The Chicago private equity firm behind a mega-deal

One thing to start: Six more women have alleged financier Crispin Odey sexually assaulted or harassed them, expanding the timeline of his abuse across five decades and raising further questions as to the extent his behaviour was tolerated by senior colleagues.

In today’s newsletter:

GTCR: Chicago-style private equity

Chicago is where Michael Jordan turned the Bulls into a global sporting sensation and pan pizza was born — but it’s not considered a hotbed for private equity buyouts.

Chicago-based private equity investor GTCR on Thursday set a new bar for ambition in today’s challenged takeover market with a deal to buy a majority stake in Worldpay from Fidelity National Information Services at a valuation of up to $18.5bn. The deal marks one of the largest corporate carve-outs ever.

The mega-deal — first reported by the FT last Friday as talks were ongoing between bidders GTCR and Advent International — has caused banks that have been hesitant to make large lending commitments to step off the sidelines.

Banks led by Goldman Sachs and JPMorgan Chase and including Citigroup, Wells Fargo, UBS and Deutsche Bank are arranging $8.4bn in loans to finance the deal, sources told the FT. It signals that large banks, which have collectively nursed billions of dollars in losses on “hung debts” such as Twitter, Citrix and Nielsen, are lending again.

Since the spring of 2022, private equity buyers have turned to private lenders such as Apollo. But GTCR sought financing from large banks from the outset of Thursday’s deal, DD was told.

While not as well known as giants such as KKR and Blackstone, GTCR has been influential in the rise of private equity.

Its roots trace to 1980, when early private equity investors Stanley Golder and Carl Thoma left First Chicago, a loose predecessor to the modern-day JPMorgan, to start their own buyout firm, Golder Thoma & Co.

Dealmaker Bruce Rauner, who would later become the governor of Illinois, and Bryan Cressey became part of its leadership, forming Golder, Thoma, Cressey, Rauner Inc before Thoma and Cressey split away in 2000.

They formed the precursor to what’s now Thoma Bravo, the world’s largest software investor with $122bn in assets. John Canning, who replaced Thoma and Golder in managing First Chicago’s private equity assets, would later spin off the unit as Madison Dearborn Partners — a private equity firm now managing about $30bn.

GTCR’s headquarters are steps away from its longtime legal adviser Kirkland & Ellis, which has ridden the private equity wave to become the world’s largest law firm.

Rauner continued to lead the remaining firm, which was renamed GTCR and mostly focused on midsized buyouts in financial services, healthcare, business services and technology.

Other than a 1998 vintage fund, GTCR has earned stellar returns mostly on midsized deals such as corporate carve-outs, which have accounted for a third of the firm’s overall investments. It is also known for financing entrepreneurs who create platform companies to consolidate industries like insurance.

GTCR has thrived quietly under its current co-chief executives Collin Roche and Dean Mihas who oversee everyday operations. Golder died in 2000 and Rauner stepped away after his stint in politics. GTCR, which took a minority equity investment from Blackstone two years ago, recently closed an $11.5bn fund that was double the size of its 2017 fund — a sign of investor confidence.

In 2020 and 2021, GTCR focused on selling assets, disposing of about $10bn in investments while spending about $5bn, according to documents seen by DD. 

GTCR saw Worldpay as an opportunity to lean into a market where valuations had fallen. The payments processor’s multiple was shaved by more than half from FIS’s ill-fated $43bn merger, Lex calculated.

GTCR will make a more than $5bn equity commitment to finance its majority stake, most of which will come from its two most recent funds and the remainder from co-investments from a broad group of limited partners.

“If we see something large that is attractive, we can chase it, but we don’t feel pressure to do that,” Roche told DD in an interview.

Tech founders get burnt out, too

It turns out tech workers strung out on Soylent and existential dread aren’t the only ones battling stress and burnout.

Their bosses feel it too (unless you’re Elon Musk, in which case, an “extremely hardcore” corporate culture is the goal.)

For Simon Beckerman, whose London-based second-hand fashion app Depop was bought for $1.6bn by Etsy in 2021, the journey to inking the deal was gruelling at times.

The takeover marked the culmination of a decade of stress, sleep deprivation and, at times, physical pain, he told the FT’s Tim Bradshaw. “I think it was relief — we went through this black hole and made it [out] the other side.”

“It was so painful, one day I woke up and I said, ‘If I go into the office for one more day I am going to die’,” Beckerman added. He was later diagnosed with chronic gastritis, which he attributes to work-related stress.

He’s not the first start-up boss to acknowledge the downsides of the job. Former Monzo chief Tom Blomfield described stress, anxiety and sleep loss during his time running the neobank as attacking the “myth of the superhero founder”.

Some tech investors have begun paying attention. Balderton, a London-based venture capital firm and early Depop backer, is launching a wellbeing programme for the founders it has invested in.

The scheme will treat founders akin to high-performance athletes, tapping clinicians to treat their nutrition, fitness, sleep and mental health.

Training tech bosses like Olympians could be a worthwhile endeavour, considering the gauntlet ahead now that the collapse of Silicon Valley Bank and the broader pullback in tech funding over the past 12 months has left the industry in a state of disarray.

The years of exhaustive work don’t appear to have deterred Beckerman, however. He recently launched a new start-up, online food marketplace Delli in the UK, where the start-up scene is grappling with an outdated listings regime and a decrease in government funding.

So what is Beckerman’s tip for avoiding burnout? Don’t skip on the self-care.

With his new venture, he has decided to cut back on wine and get a personal trainer, a performance coach and a health coach.

Job moves

• UBS has shaken up the leadership of its critical Middle East wealth management operations as it comes under pressure to keep staff happy following its takeover of Credit Suisse.

• Rothschild & Co has hired Richard Hurowitz, the founder and chief executive of boutique investment bank Octavian & Company, as a strategic adviser.

• Hedge fund Verition Fund Management has hired former Morgan Stanley executive Saad Mahmood to lead its new outpost in Dubai, per Reuters.

• Citadel has hired three traders for its equities business Ashler Capital, Bloomberg reports.

Smart reads

After the final whistle Qatar is seeking to build on its momentum from hosting the World Cup and diversify beyond oil while jostling with its Gulf neighbours for foreign investors, this FT Big Read details.

Flying too close to the sun New York state spent nearly $1bn on Elon Musk’s plan to build the largest solar panel factory in the western hemisphere but as The Wall Street Journal reports, things have not quite turned out as planned.

SBF’s go-to fixer FTX lawyer Daniel Friedberg played a more integral role at the fallen crypto exchange than previously known, Bloomberg reports, going beyond legal advice to cleaning up messes for his boss Sam Bankman-Fried.

News round-up

Generali snaps up Conning to create one of Europe’s largest asset managers (FT)

UK fintech raises up to £335mn in rare London IPO (FT)

Man Group moves into private credit with US fund Varagon purchase (FT)

Twitter threatens trade secrets lawsuit over Meta’s Threads app (FT)

The private credit ‘golden moment’ (Alphaville)

Threads/Twitter: copycat app hits Elon Musk where it hurts (Lex)