Investment

Family offices up their big private equity investments

A number of big private equity deals by family offices recently shows how they are competing for some of the best private market deals around and sometimes winning in an area traditionally dominated by private equity funds.

Bill Gates’ family office Cascade Investment has bought a minority stake in StorageMart, which claims to be the biggest privately owned self-storage company in the world in terms of revenues. Cascade along with the Singaporean sovereign wealth fund, GIC, have bought an undisclosed equity stake for an unspecified amount in the Columbia, Missouri-based family business. 

An interesting feature of the Cascade deal is how it mirrors a classic Berkshire Hathaway acquisition

The transaction values StorageMart at approximately $2.7 billion. This very much puts the Cascade/CIG deal in the top tier of private equity transitions – the upper-middle market, or the top 1% of private equity deal size where typically the big funds like KKR, Blackstone, and Carlye dominate. 

Meanwhile, Australian family office Tattarang, owned by mining billionaire Andrew Forrest and his wife, Nicola, has bought R.M. Williams, the Australian footwear and clothing maker. Tattarang bought the iconic brand from the Arnault family-backed private equity group L Catterton. Terms of the deal weren’t disclosed, although speculation in the Australian media suggest Tattarang paid around A$190 million ($135 million) for the famous riding boots maker. 

Another Australian family office Sandbar Investments has indicated it wants to sell, according to local media reports, Pack & Send, one of Australia’s biggest courier groups, to either a private equity group or through a trade sale. Sandbar is Sydney-based family office of Barry & Sandra Smorgon. Members of the Smorgon family are among the wealthiest individuals in Australia. Sandbar has been a prominent player in the Australian private equity world. 

Of course, the Cascade deal is exceptional and it’s a well-known fact that Gates’ family office is a big player in the private and public equity worlds, owning stakes in many sizable businesses. Cascade has the wherewithal to compete with the big private equity houses – after all, Gates is the third wealthiest individual in the world, according to Forbes. 

But an interesting feature of the Cascade deal is how it mirrors a classic Berkshire Hathaway acquisition. StorageMart is a privately owned family business – CEO Mike Burnam founded the business in 1999 and his son, Chris, is president. It’s also based in an out-of-the-way location in the Midwest, away from the attention of Wall Street private equity groups, but a region that would be a typical hunting ground for Berkshire Hathaway – at least in the past. Gates and Warren Buffett are good friends, and, it’s probably not stretching the truth too much to say Berkshire Hathaway has influenced the investment strategy of Cascade. The Seattle-based family office owns a small minority stake in Berkshire Hathaway. 

The Tattarang deal and the near deal involving Sandbar are less big, but they still indicate how family offices are increasingly able to compete with the bigger private equity funds for middle-market deals. 

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