Silver Lake playbook attracts attention in Europe

One thing to start: Shareholders of British healthcare start-up Babylon they are bound to be swept away as the main lender of the company is ready to take control of the business.

In today’s newsletter

• The duel between Silver Lake and Bain

• SoftBank gives up on being the next Berkshire

• Adani goes on defense

The drama of Silver Lake and Bain Capital in Germany

Silver Lakethe US technology acquisition group that helped Michael Dell take his private PC company a decade ago, it is putting his business machine in motion after taking a cautious approach to the surge in tech valuations in recent years.

But the tactics of the nearly $100 billion investment group are under scrutiny as a takeover battle unfolds in Europe.

Silver Lake has offered 2.6 billion euros to buy Germany Software AG, a pioneer in the European tech sector that stagnated in public markets until its fledgling cloud computing business caught the attention of Wall Street. Now a rival offer from Bain Capital has unearthed criticisms of Silver Lake’s complex affair dance.

UK Asset Manager Schrödersa major shareholder of Software AG, he told the FT that Silver Lake’s offer “substantially undervalues ​​the company” and said Software AG’s reluctance to engage with Bain’s counteroffer could raise conflict-of-interest issues.

“[We] are surprised that the acquisition committee does not seem willing to engage with potentially higher bids from other interested parties,” Schroders said. “It could be seen as raising potential questions regarding conflicts of interest and whether a process is followed appropriate fiduciary to fairly protect the interests of minority shareholders”.

At the end of 2021, Silver Lake invested 344.3 million euros in the Darmstadt-based software company due to the failure of its sales process.

Christian Lukeco-head of the acquisition group’s European operations, he became president of Software AG and another Silver Lake designee joined its board.

Software AG’s share price continued to stagnate until Silver Lake offered 30 euros a share to take the company private last month. Increased the offer to €32 per share and negotiated a deal to buy a quarter of Software AG’s shares from its co-founder’s foundation Peter Schnell.

But Bain blocked the takeover by indicating it would pay up to 36 euros per share to merge Software AG with its portfolio company Rocket Internet. The effort was rejected by an independent committee of the Software AG board.

It is the second acquisition Silver Lake has led this year to buy a public company in which it has board representation. (Silver Lake’s designates were withdrawn from both negotiations.)

Silver Lake is completing a $12.5 billion acquisition of a US software company Qualtricsof which he held a major shareholding and co-CEO Egon Durban he is a director.

There will likely be new twists and turns, especially if Bain makes a firm offer or other shareholders complain. In Germany, interests such as “stakeholder value” can be seen alongside shareholder value, complicating matters.

After helping Michael Dell privatize his PC company in 2013 following a lawsuit from the billionaire Charles IcahnSilver Lake is very experienced in dealing with controversial acquisitions.

The group’s business finesse will become increasingly visible as it reignites the business machine and hunts down the next Qualtrics or Software AG.

SoftBank’s “Berkshire Hathaway” ambitions fade

When Softbanks first acquired control of Fortress Investment Group for 3.3 billion dollars in 2017, chief serial trader of the Japanese group Masayoshi son had a vision to create the “Berkshire Hataway of technology”.

The alternative investment manager would open the door into the lucrative worlds of private equity and hedge funds for the technology-focused conglomerate it had just paid $32 billion on UK chip designer Arm and it was busy finalizing a $100 billion partnership with the Crown Prince of Saudi Arabia.

More than six years later, however, Fortress’s investment intended to catalyze SoftBank into a private capital powerhouse has become a way to pay off its accumulated debts.

Earlier this week the FT revealed those months of negotiations to sell Fortress to the Abu Dhabi sovereign wealth fund Mubadala have reached an advanced stage. SoftBank also has moved to sell almost all of his holding in the crown jewel Alibaba.

The Chinese e-commerce giant’s shares had been hammered by Beijing’s crackdown on technology, leaving SoftBank to sell most of its stake at prices on par with those Alibaba opened trading in New York for eight years does.

SoftBank, as DD readers know, has also halted new investments and is also preparing for a Arm’s successful initial public offering in New York to help fuel its turnaround plan.

After posting a trailing loss of 970 billion yen ($7.2 billion) in consolidated results for the year through March, he has high hopes that the arm’s listing will hit a valuation of around $60 billion.

But valued at an industry multiple, it’s more likely $34 billion, from Lex’s calculations. Meanwhile, SoftBank’s other racehorse, its holding Tick ​​tock parent Byte Dance, it is at risk as a political battle over the app unfolds in the United States.

It begs the question of whether SoftBank’s “defensive mode” is strong enough to overcome the challenges ahead.

Adani pulls out of the deal in Hindenburg’s wake

After accusing Gautama Adani‘s stock price manipulation and accounting fraud conglomerate, short seller Hindenburg research has already launched another “Blitzkrieg”, as put by his latest goal Carl Icahn.

But the Indian tycoon and his empire are still doing damage control.

The billionaire’s flagship company Adani Enterprises it more than doubled its after-tax profit for the three months ended March to 7.8 billion rupees ($95 million) compared to the same period last year.

But it was also forced to hold off the deal after the Hindenburg report wiped $100 billion off the market capitalization of Adani companies.

The company, which denies Hindenburg’s allegations, withdrew from the purchase of an $847 million coal-fired power plant in India in February and has since refrained from making any new deals.

The path ahead poses challenges not only for Adani: while the regulator of the Indian market intends to investigate the conglomerate, the opponents of Narendra ModiThe government has exploited the prime minister’s allegedly close relationship with the industrial tycoon.

Chloe Cornish of the FT it has all the details. But we leave you with one last tidbit from his account: despite rejecting Hindenburg’s claims, Adani responded to one of his criticisms by substituting one of his reviewers, Shah Dhandharia.

The group “seems barely capable of doing complex audit work,” Hindenburg wrote in his report.

The work moves

• Black rock is reviewing the organization of its alternatives business, according to a memo seen by DD. Head of Global Credit Jim Keenan will be repositioned to focus exclusively on private credit while Rick Riderchief investment officer of its fixed income unit, he will oversee leveraged finance and other more liquid credit strategies. Edwin Conwaywho previously managed alts, will lead a new unit focused on private equity, infrastructure, real estate and climate investments.

• Black stonethe credit arm of took over Jane Bradshawpreviously Morgan Stanley‘S

  co-Head of Leveraged Debt Capital Markets, as Managing Director and European Head of Capital Markets in London.

• Separately Teddy Desloge was appointed chief financial officer of Blackstone’s Secured Loan Fund among other new appointments.

• Hatem DowidarCEO of UAE Telecom Group And&, it is joining Vodafoneafter that of the Abu Dhabi-listed supplier acquire of a nearly 15% stake in the UK operator.

• Luke Ellismanaging director of the largest listed hedge fund manager in the world Men’s group, is to retire and will be replaced by the president of the company Robyn is all grown up.

Smart readings

Smooth operators Giants of private credit they are getting more and more grip Secret under-the-radar deals to get more attractive terms on financing leveraged buyouts, Bloomberg reports.

The financiers take flight JPMorgan boss Jamie Dimon is a prolific corporate jet passenger. But his new colleague, the president of the First Republic Jim Herbert, runs close behindwrites Alphaville.

Admission Wars A downside for hedge fund managers and other elite Manhattanites flocking to Miami? There are not enough prep schools for their children, writes the FT’s Joshua Chaffin.

News review

FDIC to hit biggest US banks with $16 billion SVB clean-up bill (FT)

Blackstone in talks with US regional banks over lending partnerships (FT)

BBC magazine finds outgoing chairman Richard Sharp breached code of conduct (FT)

PacWest slumps after reporting a 9.5% decline in deposits last week (FT)

Saudi Aramco postpones mega IPO of Energy Trading Unit (Bloomberg)

Elliott increases interest in Goodyear, pushes for overhaul (Bloomberg)