DWS has said dealflow in its “mid-life, mid-market” segment increased by 3x over the past six months.
The London-headquartered group has completed eight deals with a ninth set to close imminently, global head of private equity Mark McDonald told Secondaries Investor. Two transactions have completed since the onset of the covid-19 crisis with “several” others sourced during that time now in the late stages of due diligence.
“GPs are looking for ways to do more with their better-performing assets,” McDonald said.
Secondaries Investor reported in September last year that DWS had raised more than $200 million for Private Equity Solutions SCSP out of a target of $500 million. State of Wisconsin Investment Board is an anchor investor in the fund.
In late November, DWS led a “significant growth investment” in DataLink Software, a portfolio company managed by Revelstoke Capital Partners. The deal is symbolic of DWS’s strategy, said head of Americas Kumber Husain.
Revelstoke, which had the chance to sell the business to a strategic buyer, believed there was greater return potential in holding onto it, according to Husain. DWS led a group that took a minority stake in DataLink, providing partial liquidity to Revelstoke while allowing it to keep the asset.
DWS targets portfolio companies that have typically been held for two-to-four years. The young age of the assets means the economics do not generally have to be reset, making the creation of a continuation vehicle unnecessary, Husain said.
Unlike buyout firms that acquire minority stakes in portfolio companies, DWS does not try to assert “meaningful control or influence” and instead acts more like a secondary limited partner, according to Husain.
“It’s an attractive and clean alternative to single-asset secondaries deals, full-blown restructurings, or a partial sale to a direct competitor,” he said.