Secure your oil money
The cash is gushing in Saudi Arabia
Happy Sunday. Let’s get started:
Finance bros were rattled this week with a big shakeup in their sport of choice: the PGA Tour agreed to a tie-up with LIV Golf, the Saudi-backed rival that’s been luring away stars with enormous paydays.
For the Saudis, it’s just the latest in a string of well-publicized deals as the nation aggressively asserts itself on the international stage.
Forget New York, PIF’s Riyadh headquarters is the new global financial hub
The push for high-profile dealmaking is thanks to a burning desire for global power and influence, and, to a lesser extent, economic diversification away from oil. Key to this effort is Saudi Arabia’s Public Investment Fund (PIF), a top-five global sovereign wealth fund with AUM over $600 billion.
Returns are important for PIF, just like any other investment vehicle, but often take a backseat to relationship building and geopolitical advancement. The primary goal is, essentially, clout development.
The PGA deal mirrors Saudi brand-building via earlier investments across Formula 1, boxing, and soccer, including the purchase of Premier League club Newcastle United. All part of a campaign leveraging sport to become an international cultural leader.
Not content with simply buying up the world’s sports franchises, the next step in the Kingdom’s quest for clout is its over-the-top plan for new megacity Neom. It’s a $500 billion scheme to build a next-generation urban development along the Red Sea coast; something resembling a Middle East Silicon Valley utopia envisioned as the next can’t-miss business and tech hub.
The very practical plan is to build the city as a single miles-long integrated line in the middle of the desert
With that, it’s no secret that Saudi Arabia is sitting on a fat stack of cash. And who loves fat stacks of cash more than private equity and venture capital?
Saudi ambition has also driven extensive investment in foreign alternative assets. It is, again, a great way to both generate returns and forge important ties with global financial leaders.
The Kingdom has become the go-to spot on the fundraising circuit. Fund managers jet to Riyadh and head directly to PIF Tower, the fund’s new 77-floor headquarters, looking to secure their share of the oil cash.
Led by PIF’s Sanabil unit, Saudi Arabia distributes a minimum of $3 billion per year in new commitments across venture, growth, and buyout. Takers include General Atlantic, KKR, Insight, Thoma Bravo, H.I.G., TPG, Brookfield, Blackstone, and EQT, along with a number of smaller funds.
Dispersion of cash is typically handled by a relatively robust investment committee-like team, though Crown Prince Mohammed bin Salman ultimately has the final say.
That’s exactly what happened in the case of Jared Kushner’s Affinity Partners, who secured a $2 billion commitment despite a complete lack of prior private equity experience. Not a big deal — MBS pushed through funding even after PIF’s diligence found Affinity’s operations “unsatisfactory in all aspects.”
All that to say, there’s serious money up for grabs, particularly if you can build the right relationships. Don’t be surprised if you see your firm’s senior management paying more attention to Saudi Arabia — there’s a reason so many GPs jump at the chance to speak at ‘Davos in the Desert.’
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🍾 Deals, Deals, Deals
The week's most interesting transactions
The PGA Tour and LIV Golf have agreed to merge into a single entity, with PIF making an undisclosed investment into the combined business. The tie-up will put an end to bitter litigation between the two rivals following last year’s LIV launch and subsequent poaching of star golfers.
The PGA’s Rory McIlroy had this to say: “If you’re thinking about one of the biggest sovereign wealth funds in the world, would you rather have them as a partner or an enemy? At the end of the day, money talks and you’d rather have [PIF] as a partner.”
Now, the big question is whether the deal can make it past antitrust regulators. The U.S., U.K., and EU are almost certain to throw up hurdles, so it could be a long road to closing.
Loss of PGA sponsors could cause yet another hiccup. While most of the world has pretended to forget Saudi Arabia’s human rights track record (not to mention Jamal Khashoggi), there are likely some businesses that are less than thrilled with the prospect of inking their name across the new Saudi-backed tour.
One month after home health business Amedisys agreed to be acquired by Option Care, UnitedHealth’s Optum has swooped in with an unsolicited $3.3 billion all-cash offer.
Amedisys’ board is considering the new proposal, though it’s still bound by the original Option Care agreement, which had been expected to close later this year.
It’s another potential home healthcare deal for United, following the $5.4 billion acquisition of LHC Group earlier this year. Home health remains a hot niche, with both strategics and private equity fighting to get their piece of the market. For United, what better way to get it done than pulling the rug out from under Option Care?
The fight for control of distressed French grocer Casino-Guichard-Perrachon SA is heating up.
In May, the Company entered into court-supervised discussions with creditors, aiming to emerge with a more sustainable debt load. Rising rates on the on €7 billion of debt, along with increased competition from discount retailers like Lidl, proved too much for the chain with $36.2 billion in revenue.
Czech entrepreneur Daniel Kretinsky, with an existing 10.1% stake, has offered to lead a €1.1 billion equity injection. Telecom billionaire Xavier Niel, retail entrepreneur Moez-Alexandre Zouari and banker Matthieu Pigasse are reportedly pulling together a competing bid for the asset. (Read More: BBG)
This week’s other big dog deals —
⁃ Nordic Capital remains in the hunt for Swiss banking software provider Temenos, trading at a $6.7 billion market cap, even after competing interest from EQT, Thoma Bravo, and Permira has cooled.
⁃ Brookfield won the race to buy digital payments firm Network International Holdings for £2.2 billion, beating out competing bids from CVC and Francisco Partners.
⁃ Harbour Energy, a British North Sea oil and gas producer, is in talks to merge with Talos Energy, focused on Gulf of Mexico production. The combined entity could be worth north of $4.3 billion.
⁃ Standard Chartered is negotiating a sale of its aviation finance business to AviLease, backed by PIF, for nearly €3.5 billion.
⁃ Permira is nearing an exit for Golden Goose, the Italian luxury sneaker business. Options include an IPO or full sale, both of which could be worth more than €2.5 billion.
⁃ Bain Capital made an approach to buy Chindata Group, a Chinese data center operator, for $2.93 billion.
⁃ General Electric is selling a $2 billion stake in its GE Healthcare Technologies unit via a debt-for-equity swap.
⁃ Cava, the fast-casual Mediterranean chain, priced its IPO, offering 14.4 million shares at a range of $17 - $19, or a market cap of $2.1 billion at the midpoint.
⁃ Fat Brands announced plans to spin out its Twin Peaks sports bar chain into a separate entity via an IPO.
⁃ Raytheon is reportedly nearing a deal to sell its flight controls unit to Safran for approximately $1 billion.
⁃ KKR reached an agreement to buy Circor, a manufacturer of industrial flow control solutions, for $1.6 billion, or a 55% premium.
⁃ JetBlue, looking to move past antitrust roadblocks, has agreed to sell Spirit Airlines’ LaGuardia operations to Frontier, should JetBlue close its $3.8 billion acquisition of Spirit.
⁃ BlackRock reached an agreement to buy Kreos Capital, a growth and venture-debt investor focused on technology and healthcare.
⁃ Tokyo Marine has brought in Goldman and Jefferies to run a sale process for its Southeast Asia life ins. unit, which could be worth nearly $1 billion.
⁃ Barclays is reportedly considering a sale of its global payments business following an uptick in impairment charges.
⁃ Lloyds Banking Group is looking to sell the Telegraph newspaper and Spectator magazine in a deal that could be worth up to £600 million.
⁃ BuzzFeed is considering a sale of Complex Networks, acquired in 2021 for $300 million.
⁃ Cohere, focused on developing generative AI tech, raised $270 million from Inovia, Nvidia, Oracle, Salesforce Ventures, and Index Ventures, among others.
⁃ Blackpoint Cyber, a provider of SMB cybersecurity solutions, raised a $190 million Series C led by Bain Capital, with participation from Accel and Adelphi Capital Partners, among others.
⁃ Bitterroot Bio, a developer of immunotherapies for cardiovascular disease, raised a $145 million Series A co-led by Arch Venture Partners and Deerfield Management.
⁃ Upstream Bio raised $200 million in a Series B round led by Enavate and Venrock, alongside Bain Capital Life Sciences, Wellington, OrbiMed, and Samsara, among others.
⁃ Alkeus Pharmaceuticals raised a $150 million Series B led by Bain Capital Life Sciences, alongside TCGX, Wellington, and Sofinnova. The biotech is developing a gene therapy to cure a form of blindness.
⁃ The Jordan Co. is targeting $5.5 billion for a sixth flagship buyout fund.
⁃ Archimed raised €3.5 billion for its most recent fund.
⁃ HPS Investment Partners raised $7.3 billion for a second senior direct-lending fund.
⁃ BlackRock is seeking $7 billion for a fourth renewable power fund.
⁃ Just Climate, a unit of Generation Investment Management, raised $1.5 billion for a debut fund focused on net-zero initiatives.
⁃ NOVA Infrastructure is in the market for a $1 billion second middle market infrastructure fund.
⁃ Industry Ventures is seeking $1 billion for a VC secondaries fund.
⁃ Antler raised $285 million for an inaugural growth fund.
⁃ Julius Baer is looking to raise $250 million from clients for a new private equity fund.
⁃ Nexa Equity raised $180 million for its debut fund and $150 million for co-investment, both focused on software and fintech deals.
⁃ IQ Capital raised $200 million for its latest technology-focused fund.
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📜 Bullpen Reading Roundup
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Crispin Odey is out at his namesake hedge fund Odey Asset Management. It took more than two decades, but a deep history of sexual misconduct finally caught up to the investor.
Earlier this week, just prior to his dismissal, the FT penned a feature examining Odey’s unpredictable fund performance and very predictable treatment of women in the workplace. (Check it out: FT)
More beef at private credit firm Blue Owl, launched in 2021 following the merger of Owl Rock and Dyal. Executives from each side can’t make it work in yet another case of inflated finance egos. From here, the two most likely outcomes are a toxic management team or an undesired senior leadership exit. (Check it out: Semafor)
This week, the S.E.C. sued Binance in federal court, accusing the crypto firm of mishandling client funds, lying to regulators and investors, and engaging in manipulative trading practices. (Check it out: NYT)
If you’ve already hunted down all the deals for 10-cent Bud Light cans, it might be time to check in on some better-tasting beer news.
This week, Bloomberg took a look at the hottest new trend in brewing. IPA-fatigue has prompted craft brewers to switch their focus to a simple classic: perfecting the American lager. (Check it out: BBG)
Thanks for reading, catch you guys next week.
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