Mergers & Acquisitions
August 21, 2025
Covestro Acquisition
Covestro to Expand Aliphatics Production with Acquisition of Vencorex Sites in Thailand and Texas
August 20, 2025
Covestro has signed an agreement with Vencorex Holding SAS, a subsidiary of Thai chemical company PTT Global Chemical Public Co. Ltd, to acquire two legal entities with stand-alone production sites for HDI (hexamethylene diisocyanate) derivates in Rayong, Thailand, and Freeport, Texas. The legal entities and sites were formerly part of the French aliphatics specialist Vencorex. With this acquisition, Covestro strategically expands and improves its aliphatics production portfolio in the United States and in the Asia-Pacific region. This allows the company to advance the implementation of its “Sustainable Future” corporate strategy by continuing its growth in profitable and innovative business areas like coatings and adhesives.
Both parties have agreed not to disclose the purchase price. The transaction is expected to close by the end of 2025.
“The acquisition of these two former Vencorex sites fits perfectly to our portfolio and our strategic goals,” said Christian Baier, chief financial officer of Covestro. “While we maintain cost discipline to secure our short-term performance, we strengthen our long-term competitiveness through targeted investments like this one.”
Covestro is a well-known supplier for of derivatives, an essential component in polyurethanes coatings, adhesives, and sealants. It can be found in a myriad of applications, like coatings and adhesives for cars, trucks, bridges, ships, wood furniture, and electronics, to name a few. Through the acquisition, Covestro complements its existing capacities in the United States, Germany, China, and India, among others.
“These new capacities in Thailand and the U.S. will augment our existing comprehensive production capabilities across all major regions. They will enable us to produce and deliver according to our customer’s demands even better, especially during current market challenges,” says Thomas Roemer, Head of the Business Entity Coatings and Adhesives at Covestro. “After the acquisition of the Resins & Functional Materials (RFM) business from DSM and investments in organic growth this is yet another sign of confidence the company has in the coatings and adhesives business. I look forward to welcoming the new colleagues into our organization!”
Learn more about Covestro at www.covestro.com.
July 28, 2025
Adnoc Update
Adnoc contests EU findings as €12b Covestro deal faces deeper scrutiny
EU investigates foreign subsidies of Adnoc’s Covestro deal; decision due by December 2
Last updated: July 28, 2025 | 14:45
Justin Varghese, Your Money Editor
2 MIN READ
European Union flags flap in the wind outside EU headquarters in Brussels, Friday, February 21, 2020AP
Dubai: The European Commission launched an in-depth investigation into Abu Dhabi National Oil Company’s (Adnoc) proposed €12 billion (Dh47.8 billion) acquisition of German chemicals firm Covestro.
The probe is part of a newly enforced EU regulation aimed at addressing the competitive impact of foreign state subsidies.
In its official statement, the European Commission said it had “preliminary concerns that foreign subsidies granted by the United Arab Emirates (UAE) could distort the EU internal market.”
Among the subsidies under scrutiny are an “unlimited guarantee” from the UAE government and a potential capital injection from Adnoc into Covestro—both of which may have given Adnoc an edge over any competing bidders.
The Commission argues these benefits might have allowed Adnoc to offer a purchase price and terms that wouldn’t typically be viable for unsubsidised investors, raising fears of unfair competition within the bloc.
ADNOC contests EU findings
In a statement, ADNOC said it “respects the European Commission’s process” but disagrees with the regulator’s initial concerns over its proposed acquisition. The company added it is confident the deal will ultimately be cleared.
“ADNOC has a proven track record in value creation and driving opportunities for growth built on long-term and mutually beneficial partnerships,” the statement said.
”While we respect the European Commission’s process, we contest the preliminary findings of the Commission and are confident that when the facts are fully examined, there will be no reason to hold up clearance of a transaction that will add great value for all stakeholders and stimulate European industry.”
Gulf investments in Europe
While the deal had earlier passed the EU’s traditional merger control process, the new investigation under the Foreign Subsidies Regulation (FSR) reflects rising European caution toward major acquisitions by state-backed companies from the Gulf and beyond.
If the Commission concludes that the deal breaches the regulation, it could force Adnoc to offer significant concessions—or even block the acquisition entirely. A final decision is expected by December 2, 2025.
This isn’t the first time EU regulators have taken issue with UAE state-linked funding. In 2023, Emirates Telecommunications (e&) had to alter terms of its €2.2 billion deal for PPF Telecom assets by dropping an unlimited state guarantee to receive EU approval.
Why this matters now
The EU’s Foreign Subsidies Regulation came into force just over a year ago and has since been used mainly to investigate Chinese investments in rail and clean energy sectors.
For UAE-based firms eyeing strategic assets in Europe, the Covestro case could serve as a landmark moment, shaping how future cross-border deals are structured and scrutinised.
Adnoc, as the UAE’s largest oil producer, has been seeking to diversify globally through downstream and specialty chemicals investments, with the Covestro deal seen as a strategic entry into high-performance polymers used in everything from smartphones to electric vehicles.
If approved, the acquisition would hand Adnoc control of Covestro’s operations across Europe and beyond, with over 18,000 employees worldwide and major customers in auto, electronics, and construction sectors.
July 27, 2025
PE and You
Is Private Equity A Wolf In Sheep’s Clothing?
by Tyler Durden
Friday, Jul 25, 2025 – 03:45 PM
Authored by Lance Roberts via RealInvestmentAdvce.com,
In July 2007, just before the financial crisis erupted, Citigroup CEO Chuck Prince summed up Wall Street’s dangerous exuberance:
“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”
Eighteen years later, Wall Street is dancing again, and the rhythm feels disturbingly familiar.
Private equity (PE), once a niche strategy reserved for sophisticated endowments and mega-pensions, is being aggressively marketed to everyday investors. It’s creeping into 401(k)s, target-date funds, and retirement accounts under the seductive promise of higher returns and diversification. But for investors who’ve forgotten history, or worse, were never taught it, the risks are mounting.
What Is Private Equity & How We Got Here
Private equity refers to investments in companies not publicly traded on a stock exchange. Instead of buying shares of companies like Apple or Microsoft, private equity firms purchase entire companies, or large stakes in them, using a mix of their own capital and large amounts of borrowed money (leverage).
Once they take control, they often restructure the company, cut costs, increase debt, and aim to “flip” it for a profit within a few years. This can be done by selling it to another company, a PE firm, or publicizing it via an IPO.
The pitch? Higher returns.
The reality? Higher risk and lower transparency.
PE’s ascent began after the 2008 financial crisis when near-zero interest rates pushed institutional investors out of traditional bonds and into “alternatives.” As I’ve written, institutional FOMO (fear of missing out) drove billions into private markets with questionable due diligence. So they turned to alternatives: private equity, private credit, hedge funds, and real estate.
In 2019, Ben Meng, then-CIO of CalPERS (California’s massive public pension fund), epitomized the mentality when he said, “We need private equity, we need more of it, and we need it now.”
And Wall Street delivered.
The results were predictable. With cheap credit abundant, deal volume exploded, topping $3.1 trillion globally in 2021. Valuations were detached from reality. According to McKinsey, buyout multiples surged from 6.5x EBITDA in 2009 to 12x in 2022, nearly doubling in just over a decade. But this boom was built on artificially low interest rates and easy liquidity.
That means PE firms paid twice as much for companies as a decade ago. The reason is simple: They could borrow more cheaply and charge investors higher fees.
However, with rates normalized and liquidity tightening, private equity’s structural weaknesses are surfacing. Therefore, as sophisticated investors become more risk-averse to the deals they take on, Wall Street is turning to a new source of capital: unsophisticated retail investors.
What Makes Private Equity Risky for You
Let’s break down some key concerns the average investor should understand before allocating capital—directly or indirectly—to private equity.
1. Illiquidity Is a Feature, Not a Bug
PE funds lock up investor capital for 7-10 years, sometimes longer, depending on extensions and follow-on investments. This means that investors lose the fundamental flexibility that public markets provide, namely, the ability to liquidate assets in response to life events, market downturns, or better opportunities. For example, if you invested in PE through the COVID-19 market shock, you couldn’t reallocate capital even as public markets sharply corrected and rebounded. This rigid illiquidity is especially dangerous for retirees or individuals who may require access to funds unexpectedly.
2. Opacity Masks Risk
In public markets, pricing is determined every second by the forces of supply and demand, providing price discovery and transparency. However, private equity relies on subjective valuation models that are updated quarterly or less frequently. This allows PE funds to “smooth returns,” creating the illusion of low volatility. For instance, during market sell-offs like 2022, many PE funds reported negligible markdowns while public equities fell double digits. This masks the true underlying risk, potentially misleading investors about the health of their portfolios and delaying the recognition of losses until forced asset sales or fund closures
3. Fees Are Devastatingly High
PE funds follow a “2 and 20” fee structure: a 2% annual management fee plus 20% of profits above a specific hurdle rate. Over a decade-long lock-up, even in mediocre-performing funds, fees can erode a substantial portion of gross returns. For example, on a hypothetical $100,000 investment, you could pay $20,000 in management fees over ten years, excluding performance fees. Compared to passive investment vehicles like S&P 500 ETFs costing 0.03%-0.10% annually, the fee drag in PE is enormous. Academic studies, such as those by Ludovic Phalippou at Oxford, have consistently shown that net returns after fees in PE barely exceed, and often underperform, simple public index strategies.
4. Leverage Amplifies Fragility
Leverage is a double-edged sword in private equity. While it can amplify returns in bull markets, it dramatically increases financial fragility during downturns. PE buyouts frequently involve debt levels of 5-7 times EBITDA, far exceeding leverage ratios typical of public companies. This dependence on cheap debt made sense in a zero-rate world, but is becoming a liability as borrowing costs rise. For instance, companies acquired at peak valuations in 2020-2021 face refinancing risks as interest coverage ratios deteriorate. Reports of loan covenant breaches and distressed sales are already emerging across sectors like healthcare, retail, and infrastructure, previously touted as “safe” plays in the PE world.
But while these issues are important, there are seven “red flags” that signal trouble ahead.
Seven Red Flags That Signal Trouble Ahead
The CFA Institute recently highlighted seven red flags signaling serious trouble brewing in private markets—risks magnified for retirement savers who lack the tools and resources to properly evaluate these risks. For retail investors, each of these red flags represents a significant warning that could impact long-term financial outcomes, especially when embedded within retirement plans like 401(k)s and target-date funds.
1. Declining Deal Quality
With record amounts of capital flowing into private equity, more money is chasing fewer high-quality investment opportunities. This leads to PE firms lowering their standards and investing in weaker companies or more speculative ventures. For retail investors, this means exposure to riskier businesses with less predictable cash flows. For example, during the 2021 SPAC boom, many companies that would have traditionally struggled to access public markets instead found their way into private portfolios, leading to high-profile failures post-acquisition.
The chart below from S&P Global shows the number of private transactions terminated between 2020-2023.
2. Inflated Valuations
PE managers often base valuations on future projections rather than tangible market transactions. As a result, portfolios can appear healthy on paper even when underlying fundamentals are deteriorating. For retail investors, this creates the illusion of stability, where portfolio statements show steady or appreciating values while the true market value could be significantly lower. A prime example occurred during 2022, when public tech stocks corrected sharply, but many PE tech holdings barely adjusted, delaying loss recognition and masking portfolio risk.
To that point, you should realize that most private equity investments (65%) either fail or return the initial investment at best.
Yes, private equity can be very lucrative. Depending on the deal you invest in, it can also be very harmful.
3. Fee Pressures = Riskier Deals
Institutional investors are increasingly pushing back on high fees, which puts pressure on PE firms to maintain profitability. This can lead to riskier behavior, such as over-leveraging or engaging in more aggressive cost-cutting at portfolio companies to boost short-term returns. For retail investors, this translates into an even worse alignment of interests: high fees remain in place, while portfolio risk quietly increases. Worse, retail channels often lack the negotiating power to secure fee reductions, leaving them exposed to premium costs for subpar investments.
4. Frozen Exit Markets
An essential part of private equity returns depends on the ability to sell portfolio companies at a profit. However, the current environment of rising interest rates and lower public market valuations has led to a sharp decline in IPOs and M&A activity. This creates a backlog of unsold assets, commonly referred to as an “exit overhang.” For retail investors, this means delayed distributions, longer-than-expected lock-up periods, and an increased likelihood of forced sales at discounted prices. Recent data from secondary market platforms show private equity interests trading at significant discounts, clear evidence of deteriorating liquidity.
5. Discounted Secondaries
When existing investors seek to exit PE investments early, they often turn to secondary markets. Today, these interests are commonly trading at 20-40% discounts to their stated net asset values (NAVs). This is a stark warning sign: even sophisticated investors are willing to accept steep losses to exit PE positions early. Retail investors, who often lack access to these secondary markets or the liquidity to exit early, are particularly vulnerable to being locked into declining assets with no realistic way out.
6. Rising Borrowing Costs
The foundation of many PE deals is built on cheap debt. With interest rates at multi-decade highs, borrowing costs have surged, eroding profitability across PE portfolios. Companies acquired during 2020-2021 at high multiples are now facing refinancing cliffs, where new debt comes at significantly higher rates. For retail investors, this increases the risk of portfolio companies defaulting or entering distressed restructurings, outcomes that can wipe out equity holders while still rewarding debt financiers higher in the capital structure.
7. Dry Powder FOMO
Private equity firms are sitting on record amounts of unallocated capital, or “dry powder.” While that may sound reassuring, it creates pressure to deploy capital quickly, often leading to questionable investment decisions and inflated deal pricing. For retail investors, this means being funneled into PE funds at the tail-end of a market cycle when managers are most desperate to deploy funds and least disciplined in underwriting. Historically, vintages raised during peak fundraising years, such as 2007 or 2021, have produced the worst returns.
When you see multiple red flags flashing across a sector, it’s time to reassess.
What the Average Investor Should Do
As discussed in “Why Am I So Lucky,” individuals hear tales of how high-net-worth investors (the smart money) own private equity in their allocations. As shown in the chart below from Long Angle, roughly 17% of their allocations are to private equities. These reports don’t generally tell you that their allocation to “private equity” often tends to be their personal businesses. Nonetheless, individual investors frequently see this type of analysis and think they should be replicating that process. But should they?
Before investing in private equity, significant differences must be considered between the vast majority of retail investors and high-net-worth individuals. The underlying risks of private equity investments can define these differences. However, with the right knowledge and proactive steps, investors can avoid the most common pitfalls and protect their long-term financial security.
1. Know What You Own
Start by reviewing your retirement plan allocations, especially if you are invested in a target-date fund or managed account solution. Many of these funds now include allocations to private equity or private credit, often buried deep within the prospectus. Request a detailed holdings report if necessary. For example, some widely used TDFs from major asset managers have added “private market” sleeves that investors are unaware of, effectively exposing them to higher fees and illiquidity.
2. Prioritize Liquidity
Liquidity provides optionality, especially during volatile markets or personal financial emergencies. If your retirement funds are locked up for years, you lose the ability to rebalance, take advantage of market dislocations, or fund unexpected needs. Favor investment options that allow for daily liquidity, such as low-cost index funds and ETFs. Remember, having access to your capital is a risk management tool in itself.
3. Focus on Transparency and Fees
Insist on clear, net-of-fee performance reporting. Avoid products with opaque valuation methodologies or excessive fee layers. As a rule of thumb, compare fees: if a private investment costs 2-3% annually versus 0.10% for an S&P 500 index fund, it must deliver dramatically higher returns to compensate, which few consistently achieve.
4. Stay Simple, Stay Diversified
Decades of evidence show that a well-diversified portfolio of simple, liquid public investments outperforms most complex alternatives after fees and taxes. Don’t be lured by “fancy” strategies with marketing sizzle but structural drawbacks.
Final Thoughts: Don’t Dance Just Because the Music Is Playing
Private equity may have its place in a diversified, institutional portfolio, but even then, it demands scrutiny. For the average investor, the risks are magnified by a lack of transparency, long lock-ups, and a fee structure that often benefits managers more than investors.
Wall Street has a long history of selling the newest shiny object to Main Street just as the trade begins to sour. If the music stops at this private equity party, you don’t want to be the last one still dancing.
When in doubt, stick to the core investing principles: transparency, liquidity, low costs, and discipline. Complex products are often designed to enrich the seller, not the buyer. Safeguard your financial future by keeping your portfolio simple, transparent, and aligned with your long-term goals.
https://www.zerohedge.com/markets/private-equity-wolf-sheeps-clothing
July 23, 2025
More Review for ADNOC & Covestro Deal
EU antitrust regulators resume foreign aid probe into ADNOC’s Covestro deal
By Reuters
July 3, 20251:24 PM EDTUpdated July 3, 2025
- Companies
Covestro AGBRUSSELS, July 3 (Reuters) – EU antitrust regulators have resumed scrutiny of Abu Dhabi state oil giant ADNOC’s 14.7-billion euro ($17.3 billion) acquisition of German chemicals company Covestro (1COVG.DE)
,after the companies provided the information they requested, according to an update on the European Commission website.
The EU competition enforcer, which had temporarily halted its review on May 28, set a new deadline of July 28 for its decision.
The EU’s Foreign Subsidies Regulation takes aim at unfair foreign aid for companies which may have to provide concessions to offset the state support in return for clearance of their deals.
ADNOC had in May secured EU approval for the acquisition under EU merger rules.
($1 = 0.8511 euros)
June 24, 2025
Holcim Spins off North American Business
Holcim completes spin-off of North America business
- Holcim unlocks value with NextGen Growth 2030, via growth-focused capital allocation and value-accretive M&A
- Focused investment in most attractive markets from Latin America and Europe to Australia and North Africa
- Advancing its leadership in sustainable construction with expansion of high-value Building Solutions to drive profitable growth
Holcim today completed its 100% spin-off of Amrize, the partner of choice for North America’s professional builders, through a dividend-in-kind distribution of one (1) Amrize share for every outstanding Holcim share owned as of the close of business on 20 June 2025.
As distinct, independent publicly traded companies, Holcim and Amrize should each benefit from a sharpened strategic and operational focus, with dedicated management teams to capitalize on the unique opportunities in their respective markets.
Miljan Gutovic, CEO: “This is an exciting moment for Holcim and Amrize as we begin a new chapter as independent companies. I thank all employees for contributing to the many remarkable achievements of Holcim including the exceptional execution of the spin-off. We wish Amrize success in the future under the leadership of its Chairman and CEO Jan Jenisch.
“As the leading partner for sustainable construction, Holcim will capitalize on the powerful megatrends shaping the future of construction to unlock significant growth opportunities and create superior value for people, customers and shareholders. Alongside our highly accomplished leadership team and 48,000 colleagues around the world, we are executing our strategy NextGen Growth 2030 as unveiled in March.”
With NextGen Growth 2030, Holcim will leverage its sustainability leadership to deliver profitable growth in Europe, Australia and North Africa, while accelerating growth in Latin America to benefit from strong market fundamentals and industrialization trends. Holcim will grow its addressable markets by expanding in high-value Building Solutions, serving customers across the built-environment, from energy efficient building systems to high-performance concrete. The growth strategy will drive shareholder value with growth-focused capital allocation and value-accretive M&A.
Shares of Amrize will commence trading under the ticker symbol “AMRZ” on the SIX Swiss Exchange at 9:00 a.m. CEST and on the New York Stock Exchange at 9:30 a.m. ET.
About Holcim
Holcim (SWX: HOLN) is the leading partner for sustainable construction with net sales of CHF 16.2 billion1 in 2024, creating value across the built environment from infrastructure and industry to buildings. Headquartered in Zug, Switzerland, Holcim has more than 48,000 employees in 45 attractive markets – across Europe, Latin America and Asia, Middle East & Africa. Holcim offers high-value end-to-end Building Materials and Building Solutions, from foundations and flooring to roofing and walling – powered by premium brands including ECOPlanet, ECOPact, and ECOCycle®.
Learn more about Holcim on www.holcim.com, and by following us on LinkedIn.
Sign up for Holcim’s Building Progress newsletter here.
1 Net sales 2024 restated following spin-off; excludes net sales to Amrize.
About Amrize
Amrize (NYSE: AMRZ) is building North America, as the partner of choice for professional builders with advanced branded solutions from foundation to rooftop. With over 1,000 sites and a highly efficient distribution network, Amrize delivers for customers in every U.S. State and Canadian province. Amrize’s 19,000 teammates uniquely serve every construction market from infrastructure, commercial and residential to new build, repair and refurbishment. Amrize achieved $11.7 billion in revenue in 2024 and is listed on the New York Stock Exchange and the SIX Swiss Exchange. Amrize is ready to build your ambition.
https://www.holcim.com/media/media-releases/holcim-completes-spin-off-of-north-america-business
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