KKR Takes Additional Stake in Insurance Giant, Thoma Bravo Acquires NextGen Healthcare, SoftBank Helps Retailer Scoop Up Kroger/Albertsons Divestment

Insights

Chart of the Week: Western European buyout activity is rebounding more slowly than in other regions. There were 610 PE buyouts across Western Europe in Q2 2023, compared to 778 across North America. Up until three years ago, Western Europe frequently exceeded North America in buyout activity. On a YoY basis, both Western Europe and North America buyout activity increased +7% in Q2, significantly less than the +54% growth in activity across the rest of the world.

Stay tuned for upcoming research, the Western Europe Private Equity Report: Q2 2023, available to Value Add PRO subscribers only. Upgrade to PRO today.

Recent Reports

• North America Private Equity Report: Q2 2023
• Private Equity Exits Report: Q2 2023
• Private Equity Buyouts Report: Q2 2023

Deal News

KKR is set to solidify its position in the insurance brokerage market with an additional equity investment exceeding $1 billion in USI Insurance Services, making it USI's predominant shareholder. This move traces back to KKR's initial stake acquired in 2017 for $4.3 billion. As per the recent agreement, which is projected to finalize by year-end, KKR will procure shares predominantly from Caisse de dépôt et placement du Québec (CDPQ) and other existing stakeholders. Since the initial collaboration, USI has seen significant growth, doubling its operational scale and personnel, whilst ensuring that key management and employees retain substantial equity in the enterprise. (Source)

Thoma Bravo has agreed to acquire healthcare software provider NextGen Healthcare in a transaction valued at $1.8 billion, inclusive of debt. The purchase price is set at $23.95 per NextGen share, a +46% premium since the company's potential sale exploration was reported on Aug. 23. This acquisition highlights the growing interest of private equity in healthcare technology, which remains robust during economic downturns. For instance, TPG acquired healthcare IT platform Nextech for $1.4 billion in July. Globally, healthcare deals reached $187.8 billion in H1 2023, up by +43% YoY. Thoma Bravo has previously invested in healthcare software providers like Bluesight and Logex. NextGen, which reported $653.2 million in revenue for FY2023 with 90% being recurring, offers a technology platform for healthcare providers handling tasks from digitizing health records to financial administration. Prior to the sale news, NextGen shares were down -9% YTD amidst client IT spending cuts and a federal investigation. The deal, which has the board's approval, is anticipated to close in Q4. Morgan Stanley is acting as NextGen's financial adviser, while Latham & Watkins LLP is the legal adviser. Thoma Bravo's advisory was provided by William Blair & Company and Goodwin Procter LLP. (Source)

C&S Wholesale Grocers, with financing support by SoftBank Group Corp., is currently in negotiations to purchase grocery stores from Kroger Co. and Albertsons Cos. These stores are being divested by Kroger and Albertsons to obtain regulatory green light for their proposed $25 billion merger. An announcement about the acquisition by C&S, which has SoftBank as its partner in this deal, might come as early as this week. Originally, both companies indicated a potential spin-off of 100 to 375 stores if no buyers emerged. The exact number of stores C&S plans to acquire, and the deal's value, remain undisclosed. SoftBank, known for its supply chain investments, has connections with C&S via Symbotic Inc., helmed by Rick Cohen, also C&S's executive chairman. While C&S, Kroger, and SoftBank refrained from commenting, Albertsons has yet to respond. The merger between Kroger and Albertsons, targeted for completion in early 2024, would merge two dominant US grocery chains, challenging market leader Walmart Inc. However, this merger faces opposition from various state officials and lawmakers, emphasizing concerns over wages and reduced market competition. C&S, headquartered in New Hampshire, distributes over 100,000 products to various retailers and also manages Grand Union and Piggly Wiggly store brands. (Source)

TPG, Brookfield, and Tokyo Electric Power Company (Tepco) are in advanced discussions to buy a minority stake in JSW Neo Energy, as the JSW Group looks to raise up to $500 million for expanding its footprint in the renewable energy sector. The potential deal comes on the heels of JSW Neo Energy's significant acquisition of 1.75 GW renewable capacity from Mytrah Energy for about $1.41 billion. This purchase has increased their operational capacity by 36%, now totaling 6.56 GW, with a strategic goal to reach 20 GW by 2030. Adding to the corporate developments, there have been indications from JSW Energy's joint managing director, Prashant Jain, about the company's plans to take JSW Neo public in the near future. (Source

Innoliva, one of Europe's premier olive oil producers, has been acquired from Cibus Capital by the Canadian private-equity firm, Fiera Comox. Previously purchased by London-based Cibus in 2018, Innoliva owns 8,000 hectares of olive groves in Spain and Portugal and has pioneered innovative planting techniques. Under Cibus' ownership, Innoliva doubled its footprint from 4,000 hectares and expanded its product line to include table olives and almonds. Commending Cibus' transformative role, Innoliva's CEO, Jorge Pena, expressed optimism about the partnership with Fiera Comox to further the company's growth strategy in the region. The financial terms of the sale remain undisclosed. (Source)

Industry News

Deloitte is gearing up for a significant private equity hiring push to capture more business in the sector. The Big Four accounting firm announced plans to onboard 150 professionals for its strategy and consulting division within the next three years. The ultimate objective is to elevate its PE consulting unit to a strength of 500 members by 2026, predominantly focusing on UK-based hires. This initiative follows a series of senior appointments, including Anne-Marie Laing from Agilitas Private Equity and Victoria Kerrigan from PwC. James Clare, a leader at Deloitte, emphasized the growing demand from PE clients for value creation and strategic transformation to secure attractive business valuations. (Private Equity News)

Abu Dhabi's Mubadala Investment Company has officially opened its Beijing office, reflecting deepening ties between China and the Gulf states. Initially delayed by the COVID-19 pandemic, the Beijing team, which includes about 10 members, will focus on direct and fund investments in China, with interests in entities like JD Industrials and SHEIN. The inaugural event saw attendance from significant private equity figures, including Lei Zhang of Hillhouse and Neil Shen of HongShan. This move is indicative of the growing bilateral relations in areas beyond just energy, such as infrastructure and technology, especially in the backdrop of Sino-U.S. geopolitical tensions. (Reuters)

Apollo Global Management has appointed Eric Hanno, previously from AlpInvest Partners, as the co-head of its Apollo Aligned Alternatives (AAA) strategy, aiming to make private markets more accessible to high-net-worth individual investors. The New York-based firm launched AAA last year with an initial $15 billion in commitments, targeting a segment that represents about half of global assets under management but only 16% in alternative assets. Apollo aims to present AAA as an alternative to traditional equity holdings, emphasizing its unique semi-liquid structure, which differentiates it from typical private equity offerings. Hanno will co-manage AAA alongside Matthew O’Mara, with operations spanning across several Apollo offices. (Wall Street Journal)

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