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Antoine Dréan, chairman of private-equity advisory firm Triago, has published his 10 “outrageous” predictions for 2020. He has over 25 years of experience in the industry and sits on the Executive Board for Europe, the Middle East and Africa of the University of Pennsylvania’s Wharton School.
Dréan said that the predictions seek to amuse through exaggeration. However, he said that because they play on actual trends, there is “a remote possibility that some may actually come true…”
Here, MarketWatch has picked out five of those predictions, which range from fundraising to potential takeover targets.
Blackstone Raises $25 Billion in a Month
In March, the U.S. Securities and Exchange Commission (SEC) scraps net-worth restrictions on investing in private placements with new regulations centered on the idea that anyone advised by a professional broker is an accredited investor.
Having prepared for this eventuality since the SEC began seeking comment on broadening accessibility to private placements last June, Blackstone BX, +0.21%, the largest private-equity fund manager in the world with $554 billion under management, unveils a pooled vehicle for channeling individual investor capital into its private-equity funds.
Dubbed Blackstone Main Street, the fund is promoted by a $40 million marketing campaign and raises some $25 billion in its first month.
Charles Schwab Purchases KKR
In April, reacting to the success of Blackstone Main Street, listed discount brokerage Charles Schwab Corporation SCHW, -1.24% ($61.3 billion in market capitalization) joins the top-tier of private-equity managers in one fell swoop, announcing the $26.4 billion acquisition of listed private-equity giant KKR KKR, +0.82% ($208 billion in assets under management).
The purchase, made with a mix of cash and stock, represents a 60% premium to the private-equity firm’s market capitalization. KKR presidents Joe Bae and Scott Nuttall step up as co-chief executives of Schwab’s new private-equity unit, replacing KKR’s retiring septuagenarian co-founders, Henry Kravis and George R. Roberts.
The move sparks a merger and acquisition frenzy, as major asset managers, bulge-bracket brokerages and large banks compete to buy up private-equity managers.
British Companies Barclays, Prudential and Tesco are Taken Private
Surpassing the three largest private-equity deals of all time (TXU — $32.1 billion; First Data — $25.7 billion; and RJR Nabisco — $25.1 billion), banking group Barclays BARC, -0.85%, insurer Prudential PRU, +0.32% and supermarket chain Tesco TSCO, -1.33% —three of Britain’s 11 largest companies in terms of revenues—are taken private in three separate deals by global private-equity firms allied with some of their biggest limited partners.
As the clock ticks down to the December 31 expiration of the Brexit standstill transition period, shareholders opt for double-digit cash premiums rather than weather the uncertainty of Britain’s divorce from the European Union.
SoftBank Raises $150 Billion for Vision Fund II, 40% Funded by China
In November, following the August signing of the phase two U.S.-China trade agreement (ending the first major tariff war between the U.S. and China), SoftBank Vision Fund founder, Masayoshi Son announces the $150 billion closing of Vision Fund II, handily exceeding the $100 billion record notched by the first iteration in this venture capital fund series.
Some $60 billion, or 40% of Vision II’s capitalization, comes from state-connected entities in China. Son says that Vision II will invest four-fifths of its capital in Asian companies, emphasizing firms with exposure to China’s consumer market.
Warren Buffett’s Berkshire Hathaway Launches a Private-Equity Division
As consolidation sweeps the private-equity industry (see above) and price/earnings ratios rise in the public markets, 89-year-old investing legend Warren Buffett, chairman and chief executive of multinational conglomerate Berkshire Hathaway BRK.A, +0.54%, and a longtime critic of buyouts, launches a private-equity unit focused on what he calls “smallish, overlooked investment opportunities.”
With an annual spending target of $4 billion, Berkshire Hathaway’s private-equity division will invest in companies in highly specialized sectors where a lack of competitive bidding results in highly attractive valuations.
To the frustration of virtually all investors (except his own), Buffet won’t reveal what sectors the new division is zeroing in on. “If we did, there wouldn’t be any bargains,” he says.
Here are Dréan’s other predictions:
Listed Private-Equity Firms More Than Double
The Canadian Pension Plan Investment Board Launches a 50-Year Fund
Secondary Volume Hits $250 Billion
General Partner-Led Secondary Volume Surpasses Volume for Traditional Limited Partner Stakes
BlackRock Launches an Artificial Intelligence Megafund With Record Low Fees
