Corporate deal round-up H1 2023
If you’d believed the fortune-tellers in January 2023, our half year deal roundup would probably have been as bleak as the UK’s Eurovision results. Across the market, transactional lawyers were braced for the combined effects of inflation, supply chain disruption, rising costs and reduced public market activity to bite. In practice, while we certainly felt the impact of all of these things, the Corporate team at Charles Russell Speechlys was kept busy on a wide range of mandates (the party line you’ll see on every law firm website!), all driven by very different strategic goals, but united by a desire to “keep things moving”, and to adapt to this new environment.
In this update, I wanted to look a little more closely at some of this work, particularly across technology, private equity and real estate, though we also saw a range of interesting mandates across the private wealth, financial services, and consumer sectors. To get more details on any of the deals referenced below, please do click through the links to relevant press releases or, for a full deal sheet, please click here.
The disappointing stock performance of technology companies across the market was a well-documented theme in 2022, and analyst predictions were somewhat gloomier heading into the start of 2023. Our team nevertheless acted for a range of public companies including the AIM-listed cloud-based platform 7digital Group plc on its £19.4 million acquisition by Songtradr. Activity in the wider technology sector has also been high, with tech companies continuing to receive strong valuations (chipmaker Nvidia was valued at $1tn just this May, for example), outperforming many other sectors. This has been driven in part by increased appetite from private equity sponsors to engage in take-private transactions at the top end of the market, and we have seen that translate into increased appetite for mid-market private M&A deals too. In the first half of the year, our Tech M&A team was active on several mandates for private companies including on the sale of leading Salesforce consultancy Pracedo Ltd to Collabera Digital. Our group also continued its work for a number of regular clients pursuing buy-and-build strategies, including a fifth bolt-on acquisition for IT managed services provider Acora on its acquisition of Computer Service Centre Ltd. The end of H1 then saw members of the team advising on the equity elements of a $250+ million financing round for leading fintech platform M-KOPA; one of the largest fundraisings by an African technology start-up, and the highest ever for a Kenyan start-up. Given these high activity levels in the first six months of the year, which outperformed our own expectations, the feeling for the second half of 2023 is correspondingly more positive. We expect to see large amounts of capital, both private and public, deployed across the sector and are anticipating deal activity to increase as a result.
Private Equity / Venture Capital
At the start of the year, with inflation and rising rates seemingly putting an end to the extraordinary post-Covid surge in dealmaking, we did not foresee having a dedicated section for private equity in this update. Much was made of the 61% decline in aggregate transaction value for private equity and venture capital investments in the UK in 2022 and the market was braced for a slowdown. Statistics like this however, failed to capture the resilience of mid-market sponsors, who in many cases had better access to capital, and were keenly focused on bolt-on acquisitions for facilitating entry into new markets for their portfolio companies. This bore out as our Private Equity team kicked off the year at pace, advising longstanding client Puma Private Equity on its investment into HR Duo, a platform designed to act as an alternative for companies without a dedicated HR department. Puma led the Series A funding round alongside original seed investors, to support HR Duo in driving its ambitious international expansion plans. Puma then called on our team again to support it in relation to its investment into IRIS Audio Technologies Limited, whose AI powered software removes background noise from calls. The funding round, which also included investment from existing shareholders, is currently providing valuable backing to IRIS as it expands its operations in North America. On a slightly separate but related matter, our team then advised composites manufacturer Hankuk Carbon on its investment into lightweight wheel manufacturer Dymag, that had itself previously received investment from Puma. On the portfolio side, activity also remained steady, with flurries of highly strategic acquisitions to help power international growth. Members of our team, for example, advised the UK subsidiary of Apax-backed Europe Snacks - Snacks International Development UK Limited - on its acquisition of luxury crisp manufacturer Burt Snacks Limited. The takeover has enabled Europe Snacks to accelerate its growth in the UK market, and we anticipate that we will continue to see mid-market sponsors, and their portfolio companies look to deploy similar strategies in the second half of the year.
With the real estate sector feeling the effects of inflationary pressure and supply chain disruptions more keenly than most, there was a fear that commercial real estate values would be particularly affected in 2023. This prospect did however mean that potential investors in the sector were keeping a close eye on the market, looking to secure assets at reduced rates. For our team, this period was characterised by a wide breadth of matters, including joint ventures, mergers, acquisitions, and one return of capital, for a variety of clients including developers, operators and advisors. To namecheck a few, in January our team successfully advised developer Countryside Partnerships on its £2.5billion joint venture with Warwickshire Property & Development Group to create 2,000 new homes. This was quickly followed with the completion in March of the acquisition by Lovett Care of three premium care homes from care home developer Angela Swift Developments. The advisory side of the sector also saw pockets of consolidation, and members of our Real Estate team were delighted to have acted for London based disruptive cost consultancy alinea on its merger with Turner & Townsend, now operating under the name Turner & Townsend alinea as one of the leading data-led cost consultancies in the City. There was also a good degree of public company activity and our Capital Markets team supported AIM-listed regional office investment company Circle Property plc on its first return of capital of £46.16million by way of issue and redemption of B shares. Having acted for Circle Property since its days a limited partnership, then as a Jersey property unit trust, and finally on its flotation on AIM in 2016, this matter really highlights the value that businesses can create for themselves by building deep and trusted relationships with their professional advisers (and indeed, vice-versa). We expect that a number of our longstanding clients will keep our team similarly occupied in the second half of 2023.