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Oaktree Spins Out Infrastructure Group | GTCR to Buy AssetMark in $2.7 Billion Take Private
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We’ve made it to the end of another week. In recent years, we’ve seen plenty of large publicly traded private markets firms snapping up smaller specialist investors to broaden their reach in strategies such as private credit, real estate or infrastructure. However, our own Luis Garcia looks at one listed firm that is taking the opposite move. Luis reports that Oaktree Capital Management is spinning off its transportation infrastructure group into a separate firm called Duration Capital Partners, although it plans to retain a 25% stake in the newly created firm. Meanwhile, Maria Armental delves into GTCR’s proposed $2.7 billion deal for publicly traded financial services software provider AssetMark Financial Holdings.
Read on for more details on these stories and have a great weekend.
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Howard Marks, co-chairman of Oaktree Capital Management, in September. PHOTO: JEENAH MOON/BLOOMBERG NEWS
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Oaktree Capital Management is spinning out its transportation-infrastructure group with $3.65 billion in assets into a new firm called Duration Capital Partners, a move Oaktree is betting will better allow the business to expand, Luis Garcia reports for WSJ Pro Private Equity. New York-based Duration is led by Co-Chief Executives Emmett McCann and Josh Connor, who were both managing directors at Oaktree and co-portfolio managers of the firm’s infrastructure-investing strategy, according to a memo that Oaktree Co-Chairman Howard Marks sent to the firm’s investors last month and that was viewed by WSJ Pro Private Equity. Oaktree will
own a roughly 25% stake in the new firm, the memo said.
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Buyout firm GTCR reached a roughly $2.7 billion deal to take private AssetMark Financial Holdings, the latest private-equity deal in the fast-growing wealth management market, WSJ Pro's Maria Armental reports. Interest in wealth managers, particularly registered investment advisers, stems from “a perfect storm of market opportunity, fragmentation, and revenue,” according to a report last year from research and consulting firm Cerulli Associates. Buyout firms were the leading drivers of wealth management M&A deals in the first quarter, according to Echelon Partners, an investment bank and RIA consulting firm.
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$15 Billion
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The upper end of an estimated $10 billion to $15 billion range of anticipated private credit secondary deal volume expected to close in 2024, according to a survey conducted by Ely Place Partners, which advises on such deals.
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WSJ Pro Executive Edition
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Here is our weekly roundup of stories from across WSJ Pro that we think you'll find useful.
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The Justice Department is investigating McKinsey’s advice to manufacturers of OxyContin and other opioids.
Two months after the Change Healthcare hack, its parent company faces a long slog to identify all the people whose personal data was compromised.
One of Europe’s fastest-growing energy companies wants a slice of the U.S. offshore-wind market.
At Moderna, OpenAI’s GPTs are changing almost everything.
The next ad battleground will be the back seat of your ride-hailing cab.
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Darktrace’s board of directors unanimously recommended that its shareholders approve the deal. PHOTO: DADO RUVIC/REUTERS
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Thoma Bravo said it plans to buy cybersecurity company Darktrace for about $5.31 billion, intending to take the firm private and drive its global expansion in the field of artificial intelligence, David Sachs reports for the Journal. The U.S. private equity group said Friday that it had struck a cash deal with London-listed Darktrace, known for its utilization of AI to combat cyber threats. Thoma Bravo said its expertise in U.S. markets and software sector—as well as its financial resources—will hasten growth for the would-be private company, and capitalize on a growing market.
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U.S. Silica Holdings has agreed to be taken private by Apollo Global Management in a deal that gives the industrial minerals company an enterprise value of roughly $1.85 billion, Colin Kellaher reports for the Journal. U.S. Silica on Friday said funds managed by affiliates of Apollo will pay $15.50 a share in cash, a nearly 19% premium to Thursday’s closing price of $13.06 for the Katy, Texas, company. U.S. Silica said the transaction, slated to close in the third quarter, includes a 45-day “go-shop” period that allows it to seek a better deal.
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European buyout firm EQT AB’s infrastructure unit and wireless communications company T Mobile said they are forming a joint venture to acquire fiber-to-home infrastructure company Lumos from EQT Infrastructure’s third fund. EQT is using EQT Infrastructure VI fund to finance the transaction, which is designed to help Lumos build out . At closing of the deal, T-Mobile expects to invest around $950 million into the joint venture for a 50% stake and all Lumos fiber customers. The mobile company has committed around another $500 million that it expects to start deploying between 2027 and 2028. Lumos plans to use the combined capital to build out its network with a goal of
exceeding 3.5 million homes by the end of 2028.
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Niobrara Capital, a new firm founded by former One Equity Partners’ senior executive Chip Schorr, is leading a $175 million majority stake investment alongside Prysm Capital in Polar Semiconductor, a U.S. subsidiary of Sanken Electric Co. Early last year, Sanken had authorized One Equity Partners to back the majority stake for a $150 million investment, but the company shifted the investment to Schorr’s firm as he was initially the person
responsible for the proposed investment at OEP as well as the firm’s investment in Allegro Microsystems, which owns a minority stake in Polar Semiconductor. Following the proposed transaction, the investing entity backed by Niobrara and Prysm will own a roughly 59% stake in Polar while Sanken will retain a nearly 31% stake and Allegro around a 10% stake.
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HPS Investment Partners, Apollo Global Management and Oak Hill Advisors have put together a $500 million financing package for wireless telecommunications tower builder Tillman Infrastructure, which also borrowed another $500 million through syndicated debt led by JPMorgan Chase Bank, according to a news release from the company. Founded in 2016, New York-based Tillman owns more than 2,000 tower sites and is developing thousands more.
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Norway's sovereign wealth fund is expanding its deal with Iberdola in Spain to add 644 megawatts of renewable energy capacity, bringing the planned investment to around €2 billion, or about $2.14 billion, the Spanish electric utility company said. Norges Bank Investment Management, which manages Norway's €1.4 trillion sovereign wealth fund, is a minority investor in Iberdola. The company and Norges Bank now plan to develop about 2.5 gigawatts of renewable energy capacity in Spain.
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Hong Kong billionaire Li Ka-shing investment operations including CK Infrastructure Holdings, CK Asset Holdings and Power Assets Holdings have joined to acquire the owner of Northern Ireland’s biggest natural gas utility, Phoenix Energy Group, according to a regulatory filing in Hong Kong. Reuters said the deal values the business at about 7.4 billion Hong Kong dollars, or roughly $945 million, while the South China Morning Post said the deal was worth about £757 million, equivalent to about $943.6 million.
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Growth investor General Atlantic led a $115 million investment round in cybersecurity company ThreatLocker, joined by StepStone Group and hedge-fund manager D. E. Shaw, according to the company. The Orlando, Fla.-based company provides systems designed to protect information technology assets through a zero-trust approach.
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Lower midmarket firm Shoreline Equity Partners said it is investing in Prime Meats, a Duluth, Ga.-based distributor and processor of protein products including beef, poultry, pork, dairy and seafood, to restaurants, grocery stores, and butcher shops.
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Agent Capital co-led a $47 million growth investment in therapeutics developer Cerevance with Bioluminescence Ventures and Double Point Ventures, according to the company. They were joined by new backers MQB Partners and LifeRock Ventures as well as several existing investors in the Boston-based developer of drugs targeting central nervous system diseases.
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Century Park Capital Partners is backing a recapitalization of Total Access Elevator, a Santa Fe Springs, Calif.-based company that provides commercial elevator modernization, maintenance, and repair services across greater Los Angeles. Each of the company’s four owners will retain a stake in the business and continue to be actively involved in it going forward.
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DelCam Capital, a private equity firm that targets family owned manufacturing businesses focusing on New England, is acquiring Space Age Electronics, a manufacturer of fire and life safety equipment. The investment marks the first platform acquisition out of the private-equity firm’s DelCam Fund II, according to a press release.
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Credit investment firm Brightwood Capital Advisors is providing debt and equity financing to help support the growth of Allegiance Mobile Health, a Corpus Christi, Texas-based provider of medical transportation and 911 emergency services.
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Monroe Capital said it is supporting a senior credit facility and equity co-investment for Epika Fleet Services, a portfolio company of Trivest Partners.
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Our add-on deal interactive tool allows you to sort and analyze volumes of add-on deal data compiled by WSJ Pro. View more.
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SoftBank Group-backed Invitae, a medical genetics company in San Francisco that entered chapter 11 bankruptcy in February, has agreed to sell its remaining assets to publicly traded Laboratory Corp. of America for $239 million plus noncash consideration. Labcorp, as the company is known, said it expects the acquired business to generate $275 million to $300 million in annual revenue. SoftBank led a $1.2 billion convertible debt financing for Invitae in 2021, the company has said. SoftBank remained an
investor when the company entered chapter 11 proceedings.
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Multi-strategy asset manager KKR & Co. is buying a collection of student housing properties from Blackstone, which holds the 19 sites in its Blackstone Real Estate Income Trust, or Breit. KKR said it is paying about $1.64 billion. The purpose-built buildings house more than 10,000 beds and are tied to 14 public universities in 10 states. KKR plans to hand management of the assets over to University Partners, a dorm operator it set up in 2016. Blackstone acquired the 19 properties in 2018.
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Madison Dearborn Partners in Chicago and credit specialist HPS Investment Partners in New York have sold middle market insurance broker and wealth management services provider NFP to strategic buyer Aon at an enterprise value of about $13 billion, closing a deal announced last year. Madison Dearborn first backed the New York-based business in 2013. The transaction included $7 billion in cash and assumed liabilities as well as 19 million Aon shares valued at about $6 billion.
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Buyout firm 3i Group in London is selling eye and ear-care company Nexeye to KKR & Co. The Dutch company has about 3,500 employees and operates from 719 locations across the Netherlands, Belgium, Germany, Austria and Sweden under brands such as Hans Anders and Direkt Optik. London-listed 3i first invested in the business in 2017.
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OpenGate Capital said it has completed its sale of portfolio company SMAC to Luxemburg-based investment company Compagnie Financière Jousset and SMAC’s management team. SMAC offers waterproofing and building envelope systems and was initially acquired by OpenGate in 2019.
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Growth investor Norwest Venture Partners in Menlo Park, Calif., said it has collected $3 billion for its latest fund, Norwest Venture Partners XVII, roughly matching the size of a predecessor vehicle that closed in December 2021. The company said the latest fund brings its capital under management to about $15.5 billion. The firm’s investment strategies include consumer products and services as well as healthcare.
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Midmarket firm 5th Century Partners is seeking $250 million for 5th Century Partners Fund II LP and related parallel vehicles, a regulatory filing shows. The Chicago-based firm raised $144 million for its debut fund in 2022, above the fund’s $100 million target. The firm targets equity investments ranging from $5 million to $50 million in companies with between $2 million and $20 million of earnings before interest, taxes, depreciation and amortization, according to its website.
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Digital and communications infrastructure investor Palistar Capital said it has hired Brittenay Banh as a principal to head the firm’s investor relations and capital formation efforts. Banh previously served as vice president of investor relations and capital formation and digital infrastructure firm DigitalBridge.
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BlackRock is changing its strategy for interacting with wealth-management clients in the U.S., shifting a seasoned fund-distribution executive into a new role designed to cultivate relationships, including with clients in Texas, where it has run into criticism over environmentally conscious investing, Rebecca Ungarino reports for sister publication Barron’s. The firm, which oversees $10.5 trillion of assets, is also putting a longtime BlackRock wealth leader in charge of reorganized teams catering to U.S. wealth clients. The shift comes as BlackRock, already the world’s biggest asset manager, seeks to expand its ties with rich investors and calm a backlash over oil and gas investment
strategy, among other areas.
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The frenzy to build data centers – a much sought-after asset among private-equity and digital infrastructure firms – to serve the exploding demand for artificial intelligence is causing a shortage of the parts, property and power that the sprawling warehouses of supercomputers require, the Journal reports. The lead time to get custom cooling systems is five times longer than a few years ago, data center executives say. Delivery times for backup generators have gone from as little as a month to as long as two years. A dearth of inexpensive real estate with easy access to sufficient power and data connectivity has builders scouring the globe for suitable sites.
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