and Middle Market Information.” See full coverage: Middle Market Information LLC buys Mergers & Acquisitions publishing brand.

Mergers & Acquisitions is recognizing nine dealmakers as the 2020 Rising Stars of Private Equity:

  • David Farsai, Principal, Mainsail Partners, who is the first at the firm to rise from associate to principal
  • Andrea McGuirt, Senior Associate, Palladium Equity Partners, who established a strategy for sourcing and executing opportunities in the current deal environment
  • Molly Fitzpatrick, Vice President, Rallyday Partners, who led three investments and a divestment for the new PE firm
  • Jenny Zhang, Vice President, Investments, Grain Management, who helps portfolio companies in the telecom infrastructure sector find organic growth opportunities
  • Ross Stern, Principal, Summit Partners, who played a role in nearly $1.3 billion worth of healthcare company investments
  • Arjun Mehta, Vice President, Bregal Sagemount, who has made eight platform investments and seven add-on acquisitions
  • Miguel Tejeda, Vice President, Motive Partners, who stands out for his investment acumen and ability to distill complicated concepts and processes
  • Clara Jackson, Principal, TA Associates, who has become a trusted supporter during the pandemic to help portfolio companies remain sustainable
  • KJ McConnell, Principal, GTCR, who played a leading role in about 10 of the group’s last dozen deals

These outstanding up-and-coming investment professionals have been excelling during a period of profound change in the U.S. and in the world. The publication of this list comes at a pivotal moment in time. The country is beginning to open up after three months of quarantine from the coronavirus, while a second wave picks up steam in the Sun Belt from South Carolina to California and including Texas. Dealmaking under quarantine while working from home has proved challenging, to say the least.Social justice issues have taken on fresh urgency. There is heightened awareness of systemic racial injustice and police brutality against Blacks after the deaths of George Floyd and many others. Meanwhile, the U.S. Supreme Court ruled recently that, “An employer who fires an individual merely for being gay or transgender defies the law.” On immigration policy, the Court recently put the brakes on dismantling the Deferred Action for Childhood Arrivals, or DACA. Meanwhile, the President is asking the Court to overturn the Affordable Care Act, also known as Obamacare.

Click here for full coverage of Mergers & Acquisitions’ 2020 Rising Stars of Private Equity.

In the challenging times we face now, it’s more important than ever to come together as a community and recognize the people and companies that excel and lead. We invite you to join us in honoring the 2019 winners of Mergers & Acquisitions’ M&A Mid-Market Awards. In contrast with the volatile coronavirus-driven conditions unfolding in 2020, the dealmaking environment of 2019 was remarkably stable. Among the PE firms benefitting from the auspicious fundraising climate was Vista Private Equity, which raised a $16 billion fund – the largest technology-focused PE fund ever raised. Mergers & Acquisitions is honoring Vista founder and CEO Robert F. Smith with our 2019 Dealmaker of the Year award. In addition to leading his firm’s unprecedented fundraising, Smith excelled in philanthropy. When he spoke at the commencement of Morehouse College, he announced he would pay off all the student loans of the HBCU’s 2019 graduates, providing a helping hand in the student debt crisis facing many U.S. families. The financial services sector saw a lot of consolidation in 2019. Piper Jaffray wins our 2019 Deal of the Year for buying Sandler O’Neill to form Piper Sandler, which instantly became a leading investment bank in the financial services sector. And Stifel wins our 2019 Investment Bank of the Year for growing dramatically and making several acquisitions. Read our full awards coverage: Meet the winners of Mergers & Acquisitions’ M&A Mid-Market Awards.

To celebrate deals, dealmakers and dealmaking firms, Mergers & Acquisitions produces three special reports every year: the M&A Mid-Market Awards; the Rising Stars of Private Equity; and the Most Influenital Women in Mid-Market M&A. For an overview of what we’re looking for in each project, including timelines, see Special reports overview: M&A Mid-Market Awards, Rising Stars, Most Influential Women.

Editor’s Note: M&A wrap is a bi-weekly column, published on Mondays and Thursdays