Livingbridge sees North America growth for Quorum Cyber

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A quick news search shows that cyberattacks are becoming ever more frequent – so the cybersecurity industry is in tandem becoming ever more valuable.

That’s our opening theme of the day, as Livingbridge partner Matthew Jacobs tells us why his firm decided to remain invested in cybersecurity company Quorum Cyber after selling its majority stake in the business to Charlesbank Capital Partners in June.

Next, Peel Hunt head of M&A Michael Nicholson talks to us about why private equity is buying fewer public UK companies than last year, despite an overall pickup in takeovers.

One of the reasons for that dovetails nicely into the final section of the newsletter, where we feature some big private M&A deals hot off the press, including BlackRock agreeing to buy private markets data provider Preqin, Providence Equity Partners selling part of its stake in K-12 education company Globeducate to Wendel, Mutares signing its biggest deal of the year with construction contractor Serneke Sverige and Partners Group taking a majority stake in FairJourney Biologics from GHO Capital Partners.

American push Livingbridge sees a big opportunity for growth in North America for Quorum Cyber in a continuously evolving cyber-threat landscape that even affects private equity portfolio companies, partner Matthew Jacobs told PE Hub Europe’s Nina Lindholm.

The private equity firm made a partial exit from cybersecurity company Quorum Cyber to Charlesbank Capital Partners in June. Livingbridge initially invested in Quorum Cyber in 2022.

“The rationale behind the partial exit was to find someone that could really help Quorum Cyber to capitalise on the opportunity to expand in the US,” said Jacobs of the Edinburgh-headquartered company. “I think Charlesbank can really push them to that next stage. That’s why we reinvested – we very much still believe in the future of the business.”

Livingbridge has a presence in the US via its Boston office, but it is headquartered in London, with another UK office in Manchester and a team in Melbourne, Australia. Charlesbank, which is making a growth investment in Quorum Cyber, has offices in Boston and New York and its funds invest primarily in North America.

Quorum Cyber’s growth has so far all been organic. The need for specialised cybersecurity services providers has aided in that growth. “It’s a continuously evolving landscape,” said Jacobs. “We’ve even seen private equity portfolio companies in the lower mid-market and mid-market being impacted by cyber threats, leading to inability to trade, which impacts the enterprise value of these businesses.”

Check out the full interview for more on Livingbridge’s view on the wider cybersecurity industry.

Mixed report The UK takeover market is normalising but private equity activity “has been limited” in buying public companies since the start of the year, according to a new report from investment bank Peel Hunt.

There have been 30 firm offers and average deal size has doubled in value to £1.05 billion ($1.33 billion; €1.24 billion), according to the report, with average premiums up to 40 to 60 percent as targets win some pricing power.

That might be pricing out private equity, however, Peel Hunt head of M&A Michael Nicholson told PE Hub Europe.

“PE firms continue to look at public markets for investment opportunities,” he said. “However, with trade buyers more active, alongside building confidence amongst boards and shareholders, we have seen PE firms fail to meet pricing expectations more often. As private M&A markets re-open, the absolute focus on public markets may also start to ease.”

In the first half of this year, private equity was behind 27 percent of firm offers, compared to 53 percent in the second half of 2023 and 41 percent in the first half of 2023.

The report said that the normalisation of the M&A market was down to a series of factors, including the prospect of a stable UK government with a large majority after this week’s general election and improving macroeconomic conditions such as falling interest rates.

Big deals It certainly looks like Peel Hunt’s Nicholson is right about things opening up in private M&A markets, with some chunky deals to report this morning.

BlackRock has agreed to acquire Preqin, an independent private markets data provider, for £2.55 billion ($3.2 billion; €3 billion) in cash.

London-based Preqin is expected to generate around $240 million of recurring revenue in 2024 and has grown around 20 percent per year in the last three years.

Providence Equity Partners has agreed to divest part of its stake in Globeducate, an international K-12 education group, to investment firm Wendel. Wendel is paying €625 million to take a roughly 50 percent stake in the company’s capital based on an enterprise value of around €2 billion. Providence will be left with a roughly 50 percent stake.

Spain-based Globeducate provides K-12 education through a network of 65 premium bilingual and international schools, as well as online programmes, across 11 countries mostly in Europe. It employs over 6,000 people.

Mutares has agreed to acquire Serneke Sverige, a general contractor focusing on the construction of service and infrastructure properties, residential properties and commercial properties, from Serneke Group.

Serneke Sverige has over 200 active projects and offers its services throughout Sweden. Its clients primarily consist of public agencies, municipalities and large private corporations.

With revenues of €700 million in 2023, Serneke Sverige is Mutares’ largest acquisition this year.

Partners Group has agreed to acquire a majority stake in FairJourney Biologics, an antibody discovery contract research organisation, from GHO Capital Partners.

Porto, Portugal-based FairJourney provides services for the discovery, engineering, production and characterisation of antibodies. It has worked with over 250 clients across the globe to develop more than 4,000 unique screening libraries for identifying antibodies. The partnerships have yielded 14 therapies that are in active clinical development to treat unmet patient needs across oncology, immunology, and cardiovascular disease.

GHO Capital, which first bought into FairJourney in 2020, will reinvest. FairJourney’s revenue has grown more than 5x since 2019, according to a GHO statement.

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