_{DEAL OF THE WEEK}

They See Me Rovin’

PE giant Blackstone has agreed to acquire Rover Group, the world’s largest online market for pet care for a whopping $2.3Bn. The all-cash purchase price is $11/share, which represents a 61% premium over the 90-day VWAP.

Since its founding, Rover’s more than 4 million pet owners have booked over 93 million services with more than 1 million pet care providers across North America and Europe.

Rover’s shares have had an interesting year to say the least. The 52-week low is $3.38/share, but recently shares have jumped up to $10.91/share (as of 12/5/23) following the announcement. Throughout the year, the shares have hovered closer to $7.00/share, so Blackstone is paying a healthy premium.

For further context, this deal implies a multiple of ~10× 2023E revenues (guidance of $230 - $232 million) or ~50× 2023E Adj. EBITDA (guidance of $46 - $48 million). Seems like the only people happier than the pets are Rover shareholders…

The deal does include a standard 30-day go-shop period, where Rover can go solicit and negotiate other offers. Given the valuation, it is unlikely that there are going to be any better bids, and the Rover board has acknowledged that.

The board has approved the acquisition and recommends that shareholders do the same following the end of the go-shop period on December 29, 2023. Once approved by shareholders, Rover will cease to be a publicly traded company.

_{PRESENTED BY MAG CAPITAL PARTNERS}

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_{EXIT OF THE WEEK}

Carlyle’s Golden Arches

US-based private equity “megafund” Carlyle is poised to earn a ~6.7x return from the sale of its minority stake in McDonalds’ Chinese operations… back to McDonalds. McDonalds has agreed to acquire Carlyle’s 28% stake in the Chinese operations for ~$1.8Bn.

Following the transaction, McDonalds’ total stake in the operation will increase to 48%. Chinese investor Citic holds the remaining 52%, which they acquired back in 2017 at the same time as Carlyle when McDonalds sold 80% of the business for $2.1Bn.

Carlyle’s six-bagger return is especially impressive given the recent challenges in China as many US funds look to reduce exposure to the region.

Carlyle has been looking to exit this stake since early 2023. The initial plan was to sell its stake to its larger LPs, namely several sovereign wealth funds like GIC who operate in Asia.

McDonalds’ Chinese operations more than doubled the number of restaurants during Carlyle’s tenure to 5,500 stores, while also increasing its delivery business, a significant driver of the increase in valuation.

_{IPO CORNER}

The Private Credit Boom Continues

While everyone is out here meme-ing the golden age of private credit, some investors are looking to capitalize on these returns. Namely, HPS Investment Partners is the latest in a slew of private credit funds to set its eyes on the public markets.

HPS initially filed its registration with the SEC confidentially about a year ago, but decided to not pursue an IPO given the weak market conditions; however, it has now engaged banking powerhouses Goldman Sachs and JP Morgan to go public at an ~$8Bn valuation.

Outside of HPS, there are two major publicly traded private credit funds - Ares and Blue Owl. Ares touts $395Bn in assets under management, Blue Owl comes in at ~$123Bn, and HPS will round out the list at around $100Bn.

Size isn’t everything in this bet though, HPS claims that its focus on trickier situations and more complex transactions give it a leg up over the other two.

The private credit space is tight, especially given how much competition there is from both lending shops like the aforementioned big 3 and the major PE houses, all of which also have credit funds, because of course they do. That being said, HPS funds have delivered some solid performance, which have allowed it to have continued success with fundraising.

While not a ton of information is public yet, we will keep our eyes on the prize and let you know how the IPO goes if it gets off the ground.

_{NEWS ROUNDUP}

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• Blackstone closes eighth real estate secondaries fund for $2.6Bn