Happy Monday! It’s Isabel O’Brien here with Value Add, a free weekly newsletter from Privitas covering the latest private equity operations news. Here’s what you need to know this week.

Done Deal

It’s textbook. General Atlantic is due to take Learning Technologies Group (LTG) private in a deal valued at £802.4 million (just over $1 billion). Shareholders will receive $1.27 per share, a 34% premium over its 26 September closing price. 

The deal aims to invest in LTG’s product innovation. The firm is a leading provider of corporate training programs and is looking to integrate AI into its solutions.

Learning curve. This isn’t General Atlantic’s first foray into edtech – the firm has a storied history in the sector. Quizlet, Unacademy, Fluency Academy, and Kahoot are all edtech companies currently in General Atlantic’s portfolio. 

The firm’s biggest claim to fame, though, in the edtech sector is Duolingo. The firm invested $10 million in the platform in April 2020 and upped its position in November of that year during a $35 million funding round that valued the company at $2.4 billion. General Atlantic then led the company’s successful IPO the following year, where it closed 36% above its initial asking price within its first day and was valued at $5 billion.

General Atlantic has slowly divested from Duolingo since 2022 and no longer lists it as a portfolio company on its website. 

While General Atlantic’s run was relatively short with Duolingo, it created a good amount of value – the company currently has a market capitalization of $16.21 billion and an enterprise valuation of $15.38 billion. 

Breaking (down) the streak. How did General Atlantic grow Duolingo so quickly? Much like General Atlantic’s plans for LTG, the value came through product innovation.

First, in early 2021 Duolingo professionalized its product by ending its volunteer contributor program. Then, in 2022 it redesigned its user interface and invested more in graphics by acquiring Detroit animation studio Gunner. 

Whether or not this playbook will be repeated with LTG remains to be seen. There is one aspect that may be more difficult to replicate: virality. The firm’s owl has become an internet icon for its absurdist humor, helping to popularize the app with Gen Z. 

Having a corporate learning company publicly shoot its shot at global popstars might not have the same impact. 

LTG and General Atlantic did not respond to requests for comment. 

Portco News

PE portcos saw some full and partial exits last week:

• Frontenac sold Integris, an IT solutions provider, to OMERS Private Equity for an undisclosed amount.
• Veriforce, a supply chain risk management platform, was traded from Thoma Bravo to Apax Partners. Financial terms were undisclosed.
• Insight Partners offloaded some minority stakes in its data resilience portco, Veeam, to a variety of investors including TPG, Neuberger Berman, and Temasek. Insight Partners initially bought the company for $5 billion in 2020. The latest funding round has raised another $2 billion in capital for the firm and values it at $15 billion.

Meanwhile, portco M&A was in full swing:

• Apollo and Oaktree’s ABC Technologies acquired TI Fluid Systems for $1.92 billion. Both firms are manufacturers in the automotive industry.
• Astorg took Hamilton Thorne, a reproductive technology company, private in a deal valued at $282 million. It then immediately closed a deal to carve out and merge Cook Medical’s reproductive health business with the asset. The newly combined business will rebrand to ART MedTech in 2025.
• GTCR’s wealth management portco AssetMark completed its acquisition of Morningstar Wealth’s TAMP (turnkey asset management program) assets. The firm is reportedly paying “upwards of $100 million” for the additional $12 billion in assets under administration. 
• Advent International’s SYSPRO, a software company focused on the manufacturing and distribution sectors, agreed to pay £36 million ($46 million) to carve out NexSys, another software provider, from K3 Business Technology Group.
• Eleda, a Swedish infrastructure services provider backed by Bain Capital, bought three companies from Vestum, a Swedish construction engineering company: landscaping firm Marbit and railway service providers Hanell Entreprenad and Flexirail.
• Mubadala-backed Canada Cartage, a transportation and logistics provider, acquired Coastal Pacific Xpress (CPX), a refrigerated transportation solution provider, for an undisclosed sum.
• Insurcomm, a disaster restoration construction firm owned by Summit Partners, bought Theraclean Restoration in order to expand its services beyond New England into the mid Atlantic region. 

And finally, there were a few people moves:

• CD&R named Andy Callahan as an operating advisor. Callahan most recently served as the chief executive of Hostess Brands.
• The Knot Worldwide, an online wedding registry company owned by Permira, appointed Raina Moskowitz as its next CEO and president. Moskowitz is coming from Etsy, where she was the COO and and CMO, to replace founder Tim Chi. 
• Alteryx, an AI enterprise analytics platform owned by Clearlake and Insight Partners, appointed Andy MacMillan as its next CEO. MacMillan is currently the CEO of UserTesting. He will replace Mark Anderson, who left the firm in February to join Cloudflare as its president of revenue.
• Apollo poached Hector Fernandez from Aristocrat Gaming to lead Diversified Gaming Solutions, the combined entity of IGT and Everi, which Apollo merged in July. 
• Hillhouse Investment hired Tomohiro Kikuta as the head of its Japan operations. Kikuta joins from Bain Capital, where he was a partner on the APAC PE team.

Hot Take

Crazed fans. I will never understand the public aversion to foreign private equity ownership in sports. People will let foreign entities own everything from gas pipelines to digital infrastructure assets – things that are genuinely crucial to national security. But I don’t see those deals getting toppled like sports deals have.

There were two headlines that highlighted the absurdity of the situation to me: Ackerly Sports Group’s failed $75 million attempt to buy 20% of South African rugby team Springbok’s commercial rights, as well as Apollo’s grueling two year bid to buy Liga MX for $1.25 billion. I won’t even mention the NFL negotiations going on right now.

It should come as a surprise to no one that I am not a sports fan. Maybe that’s why I don’t understand the backlash. In private equity, not all capital is created equal… except when it comes to minority investments in sports leagues. I highly doubt that a 20% equity stake won’t result in an operational overhaul. 

But hey, there’s a lot about sports I don’t understand. I have no idea what the rules are to score a touchdown – and evidently, neither did ASG. 

More from Privitas

• Technology: Value Creation 2024 (Read)
• Could Unhappy Employees Be Good For Tech Exits? (Read)
• Portco IQ: Technology 2024 (Read)
• Top Tech Exits in 2024 Were to Strategic Acquirers (Read)
• Exits Are Back, But Different (Read)

That’s all for this week – thanks for reading. Have questions? Email isabel.obrien@privitas.com