Abu Dhabi’s Midas Touch Returns in $19 Billion Thyssenkrupp Deal

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(Bloomberg) -- Want to know who’s going to win that bidding war? Just find out who Abu Dhabi is backing.

Advent International and Cinven roped in the Abu Dhabi Investment Authority early on to join their bid for Thyssenkrupp AG’s crown jewel, its elevator unit. The German conglomerate announced Thursday that the private equity consortium had won the auction, beating out a rival group backed by Blackstone Group Inc. and Carlyle Group Inc.

By bringing in the sovereign wealth fund, which invests the emirate’s excess oil revenue, Advent and Cinven got additional firepower to offer 17.2 billion euros ($18.9 billion) for the elevator business. ADIA, sitting on an estimated $700 billion in assets, has shown an uncanny ability to back the winning side in recent big-ticket auctions.

Last year, it was part of a consortium that bought Nestle SA’s $10 billion skincare business. The group beat out a who’s who of rival bidders: KKR & Co., Advent, Colgate-Palmolive Co., Unilever NV and PAI Partners.

The Gulf fund also teamed up with Cinven in its multibillion-dollar purchase of British scientific measurement and testing company LGC Group this year, people familiar with the matter have said. Other suitors that were vying for the business include CVC Capital Partners, Thermo Fisher Scientific Inc., Danaher Corp., Blackstone, Carlyle and EQT AB, Bloomberg News reported.

Courting Partners

Buyout firms are increasingly teaming up in the most contested auctions, sometimes with powerful investors like sovereign funds. In a yield-starved world, promising assets are hard to come by and competition can be fierce.

ADIA’s position as a major investor in some of the largest buyout funds gives it a natural advantage. It can identify relatively early which private equity firms are serious about going after an asset, which can generate the biggest synergies and who will pay the most.

The sovereign fund has also been building out its own team of private equity professionals, which allows it to make more of its own direct investments.

ADIA’s private equity unit sourced about 40% of its investments in 2018, a new high, up from 30% the previous year. The total value of its new principal investments has more than doubled since 2016, the fund said in its annual report released in July.

©2020 Bloomberg L.P.

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