Permira Sells Stake in Alter Domus After 5x'ing EBITDA

Spotlight

Permira has agreed to sell half of its stake in Alter Domus to Cinven. Alter Domus is a leading fund administrator to the alternative investment industry with ~$2.5 trillion in assets under administration. The company was founded over 20 years ago in Luxembourg. The deal introduces Cinven as a new strategic investor with the intent to support the company’s long-term strategic growth by leveraging its team's expertise and global scale. The deal values Alter Domus at $5.3 billion, with EBITDA increasing 5x since Permira’s initial acquisition in 2017 and assets under administration increasing by +69% since 2021. 

How was Permira help Alter Domus improve company performance?

• Effective Strategic Planning: Since Permira’s acquisition in 2017, Alter Domus has taken share in the fund administration industry by successfully introducing new capabilities for open-ended and liquidity-managed private market funds, including European long-term investment funds. New features include support for NAV calculations, enhanced efficiency with settlement processes, overall improved network connectivity for distribution services, refined regulatory reporting, and white-glove support as a registered transfer agent for Luxembourg-based funds. These enhancements further broaden the company’s overall fund-administrator capabilities.
• M&A: In 2021, Alter Domus acquired IPS Fund Services, a Boston-based fund admin with $9 billion assets under administration which helped it to enter the North America market. Just over a month later, Alter Domus followed with another acquisition of Strata Fund Solutions, a Utah-based fund admin with $140 billion in assets under administration. In May of 2023, Alter Domus acquired Solvas, a loan and debt servicing company founded by Deloitte, with the intent to grow technology and servicing support capabilities. 
• Digital Transformation: Alter Domus has been highly focused on digitisation in recent years, going to market with new technology that helps clients manage and optimize risk in their financial portfolios. The company’s tech strategy has three branches that consist of the following: acquiring data-focused companies, partnering with companies that provide state of the art technological experiences (such as eFront and Yardi), and developing original tech-based solutions such as CorPro, VBO and Agency360. In 2020, Alter Domus launched an ‘Accelerate’ program, investing $125 million in companywide digital transformation. 
• Management Changes: In 2021, Alter Domus appointed Michael Janiszewski, the former COO of BNY Mellon’s Securities Services and Digital business, as their COO with the overall goal of elevating client experience. Janiszewski has over 20 years of experience in business strategy development, operational management, and technology innovation More recently, Alter Domus appointed Amaury Dauge as its new CFO. Dauge has an extensive background in finance, previously serving as CFO of Allfunds and Euronext where she led both companies through the IPO process. Alter Domus’ CEO Doug Hart has hinted at how these new management changes will be an important step in the company’s next phase of growth, which could suggest an IPO in the future.

In other portco news …

Summit Partners is looking to exit men’s personal care brand Dr. Squatch for $2 billion. The PE firm is working with investment banks Raymond James and Centerview Partners to find potential buyers. The company reportedly generated EBITDA of $90 million last year, suggesting rapid growth given a valuation which would be more than 20x earnings.The company was founded in 2013 and instantly made a name for itself with its organic and natural handmade soaps for men. Since then, the company has diversified its offerings into a wider range of men’s hygiene products, including deodorant, cologne, lotion and hair care. By 2020, the company had grown by over 4x and surpassed $100 million in revenues. In 2021, Dr. Squatch gained distribution at Walmart, placing its products in over 1,600 of the retailer’s stores. Recently, M&A interest and activity in innovative and natural personal care brands has grown. Carlyle is rumored to be exploring a potential sale of Every Man Jack, maker of men’s personal care and grooming products utilizing clean ingredients. Additionally, in October 2023, Unilever sold Dollar Shave Club to Nexus Capital Management. (Source)

BC Partners is selling a majority stake in Presidio, an IT provider, to Clayton Dubilier & Rice. Financial terms were not disclosed, but BC Partners almost sold the company for $4 billion in 2021. Presidio delivers IT software solutions for over 6,600 customers, including Amazon, Microsoft, Google, and Cisco Systems. Over the years, Presidio has undergone a series of strategic transactions with various PE firms. These investments include:

• 2011: American Securities acquires a majority stake in Presidio
• 2014: Apollo Global Management Inc purchases Presidio from American Securities for $1.3 billion, eventually leading to its IPO in 2017
• 2019: BC Partners takes Presidio private in a $2.1 billion transaction, thereby delisting the company from the NASDAQ 

Under BC Partners’ ownership, Presidio strategically acquired several firms including the Irish IT consulting firm Arkphire as well as ROVE. CD&R invests in diverse portcos across industrial, healthcare, consumer, technology, and financial services sectors, and has hinted at wanting to implement operational improvements with Presidio’s business. (Source). 

What we’re reading …

Carlyle has appointed Afsaneh Beschloss to its board following the retirement of Dr. Thomas Robertson. Beschloss is the founder and CEO of RockCreek, former CIO of the World Bank, and former Managing Director and Partner at Carlyle. (Source)

The FTC and DOJ issued new M&A guidelines that will put greater scrutiny on private equity buy-and-build strategies. (Source)

PE firms are investing in their own in-house talent management teams to help portfolio companies with recruiting, according to NU Advisory. (Source)

KKR is taking a page out of the Berkshire Hathaway playbook and holding companies for longer. The PE firm’s “strategic holdings unit” which has 19 companies in it, is forecast to generate $300 million in dividend payments by 2026 and $600 million by 2028. (Source)

CEO confidence fell in April as inflation remains higher-than-expected for longer, despite signs that consumer spending is slowing and credit card debt reaches its highest level since 2012 (Source)

Carlyle CEO tops private equity pay packages with $187 million in his first year on the job. (Source)

Brian Lafemina has joined Arctos, a sports-focused PE firm, as an operating partner. Previously, he spent 20 years at The Madison Square Garden Company where he led business operations for the New York Rangers, New York Knicks, and New York Liberty. (Source)

Jamie Dimon devoted a portion of his annual shareholder letter to talk about how AI could be as “transformational as electricity or the steam engine.” It’s noteworthy, because Dimon isn’t one to jump on the technology bandwagon. He has been an outspoken critic of cryptocurrencies for several years. (Source)

Questions? Email us: editor@valueaddpe.com