Investments Archives

Markross121_ May 22, 2019 No Comments

Scots packaging firm Macfarlane expands in England

Glasgow-based packaging firm Macfarlane Group has expanded in England with a new acquisition.

Macfarlane, which is the UK’s biggest protective packaging distributor, bought Buckinghamshire-based Ecopac (UK) Ltd in a deal worth up to £3.9m.

Ecopac generated sales of £6m and pre-tax profits of £500,000 in the year ended 31 March 2018.

It focuses on customers based near its 60,000 sq ft facilities near Aylesbury.

Macfarlane said Ecopac was a profitable packaging business that would be earnings-enhancing in its first full year in the group.

Ecopac is the latest in a series of acquisitions by Macfarlane within the past two years.

In September 2017, it bought two Nottingham firms in a deal worth up to £16.75m. It later bought Leicester-based Tyler Packaging and Harrisons Packaging, based in Lancashire.

Macfarlane recently reported a ninth year of successive growth.

Sales were £217m in in 2018, up from £196m the year before. Pre-tax profits were at £11.2m – 20% ahead of 2017.

Cruise hits $19B valuation as corporate VCs rev up self-driving buzz

Autonomous car company Cruise announced Tuesday that it has secured a $1.15 billion equity investment from a group of investors including its parent company, GM, as well as T. Rowe Price, Honda and SoftBank’s Vision Fund. The deal brings Cruise’s valuation to $19 billion.

The Bay Area business plans to launch a commercial robotaxi service by the end of this year, and to hit that milestone, it is looking to double in size by hiring about 1,000 employees during the year, according to Reuters. “Developing and deploying self-driving vehicles at massive scale is the engineering challenge of our generation,” Cruise CEO Dan Ammann said in a statement.

The company revealed that it has secured capital commitments of $7.25 billion in the past year. That includes $2.25 billion from SoftBank’s Vision Fund last year, with the fund planning to contribute $900 million in the first tranche and another $1.35 billion when Cruise’s autonomous vehicles are ready for commercial use. Honda also contributed, announcing a $2.75 billion investment in October. The Japanese automaker planned to make a direct equity investment of $750 million at the time and the remaining $2 billion coming over 12 years.

There was an explosion in corporate VC activity overall in 2018, and the trend continues this year. During 1Q, “autonomous driving companies raised $2.3 billion in deals including CVC investors with technology parent companies, such as Amazon and Intel Capital, as well as CVCs with automotive parent companies, such as Toyota AI Ventures and BMW i Ventures,” according to the latest PitchBook-NVCA Venture Monitor report. The autonomous-driving industry is expected to attract CVC investment in coming quarters due to high demand from automotive original equipment manufacturers for technology partnerships and additional investment opportunities in self-driving businesses.

Last year saw record-breaking traditional and corporate VC investments in companies developing autonomous cars in the US, as the total capital investment peaked at $3.8 billion across 68 deals. The second quarter of 2019 is well underway and autonomous businesses have secured $1.8 billion across 13 deals in the US.

9 big things: Unicorn stocks are spiking after IPOs

Like so many of the VC-backed unicorns going public these days, vegan protein specialist Beyond Meat has never made a profit.

But the past two days were highly, insanely, ludicrously profitable for the company’s backers, as stock in Beyond Meat shot up nearly 200% from its IPO price and investors swarmed in pursuit of a piece of that sweet, sweet meatless meat. That sort of spike is rare. But it also aligns with the post-IPO performance of the rest of 2019’s unicorn herd.

So far this year, when unicorns go public, they tend to get more valuable—and that’s one of nine things you need to know from the past week:

1. To infinity for Beyond

The first hints that something might be brewing emerged earlier in the week, when Beyond Meat elevated its original IPO price range. The company priced at $25 per share, at the top of its revised range. And then everything went crazy: Stock in Beyond Meat (NASDAQ: BYND) opened Thursday trading at $46 per share, closed at $65.75, and then inched up even higher on Friday, finishing the week at $66.79. That equates to a market cap of $3.8 billion, compared to a $1.5 billion IPO valuation and a $1.35 billion figure with its last round of VC.
There’s probably nobody happier about it all than the folks at Kleiner Perkins: The firm owned a 15.9% pre-IPO stake in Beyond Meat, holding shares now worth well over $500 million.

Recent weeks, of course, have been peppered with unicorn IPOs. For the most part, once these companies have gone public, they’ve been out of mind; the main exception might be Lyft, whose slipping stock price has caused cries of concern about Uber’s eventual fate. But for the rest of the cohort, the move to the public markets has been accompanied with steadily rising stock prices.

IT software provider PagerDuty went public on April 11 with an IPO price of $24 per share, valuing the company at $1.8 billion. Its stock shot up nearly 60% on its first day of trading, closing at $38.25 per share, and has continued to tick up in the weeks since. Shares in the company closed Friday at $46.52 per piece, for a market cap of $3.4 billion, compared to $1.3 billion with its last VC round.

Social media unicorn Pinterest debuted a week later, pricing its IPO at $19 per share—above its expected range—to establish a $10 billion valuation, notably less than its prior $12.3 billion VC-backed valuation. But Pinterest stock closed its first day trading up at $24.40 per share, and it closed Friday at $28.36, for a market cap of about $15 billion.

The prime example of the trend might be Zoom, which joined Pinterest in going public on April 18. After pricing above its anticipated range at $36 per share, the company’s stock zoomed (sorry) to $62 by the end of its first day, representing a valuation increase from $9.2 billion to nearly $16 billion in mere hours. Zoom’s stock closed Friday at $79.18, valuing the workplace video company at almost $20 billion.

The performance of these stocks and the rest of the unicorns on their way to the public markets will of course be worth monitoring in the weeks, months and years to come. The early results, though, must have some of the longtime investors in those unicorns asking: What took you so long?

2. A new Vision

There could be an unusual new entrant in the sprint to the public markets: SoftBank’s Vision Fund. The Japanese investor might conduct an IPO for the $100 billion vehicle sometime this year, per The Wall Street Journal, among additional plans to raise an equally enormous follow-up fund; the hope of chief executive Masayoshi Son is reportedly to turn the vehicle into a tech-focused (and unprofitable) analog to Berkshire Hathaway. One of SoftBank’s major portfolio companies could also soon go public, as WeWork announced this week that it confidentially filed for an IPO back in December.

3. Making it easy

That’s the goal of UiPath, a startup focused on automating workplace functions that raised $568 million this week at a $7.1 billion valuation, a huge step-up from a $3 billion valuation just six months ago. Making cross-border payments easy is what helped London’s Checkout.com bring in an enormous Series A this week, collecting $230 million at a reported $2 billion valuation. Other kinds of payments are the domain of Divvy, which banked $200 million at an $800 million valuation this week: The company makes software designed to replace expense reports.

4. Fight club

The Professional Fighters League pinned down a $30 million Series C this week to fund its unique mixed martial arts competition, with Elysian Park Ventures and Swan Ventures among the backers. And while Sumo Logic doesn’t have anything to do with actual sumo wrestling, PitchBook learned that the data analytics company is raising new cash at what would be a unicorn valuation.

Brewery openings stall as multinationals move in

A boom in new brewery sites has slowed down dramatically in the last 12 months as multinational firms muscle in on the growing demand for craft beer.

Growing competition from large businesses has hindered smaller brewers from setting up new outlets, causing the growth in openings to hit a five-year low.

The total number of breweries increased by just eight in 2018, marking a sharp slowdown from 390 openings in the previous year.

According to accountancy firm UHY Hacker Young, which produced the data, the craft beer market has become difficult for new entrants as “multinational brewers continue to buy and invest the more successful craft breweries.”

Among the high profile mergers and acquisitions involving multinational businesses in the craft beer sector is the Fullers deal for Dark Star, a craft beer business in West Sussex, and Heineken’s acquisition of stakes in Beavertown Brewery, Lagunitas and Brixton Brewery.”We’re not saying that the market is shrinking just the number of players is consolidating and sales growth is going to be harder to come buy,” said James Simmonds, partner at UHY Hacker Young.

He added: “Craft breweries need to ensure their business model is s sustainable and profitable at an earlier stage and not just rely on the idea they’ll constantly be able to grow their way out of trouble.”

The total number of UK breweries reached 2,274 at the end of 2018, rising from 1,352 five years ago.

Debenhams on the brink as it rejects £150m Mike Ashley rescue deal

Debenhams is on the brink of falling into the hands of its lenders in a move that will wipe out shareholders after the company and its financial backers rejected a £150m cash injection from Mike Ashley’s Sports Direct.

A pre-pack administration deal is expected to be announced on Tuesday morning that would affect Debenhams’ holding company only, meaning its 165 stores would continue to trade. However, shareholders’ stakes will be rendered worthless, including Sports Direct’s near 30% stake, which cost about £150m to build up.

The retailer’s banks and bondholders also want Debenhams to close about 50 stores via an insolvency process known as a company voluntary arrangement, which is likely to follow within weeks. Landlords will hold a vote on whether to approve the deal, expected to involve stores closing after Christmas and putting thousands of jobs at risk.

Sports Direct said Debenhams had turned down its offer of a £150m rescue package, in the form of a fully underwritten rights issue, in a deal it hoped would keep the company in the hands of shareholders. In a stock market announcement on Monday afternoon after that deal was rejected, Ashley’s retail group said it was still considering making a fully funded takeover bid instead, but no offer had emerged by a 5pm deadline.

With the deadline missed, the most likely outcome for the chain, which has 165 stores and employs 25,000 people, is that lenders will take control of Debenhams. They have lined up administrators to organise a pre-arranged deal under which Debenhams’ listed holding company will go into administration. The group’s operating companies, which run its stores, will then be sold to a new entity controlled by the lenders in return for reducing the group’s £640m debt pile.

Dr Pepper Snapple merges with Keurig Green Mountain

US soft drink maker Dr Pepper Snapple is to merge with coffee company Keurig Green Mountain to form Keurig Dr Pepper.

The new beverage giant will bring together well-known brands such as Dr Pepper, Orangina, Schweppes and Sunkist with Green Mountain Coffee Roasters.

Keurig Dr Pepper will have a combined annual revenue of $11bn (£7.8bn).

Under the terms of the agreement, Dr Pepper Snapple shareholders will retain 13% of the combined company.

Dr Pepper Snapple shareholders will also receive $103.75 per share in a special cash dividend.

The firms said that the merger would enable Keurig Dr Pepper to have “unrivalled distribution capability to reach virtually every point-of-sale in North America”.

Sushi chain Wasabi fishes for new funding

The Japanese food chain Wasabi is in talks to sell a stake for the first time in its 16-year history.

New funding will act as a vital growth engine for the sushi and bento seller’s parent company, which manages the outlets along with a handful of Kimchee outlets and an Asian-inspired bakery in Cambridge.

The investment comes amid questions over Wasabi’s finances. Companies House recently issued a notice to strike the company off the register after it missed last year’s deadline to file its accounts.

UK digital advertising spend to grow to £15bn in 2019

Spending on digital advertising in the UK is set to grow to more than £15bn this year amid a boom in new digital marketing technology, a new report has revealed.

Digital ad spend will enjoy double-digit growth in 2019 as the industry moves away from traditional media forms, according to the latest forecasts by Barclays Corporate Banking.

The optimistic figures come amid an ongoing shift to digital in the sector, with out-of-home (OHH) advertising earmarked as a key area for transformation after digital OOH surpassed traditional outdoor for the first time last year.

Agencies have been grappling with disruption in the industry, with ad giant WPP undergoing a radical transformation plan in a bid to simplify its complex structure.

Despite concerns about sweeping changes across the industry, the report stated optimism remains high, while appetite for mergers and acquisitions remains buoyant.

Sean Duffy, head of TMT at Barclays Corporate Banking, said: “It feels like adtech is slightly pushed to the sidelines, which is a mistake as it is transforming advertising and can be another real growth engine for the UK economy.

“Adtech is already helping UK businesses compete on the global stage and will continue to allow brands to market themselves more effectively as further technology advances are harnessed.”

River Island family takes control of Mint Velvet in £100m deal

Lewis family says investment reflects high confidence in the business, brand and people.

The family behind the River Island clothing chain has taken control of Mint Velvet, the fashion label founded by three former Principles executives, in a deal understood to value the company in excess of £100m.

The co-founders Peter Davies, Liz Houghton and Lisa Agar-Rea will share a multimillion-pound payout from the deal with the Lewis Trust Group (LTG).

It is a second fashion fortune for Davies, who previously rescued and sold Principles and Warehouse, making nearly £40m in three years.

LTG, which also owns stakes in the Everyman cinema chain and the San Francisco-based fast fashion label Dolls Kill, first bought a stake in Mint Velvet in 2015. It is understood to have exercised an option to take control of the company last week.

Mint Velvet, which specialises in “relaxed glamour” for the over 30s, was started from Houghton’s kitchen table in 2009 and launched with concessions in House of Fraser.

Advent eyes $1B fund as PE continues its push into tech

Advent International has launched its first tech-focused vehicle with a target of $1 billion, according to Buyouts, becoming the latest major private equity firm to indicate an increasing appetite for tech deals.

The news comes about seven weeks after Bryan Taylor joined Advent as a managing partner and leader of the firm’s tech investment team. Taylor’s hiring coincided with the opening of a new office in the Bay Area, part of what an Advent press release at the time described as the firm “deepening its commitment to the technology sector.” Most recently, Taylor was the co-head of the tech group at TPG Capital, where he helped lead a team of 20; Advent’s tech group currently has more than a dozen employees across North America and Europe.

Reports of the debut tech vehicle also come as Advent is in the midst of another major fundraising effort. Public LP documents from earlier this month showed the firm has begun gathering commitments for its ninth flagship buyout fund, which reports from last autumn indicated could target at least $13 billion. That would equal the sum Advent raised for its prior flagship fund, which hit a $13 billion hard cap in 2016.

Earlier this week, another private equity investor formed a new fund focused on the tech space, albeit a very specific slice of it: Caisse de dépôt et placement du Québec unveiled its CDPQ-AI Fund, a $250 million pool that will be put to use backing companies from Québec with “a proven track record in artificial intelligence.”

Across the entire private equity landscape, firms are raising more cash for tech investments. At the end of January, buyout giant The Carlyle Group closed its latest European tech fund—which will also be deployed in the US—on €1.35 billion (about $1.5 billion), a serious increase from a 2015 predecessor that brought in €656.5 million. Carlyle’s close came a mere two days after Thoma Bravo, a longtime specialist in the tech space, wrapped up a $12.6 billion mega-fund, one of the largest vehicles ever that will mainly target tech companies.

In each of the past four years, there has been an increase in the percentage of overall PE investments in the US and Europe taking place in the IT space. During 2019, though, the numbers are full-on booming. More than 22% of completed deals so far this year have been in IT, per the PitchBook Platform, a major jump from last year’s 18% rate and a whole different universe from the 13% clip logged as recently as 2015. For years, the B2C space ranked second only to B2B in drawing the most PE deals; now, it seems IT has clearly overtaken B2C as the No. 2 choice.

And while Advent may be among those contributing to that change, tech deals are far from the Boston-based firm’s only focus. In March alone, Advent has been linked to a dizzying array of potential billion-dollar deals. The firm agreed to buy German chemicals company Evonik for €3 billion, while a potential €1.8 billion buyout of Italian debt provider Cerved fell apart after news of ongoing negotiations leaked to the press. Advent has also been among a host of firms named as possible buyers in a handful of very expensive auctions, including ongoing sale processes for Bayer‘s animal health unit, the skin health unit of Nestlé, and Kantar, a data analysis business owned by WPP.

08:00 – 18:00

+ 44 800 044 8128

Head Office,