Wealthy Families Fuel $20bn Private Equity Buyout Wave

Jun 8, 2024 | News

Ultra-rich individuals and families worth more than $150bn are helping drive a resurgence in private equity buyouts, providing capital for some of the year’s biggest acquisitions to overcome a tough dealmaking environment.

Wealthy clans that built their fortunes in industries from children’s toys to household boilers have been co-investors on nearly $20 billion of listed company takeovers this year, according to data compiled by Bloomberg. They’ve made a mark on Wall Street as go-to sources of capital for investment firms like KKR & Co. and Silver Lake, helping them get acquisitions over the line at a time when borrowed money remains expensive.

Germany’s Viessmann family, flush with cash after a major divestment, teamed up with KKR for its $3 billion acquisition of renewable energy firm Encavis AG announced in March. The century-old dynasty has an estimated net worth of $13.7 billion after completing the sale of their heating and cooling business to Carrier Global Corp. in January, according to the Bloomberg Billionaires Index.

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Meanwhile, Michael Dell’s family office partnered with Silver Lake on the biggest private equity buyout this year, a $13 billion deal for talent agency Endeavor Group Holdings Inc.

Goldman Sachs Asset Management closed its purchase of Norwegian e-learning platform Kahoot! ASA in January with funding from Denmark’s Kirk Kristiansen dynasty, the owners of Lego Group. In April, Morgan Stanley’s infrastructure arm agreed to buy Milan-listed construction firm Salcef Group SpA with the Salciccia family, who have controlled it for decades.

Direct Investments

Many pension funds and endowments have hit the limit for how much they can allocate to private equity, leaving buyout firms to turn to increasingly sophisticated wealthy families or sovereign funds. Roping in a co-investor allows private equity firms to reduce the money they front themselves for a deal, a welcome prospect at a time when high borrowing costs are crimping the amount of leverage they can use.

The shift is catching the eye of major investment banks. Darren Allaway, a London-based managing director in Goldman Sachs Group Inc.’s family office unit, said he’s spent more time engaging with private equity investors within the past year than in his entire finance career of more than two decades.

 

Source: Yahoo Finance

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