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US investment firm Clayton, Dubilier & Rice has agreed to buy IT business Presidio from UK rival BC Partners, according to several people familiar with the details, in the latest sign that private equity dealmaking is starting to come back to life.
The investment, which values Presidio at around $4bn, comes after a significant slowdown in the past 18 months as the buyout industry, which relies on debt to acquire businesses, felt the effects of higher interest rates.
The quiet market has meant that private equity firms have accumulated record levels of undeployed money from investors — around $4tn by the end of 2023 — as well as a large backlog of unsold companies that they have been unable to sell or list on public markets.
New York-based Presidio provides IT services to some of the world’s largest companies, including Amazon, and government organisations.
The business says it helps securely process every tax return filed in the US and broadcasts presidential debates, among other things. According to its website, it has generated nearly $6bn in revenue and employs more than 3,500 people globally.
Presidio has long been a favourite with private equity firms. The company was bought by US buyout group American Securities in 2011 before Apollo agreed to acquire it in 2014.
Apollo went public with it in 2017, before BC Partners took it private again in a $2.1bn deal two years later.
Under BC Partners, Presidio has grown rapidly, including through the acquisitions of Irish IT business Arkphire and cloud technology company Coda.
The sale to CD&R is the latest exit for BC Partners, which has returned more than $7.5bn to investors over the past 12 months after reducing its stake in US pet company PetSmart and striking a deal to sell Italian bakery company Forno D’Asolo to a rival buyout group.
Investors are putting pressure on private equity firms to return cash after the value of companies sold or taken public last year fell 44 per cent last year to its lowest level in a decade.
The lack of money generated by their private equity investments has also made it difficult for investors to continue committing capital to the asset class.
But there are signs that the deal freeze is thawing. In March, private equity group Permira agreed to sell fund administrator Alter Domus to rival Cinven in a €4.9bn transaction.
The industry has also recently taken several large companies public, including dermatology business Galderma and fashion retailer Douglas.
CD&R, which owns UK supermarket chain Morrisons, raised $26bn for new deals last year. Since then, as well as agreeing to buy Presidio, it has made a series of large investments including buying snack company Shearer’s Foods.
CD&R and BC Partners declined to comment.