Bruhn NewTech, the leading provider of CBRN knowledge management software, announces Adelis Equity as new majority shareholder. Adelis will, through Adelis Equity Partners Fund III AB, support Bruhn NewTech in its next stage of its growth and product development. Bruhn NewTech marks the first milestone in Adelis’ establishment of a company group of leading niche software companies to support the protection of people and societies.

Bruhn NewTech, the Danish provider of knowledge management software that increases societies readiness towards chemical, biological, radiological and nuclear (CBRN) threats, has announced Adelis Equity Partners (“Adelis”) as its new majority shareholder. Adelis will provide strategic support to Bruhn NewTech as a partner to the management team, led by Erik Juel Ellinghaus, and Chairman, Kristoffer Basse, and leverage its expertise in how to develop and scale software companies based in Northern Europe.
Bruhn NewTech is the world’s leading provider of CBRN knowledge management software, with over 30 years’ experience in its field. The company’s main purpose is to protect people from airborne threats, and it serves more than 80% of NATO forces and more than 40 countries worldwide. Furthermore, Bruhn NewTech’s software has enhanced the security related to airborne threats in public settings, such as the Olympic Games. The company is seeing increased demand from countries and organisations to increase its CBRN readiness and has grown by ~20% per annum in recent years.
“We are looking forward to the partnership with Adelis. They have an impressive background in supporting software companies to grow globally and we are excited to actively participate in the creation of a strong technology defence group. Furthermore, we are encouraged to see that they share our vision to make the world a safer place and better prepared for CBRN events”, say CEO Erik Juel Ellinghaus and Chairman Kristoffer Basse, who will both remain shareholders in the company.

Continued growth and development of its offering

Through the partnership with Adelis, Bruhn NewTech will continue its growth journey and support more countries and societies in their efforts to protect their citizens. With the support from Adelis, Bruhn NewTech will continue to enhance its software to increase the capabilities of its current and future customers when it comes to CBRN readiness.
“We are impressed by Bruhn NewTech’s position within the niche of CBRN related software. Through persistency over the years, Erik and his team have established Bruhn NewTech as the clear global leader in their field of expertise. We are excited to support Bruhn NewTech to further enhance its product and offering to help them protect societies and people across the world”, say Hampus Nestius and Joel Russ at Adelis.

The first milestone in Adelis’ establishment of a defense software group

Adelis aspires to support Western and democratic countries to protect people and societies, as well as to support small- to mid-sized defense companies to scale and develop. The acquisition of Bruhn NewTech marks Adelis’ first investment in its recently established defense technology group that will consist of leading niche software and technology companies focused on the defense sector.

The transaction closed on June 28^th, after having received applicable regulatory approvals. Financial terms of the transaction were not disclosed.

For further information:

Kristoffer Basse, Bruhn Newtech: kb@newtech.dk

Hampus Nestius, Adelis Equity Partners: hampus.nestius@adelisequity.com

Joel Russ, Adelis Equity Partners: joel.russ@adelisequity.com

About Bruhn NewTech

Bruhn NewTech exists to increase the number of people protected from airborne threats. One human life at a time. With more than 30 years of experience with CBRN software solutions, Bruhn NewTech supplies civil authorities and more than 80% of NATO forces in more than 40 countries worldwide with proven and lifesaving CBRN knowledge management software. For more information, please visit www.bruhn-newtech.com.

About Adelis Equity Partners

Adelis is a growth partner for well-positioned companies in the Nordic and DACH regions. Adelis partners with management and/or owners to build businesses in growth segments and with strong market positions. Since raising its first fund in 2013, Adelis has been one of the most active investors in the Nordic middle-market, making 41 platform investments and more than 230 add-on acquisitions. Adelis manages approximately €3.0 billion in capital. For more information, please visit www.adelisequity.com.

New Mountain Capital founder played minor role in brawl for RJR Nabisco — and spent rest of career avoiding deals like it

Antoine Gara in New York, NY – (FINANCIAL TIMES) – June 30, 2024 – Dealmaker Steven Klinsky had a front-row seat to the most operatic takeover drama Wall Street has ever seen, the knives-out multibillion-dollar battle for control of RJR Nabisco.

From that 1980s contest he learned a formative lesson: stay far away from the highly leveraged takeovers orchestrated by swashbuckling debt junkies. The results have been a quiet success.

His New Mountain Capital has focused on building up mid-sized companies in predictable industries using modest amounts of debt. Returns have been robust and investors are rewarding the results, with the New York-based group raising $15.4bn for its seventh buyout fund, exceeding a $12bn target set last year — and bucking a recent trend of poor industry-wide fundraising.

New Mountain joins private equity groups such as CVC Capital Partners, Clayton, Dubilier & Rice, Warburg Pincus and EQT that have exceeded their fund targets at a time when many rivals have fallen short of their goals.

It is part of a rare successful streak of the past few years among buyout groups that steered away from pursuing peak-valuation deals during the frenzied markets of 2021 and instead consistently returned cash to investors.

“I preach against the old private equity model of 40 years ago where people think you borrow as much as you can, go play golf, and see if it all worked out in five years,” Klinsky said in an interview with the Financial Times.

The group is known for its ability to build small businesses in sectors including healthcare services, software and manufacturing into industry leaders by pushing their products into new markets, or by identifying acquisitions.

“New Mountain’s judicious use of leverage and its focus on building businesses in faster-growing parts of the economy have insulated the firm from the brunt of the Federal Reserve’s interest rate hikes,” said Maxwell Snyder, vice-president of alternatives at NewEdge Wealth, an investor in its funds.

Fundraising for the private equity industry slowed dramatically in 2022 when interest rates rose quickly and public stock valuations fell, causing large investors to become overexposed to private assets and pull back from investing in new funds.

The industry’s challenges have been exacerbated by a slowdown in dealmaking and initial public offering activity that has made it hard for PE groups to exit their investments even as public markets reach new highs. In 2023, buyout firms distributed the lowest amount of cash versus what they called from investors since the 2008 financial crisis, according to Bain & Co.

New Mountain, however, has returned more capital than it has invested in recent years. Since January 2021, the firm has sold more than 20 companies, returning well over $10bn in cash to its investors because of successful deals such as Signify Health, a healthcare IT company.

Its 2017-era buyout fund returned 1.16 times what investors had committed by the end of 2023, making it the rare fund from that year to have returned a surplus of cash to investors, according to documents published by public pension funds. When including the fund’s remaining unsold investments, it has generated a 2.4 times gain.

New Mountain’s assets under management have more than doubled to $55bn since 2018, when Klinsky sold a minority stake in the group to Blackstone that cemented his billionaire status. The investment allowed him and his partners to invest $1.4bn into their new fund. It has also given them the financial heft to remain private and resist seeking a tie-up with a larger asset manager, Klinsky added.

As a partner in his early 30s at Forstmann Little, an early pioneer of the $4tn private equity industry, Klinsky became a top lieutenant to Ted Forstmann as the prolific financier studied a bid for RJR Nabisco. It was the seminal deal of the go-go 1980s, later chronicled in the book Barbarians at the Gate.

Klinsky had a memorable bit part in the saga.

Ross Johnson, the chief executive of RJR, had approached Forstmann about teaming up as a “white knight” to counter a takeover effort led by KKR. After hearing Johnson’s pitch, Forstmann consulted Klinsky, a trusted number cruncher, to see whether it was workable. “I think he’s totally insane,” Klinsky is quoted as saying in the book.

Forstmann never bid on RJR, which was sold to KKR for $29bn, but quickly became an emblem of the private equity industry’s hubris as it struggled under the crippling weight of its takeover debt.

When he left Forstmann Little in 1999 to create his own private equity outfit, Klinsky decided on a different approach.

Many of the companies New Mountain buys are family-owned businesses that have never made an acquisition or built operations outside of the US. In many deals, New Mountain forges novel corporate strategies.

The style has helped the firm earn large windfalls at a time when many rivals are contending with an industry reckoning.

In 2017 New Mountain made a push into so-called “value-added care”, with companies focused on preventive health measures to lower costs. It acquired and merged two small companies in the sector for less than $500mn and renamed the group Signify Health. Last year, New Mountain sold the company to CVS for $8bn.

It also had success in technology investments. Klinsky’s firm acquired a small logistics software company called RedPrairie in 2010 for $550mn. Under new management, the company plotted acquisitions and built artificial intelligence tools that propelled it into a leader in identifying supply chain bottlenecks. In 2021, it sold the rebranded company, Blue Yonder, to Panasonic for $8bn, generating more than $5bn for its investors and employees at the company.

Another big windfall has been Avantor, a pharmaceutical chemicals company that New Mountain acquired from Mallinckrodt for less than $300mn in 2010. Klinsky’s firm pushed Avantor into specialised chemicals that earn higher margins. In 2019, it listed Avantor, which now trades at a $15bn valuation. New Mountain has earned gains exceeding $3bn, according to the FT’s calculations.

Klinsky said he prefers investing in these midsized companies partially because they offer many more growth opportunities for his 200-plus dealmakers and consultants to pursue.

“[A] $500mn company could be a leader in an important niche industry, but there are so many things that the management hasn’t done yet . . . If you are a $10bn company, you probably have done almost everything smart there is to do,” he said. Such businesses are easier to sell to corporate buyers and other buyout firms, he added.

Though private equity is under pressure from the slowdown in dealmaking, Klinsky does not see a coming industry washout. He said the sector has become more professional with less-cavalier capital structures.

“I don’t see a hard landing or crisis in private equity,” he said. “The companies are much less leveraged than they were in the old days. In 1981, a buyout had 19 parts debt and just one part equity. So people threw away the keys on bad deals.”