The take-private market has cooled after a prolonged spree of deals across Europe but US investors have continued to pile cash into non-domestic assets, with Kirkland & Ellis, Latham & Watkins, Baker McKenzie and Simpson Thacher & Bartlett all commanding lead roles on multi-billion-dollar transactions with a tech flavour in recent weeks.
Blackstone’s proposed $3bn acquisition of a majority stake in MagicLab, the London-based dating and social networking app start-up, spelled instant attraction for transatlantic teams from Simpson Thacher and Bakers.
The majority shareholders of MagicLab, which owns and operates apps including Badoo, Bumble, Chappy and Lumen, were advised by a Bakers team led by London M&A partner David Scott (pictured) and including partners Leif King and Lawrence Lee in Palo Alto.
The Simpson Thacher team advising Blackstone was led by M&A partner Anthony Vernace in New York and included M&A partner Robert Langdon in Palo Alto and corporate partner Clare Gaskell in London.
The deal sees founder and chief executive Andrey Andreev sell his stake and step down from the business to be replaced by Whitney Wolfe Herd, the founder and chief executive of Bumble. Blackstone Growth – Blackstone’s new growth equity investing business – is behind the acquisition.
Scott told Legal Business: ‘Blackstone is taking a different approach from other PE investors here, in taking a majority stake in a profitable company with strong cash flows, rather than a minority stake in companies with a high cash burn, which is what we have seen in the recent Uber and Lyft investments, for example.’
‘Online dating is an exciting and fast-growing sector, and users tend to be on multiple platforms at the same time, so there’s lots to play for. MagicLab is a pioneer in the sector, with a very talented team and strong platforms, covering lots of different consumer angles. Bumble’s commitment to inclusion and female empowerment no doubt will have been attractive too,’ said Scott.
He added that Facebook has recently moved into the sector, so it is not just existing strategics and private equity players that are taking a close look. ‘It will be interesting to see where MagicLab goes under Blackstone’s direction – consumers are moving more and more towards privacy and personalisation, so an exciting and novel journey is no doubt ahead.’
Elsewhere, Latham cashed in on the booming payment processing systems market opposite Morrison & Foerster, in a deal that saw Visa acquire a minority stake in Nigerian fintech company Interswitch.
The Latham team was led by London corporate partners Kem Ihenacho and Linzi Thomas and included partners James Inness and payment expert Christian McDermott. A Morrison & Foerster team led by London corporate partner Andrew Boyd advised Visa on the deal, which is subject to regulatory approval.
Ihenacho is no stranger to such deals, having in 2017 been on the team advising Blackstone and CVC Capital Partners on their £2.9bn takeover bid for UK online payment company Paysafe. Speaking from Lagos, where Interswitch has its headquarters, he said that the deal stands out as it makes Interswitch one of the most valuable African fintech businesses with a valuation of over $1bn.
‘Over the last ten years, payments has moved from being just part of banking infrastructure to a sector that has attracted significant private equity and corporate interest across the globe. Sub-Saharan Africa is the fastest-growing digital payments market in the world, and so is attracting interest and investment from private equity and strategic investors like Visa,’ said Ihenacho.
CVC, Hellman and Friedman, Advent International and Bain Capital have all invested in the space. Other new entrants in the market at an earlier stage than Interswitch, including fellow Nigerian operators Paystack, Flutterwave and OPay, have attracted interest from venture capital investors and Silicon Valley.
In another example of US-based sponsors diversifying their reach outside of the US and buying into European deals, Vista Equity Partners acquired Accelya, the Barcelona-based provider of financial, commercial and analytics services to the airline and travel industry, from Warburg Pincus in a deal reportedly worth more than $1bn.
Kirkland won the mandate to advise Warburg Pincus with a team led by partners Adrian Maguire and Neel Sachdev. Meanwhile, Simpson Thacher acted for Vista Equity Partners with the team including London partner Derek Baird, as well as Gary Horowitz and Jakob Rendtorff out of New York.
Vista’s investment in Accelya is the first by the private equity firm’s permanent capital investment fund, Vista Equity Partners Perennial, which is focused on growing industry-leading, vertical software companies through long-term investments in product development.