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Dealmaking set to underperform forecast, says Brightstar’s Weinberg; Higher education technology sector ripe for investment

Happy Presidents’ Day, Hubsters! Rafael Canton filling in for MK Flynn today with the US edition of the Wire from the New York newsroom.

Let’s start off the week with a look at US dealmaking. Andrew Weinberg, founder and CEO of Brightstar Capital Partners, has thoughts onthe dealmaking environment.

Next, we have a report from Harris Williams about the higher education technology sector and why there have been deals happening in the space.

Wait-and-see approach

The first month of US dealmaking was slow. As PE Hub’s MK Flynn noted last week, January saw just 894 US deals, down nearly 26 percent from 1,201 the previous January, according to LSEG. Total deal value dropped about 17 percent. Private equity dealmakers have said uncertainty can kill deals. The uncertainty around topics from tariffs to carried interest has played a part in slowing dealmaking.

Premium subscribers to the Wire can read insights from Andrew Weinberg, founder and CEO of Brightstar Capital Partners about the dealmaking environment.

PE Hub will be keeping an eye on whether deal activity picks up during the rest of February.

Transformative period

Fewer students are quickly enrolling in college after graduating from high school. One reason for this is the increased cost to attend college. In response to those challenges, educators are looking to create more experiential learning opportunities and finding new ways to engage with the next generation of students, according to Harris Williams’ higher education technology sector brief.

Subscribe to the premium version of the Wire to see what deals are happening in the space and why there is PE interest.

If you have any questions, thoughts, or want to chat about deals in the tech, consumer or sports sectors, please email me at rafael.c@pei.group.

Tomorrow, Craig McGlashan will be with you for the Europe edition of the Wire. John R Fischer is filling in for Obey Martin Manayiti and will bring you the US edition.

Cheers,

Rafael

Read the full Wire commentary on PE Hub ...

Also of note (may require subscriptions)

Investcorp has reached a first close of $965 million on its second North American fund, Investcorp North America Private Equity Fund II, according to two people familiar with the matter.

The Vermont Pension Investment Commission committed $35 million to a US Agriculture vehicle to keep pace with allocation targets altered by growth in its private equity portfolio. (Agri Investor)

"One of the world’s oldest and largest puzzle media companies is being prepared for sale by private equity group BC Partners to tap into investor interest in 'braintainment' sparked by the success of games such as Wordle." (Financial Times)

"Bain Capital said it will give up its pursuit of Fuji Soft Inc., ending a months-long bidding war with KKR & Co. to take the Japanese software company private." (Bloomberg)

"JPMorgan Chase has dealt a blow to regulators’ efforts to understand the depth of ties between banks, buyout firms and the fast-growing private credit sector, declining to disclose its lending in an area of increasing systemic concern." (Financial Times)

"British healthcare property developer Assura has rejected a £1.56 billion ($2 billion) acquisition bid from KKR and pension fund Universities Superannuation Scheme, the U.S.-based private equity group said on Monday." (Reuters)

A Saturday op-ed in the FT from Amit Seru, a senior fellow of the Hoover Institution and a professor of finance at Stanford Graduate School of Business, says that private equity should be wary of democratization "because it comes with serious risks. Private equity needs patient, long-term capital, free from short-term public market pressures. Opening the floodgates to retail capital introduces liquidity demands, shorter investment horizons and regulatory scrutiny."

"Lazard Inc. has hired Klaus Hessberger, one of JPMorgan Chase & Co.’s most senior private equity dealmakers, as co-head of its sponsors practice globally." (Bloomberg)

"Dubai-based Huda Beauty will sell its popular fragrance brand KAYALI to its co-founder and General Atlantic in a move that allows the beauty company's owners to buy back a stake held by TSG Consumer Partners since 2017, according to a joint statement by the three companies on Monday." (Reuters)

"Paul Weiss, long known as a top-tier litigation law firm, has surpassed storied New York rivals to also become a mergers and acquisitions behemoth. The firm’s lawyers advised on more than $261 billion worth of deals last year to rank fifth on Bloomberg Law’s League Tables, up from 31st a decade ago."

Deals

They said it

“Versus the forecast, I think there will be underperformance in dealmaking. If you want to launch an auction to sell the business, that's a six-to-12-month process. If that is not underway at this point, anything you launch now may not be a deal that happens this year.”

— Andrew Weinberg, founder and CEO at Brightstar Capital Partners

Today's letter was prepared by Rafael Canton

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