As investors know, the food industry in America is an oversaturated market. Companies including grocery stores, fast casual restaurants, and online delivery services compete to win the dinner plate of Americans. With a plethora of dining options, cooking options, and delivery options, companies continuously try to innovate and offer more for less, which has made it incredibly difficult to profit in this industry. That is where innovation adds value. Over the years casual dining has been replaced by fast casual, “organic, healthy” foods have grown in popularity, and companies like Postmates, GrubHub, and app payment methods have made tech increasingly more prevalent in the food industry.
THE TWINKIE REVIVAL
Twinkies have just made their comeback. Gores Holdings, Inc. has just completed its acquisition of Hostess Brands LLC, the makers of Twinkies, Ding Dongs, Ho Hos and other staples of the American culture. This marks the first time Hostess has been publicly traded since 2012. Gores, which has since renamed itself Hostess Brands, Inc. in spirit with its acquisition of Hostess, reported third quarter results in net revenue growth of 24% to $196.2 million and adjusted EBITDA growth of 36.7% YOY to $55.6 million.
PRIVATE EQUITY IN CENTRAL AND EASTERN EUROPE
Ten years ago, private equity investors knew where the most secure investment opportunities existed. Countries like the United States and the United Kingdom provided stable governments, existing investment networks, and strong laws. Yet, in the past few years, we have seen private equity begin to migrate elsewhere. Yes, private equity investments have steadily increased in Southeast Asia and Africa, but one area of the world that remains relatively untapped is Central and Eastern Europe.
THOMA BRAVO ACQUIRES QLIK
Thoma Bravo recently made a market move in June in the tech space, purchasing a visual analytics company called Qlik Technologies. The purchase came after heavy pressure from activist hedge fund Elliot Management Corp. This is hardly their first play in software and technology; the private equity giant currently boasts a portfolio of 54 completed acquisitions in this field, which generates aggregate profits of $1 billion. Most recently, they’ve made headlines tripling Blue Coat’s EBITDA over three years and selling for $2.4 billion to Bain Capital in early 2015.
THE CRAFT BEER BUBBLE
Over the past couple years, the craft brewery industry has become a very attractive investment for private equity firms. For the beer industry, “2015 brought an unprecedented number of mergers, acquisitions and private-equity purchases.” (Nurin). You might have noticed the attention craft has received, more so than activity in the wine industry, and the growth in the number of breweries. The focus in craft investment, in particular, stems from the double digit growth it has seen over past six years, according to the Brewers Association. (Cohen).
CHINA’S GROWING INTEREST IN VC
BLACKSTONE’S REVIVAL OF INTEREST IN TEAM HEALTH
Team Health Holdings, Inc. (NYSE: TMH) has experienced a gigantic surge in market value after the Wall Street Journal published reports rumoring that both The Blackstone Group (NYSE:BX) and Bain Capital have expressed interest in buying out the company and restructuring, with a deal possibly materializing as early as this month. Team Health Holdings specializes in physician outsourcing services and has been seeking firms to take it private for a long while already after an unsuccessful IPO and shares on the market diluting its $1.6 billion purchase of IPC Healthcare.
PRIVATE EQUITY FIRMS IN THE ENERGY INDUSTRY
In the last decade, the United States saw a tremendous shale-drilling boom in which private equity firms were among the most aggressive financiers. Seeing great potential returns due to increasing production, many investors financed the shale boom, but did so with the price of $100 per barrel of oil in mind. In the long run, the shale boom produced market-flooding supplies of oil and gas and was a factor in oil prices crashing to $45 a barrel in 2014.
BIG DATA AND VC
As the world becomes more interconnected through advances in technology, the creation of new data is growing at 60 percent a year. This growth is driven by a dramatic increase in transactions and a flurry of new devices which create additional sources of data. This explosion of data makes the storage of the world’s data, and the ability to analyze it more and more difficult. Companies are looking for solutions to match the volume of data they collect on all aspects of their business, and they also need new tools to improve the speed at which they can process and analyze streams of data.
CAESARS ENTERTAINMENT: APOLLO’S GAMBLE
This past month, an agreement was finally reached between Apollo & TPG Capital—the two private equity firms that controlled a majority stake in Caesars Entertainment—and its largest creditors. This deal marked the end of what has been an extremely contentious and often ugly series of lawsuits and failed negotiations in a bizarre tale of a Wall Street players going head-to-head. The clear winners of the new agreement are second-lien bondholders including David Tepper’s Appaloosa Management and Oaktree Management, amongst others, which held just under $900 billion in bonds at one point.