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SEC Aims to Enhance Fund Disclosures | Accel-KKR Nears $1.25 Billion | Continuation Fund Quandary
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Good Thursday morning. We can’t really say whether Microsoft is paying an overly rich price for game maker Activision Blizzard, at a price to trailing earnings multiple of 7.51, according to S&P Global Market Intelligence estimates. But as anyone who can read a stock chart can see, at $95 a share, the software giant agreed to pay a nearly 66% premium over Activision’s closing low of $57.28 at the start of December, barely six weeks ago. That looks pretty rich even for a company that entertains almost 400 million active users every month–even more so as the Nasdaq Composite sinks into correction territory. Will this valuation have any impact on other tech company values? Unlikely is the guess here.
The valuations of tech companies may very well be on the minds of fundraising executives at Accel-KKR, where they are bearing down on around $1.25 billion for the firm’s latest growth capital fund, as our Preeti Singh and Laura Cooper report below. The firm makes minority investments in software and tech-services businesses through the strategy.
Preeti also has a look at the dilemmas that can arise for limited partners when the sponsor of their fund sets up a continuation vehicle to extend the life of some of its investments. And in Washington, our Journal colleague Paul Kiernan reports that the SEC expects to roll out a proposal next week to enhance disclosures concerning private-equity funds.
We have these stories and many more for you summarized and linked below, so please jump in…
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Gary Gensler at the Securities and Exchange Commission headquarters in Washington last October.
PHOTO: JUSTIN T. GELLERSON FOR THE WALL STREET JOURNAL
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Securities and Exchange Commission Chairman Gary Gensler spent his first nine months on the job sketching out ambitious plans to tighten federal regulation of Wall Street, Paul Kiernan writes for The Wall Street Journal. Now, the clock is ticking for him to implement his agenda. With Democrats at risk of losing their thin majorities in the House and Senate after November's midterm elections, the coming months could be critical for Mr. Gensler. In a speech on Wednesday, Mr. Gensler said the SEC plans next week to offer a rule that would enhance disclosure around private-equity funds.
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Technology investor Accel-KKR is raising more than $1 billion for a new growth capital fund and is expected to hold a final close for it in the next month, Preeti Singh and Laura Cooper report for WSJ Pro Private Equity, citing a person familiar with the fundraising. The Menlo Park, Calif.-based firm is poised to raise around $1.25 billion for Accel-KKR Growth Capital Partners IV LP, according to people familiar with the situation, noting the firm first targeted $850 million for the fund. The multistrategy investor says it manages more than $10 billion of committed capital.
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Investors face more decisions over whether to support secondary deals structured as continuation funds, as buyers fuel a growing number of such transactions. However, as WSJ Pro Private Equity’s Preeti Singh reports, making those decisions is often tricky for limited partners in the funds, who must navigate tight decision deadlines and structures that could misalign their interests with those of fund managers.
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14340.26
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The closing value for the Nasdaq Composite index on Wednesday, down 10.1% from its November peak–just over the line to qualify as a correction for the tech-heavy market
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Barry Massarsky, a pioneer in the economics of music-royalty flows. PHOTO: AMIR HAMJA FOR THE WALL STREET JOURNAL
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As investors rush to buy megastars’ music catalogs, Barry Massarsky and his firm are in the middle valuing most of the deals, Anne Steele reports for The Wall Street Journal. He pioneered the economics of royalty cash flows in the early 1990s and together with his business partner, Nari Matsuura, developed a model to guide banks lending to music investors. Last year Massarsky Consulting valued over 300 catalogs totaling more than $6.5 billion.
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Blackstone Inc. said it has acquired electronics parts maker Interplex Holdings Ltd. from Baring Private Equity Asia at an enterprise value of about $1.6 billion, according to Baring in Hong Kong. The deal closed after clearing antitrust review in Europe earlier this month under a process that began in December, official documents show. Baring took the Singapore-based custom manufacturer private in March 2016, at an announced price of 450 million Singapore dollars, or about $333.9 million, from majority shareholders CVC Capital Partners and Standard Chartered Private Equity Ltd. Interplex makes connectors used in electric vehicles,
medical devices and digital infrastructure, Blackstone said. The company said it has more than 13,000 employees in 33 sites across 13 countries.
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Vista Equity Partners is backing BigTime Software Inc., a provider of cloud-based applications for professional services firms, making a $100 million growth investment in the Chicago company, according to a press release. The investment is earmarked for product development and innovation along with recruiting talent and bolstering customer sales and support. Vista is investing from its Endeavor Fund. Previous BigTime investor Wavecrest Growth Partners retained a stake following the deal.
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European asset manager Eurazeo has completed a €108.8 million, or $123.4 million, credit secondary transaction, WSJ Pro Private Equity’s Preeti Singh reports, citing Daniel Roddick, founder of deal adviser Ely Place Partners Ltd. Assets were moved from three Eurazeo funds into a continuation vehicle, providing liquidity to the fund investors, Mr. Roddick said. Two of the funds were co-investment vehicles, and it was important for the general partner to retain control of the assets involved and the underlying loans, he said.
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Blackstone Growth, the growth investment unit of Blackstone Inc., has led a $225 million investment in Clari Inc. that brings the revenue-operations-management software provider’s valuation to more than $2.6 billion. Other investors that participated in the investment in the Sunnyvale, Calif.-based company included Silver Lake, Light Street Capital and Maverick Capital, according to a press release.
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Coatue Management and Valiant Peregrine Fund led a $200 million investment in job-seeker social network Handshake, which is the operating name of Stryder Corp. in San Francisco. The deal, which was joined by several other firms, values the company at about $3.5 billion, according to a news release.
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KKR & Co. has acquired real-estate lending company Merchants Mortgage Trust & Corp., which specializes in short-term mortgage products for individual residential real-estate investors. KKR backed the investment out of its private-credit funds and accounts that the firm manages through its asset-based finance investment strategy, the firm said in a press release.
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Global energy and infrastructure firm EIG has backed a $400 million equity and debt financing for solar power developer 8minute Solar Energy. R. Blair Thomas, EIG’s chairman and chief executive, will join the company’s board of directors, according to a press release.
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Novotech Health Holdings Pte. Ltd., an Asia-Pacific biotech contract research organization majority owned by TPG Capital Asia, has raised $760 million in financing in a transaction that values the company at around $3 billion. The financing consists of a $255 million private placement and $505 million in debt refinancing, according to a press release.
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Morgan Stanley’s private-credit arm, joined by Ellington Management Group and Investcorp Credit Management BDC Inc. led a recapitalization of cybersecurity company Fusion Connect Inc. in Atlanta. The deal included $55 million in preferred equity and the refinancing of a $60 million credit facility, according to a news release.
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Insight Partners and Clearlake Capital Group led a $150 million investment in Iterative Scopes Inc. in Cambridge, Mass., according to an emailed news release. The company applies artificial-intelligence technology to gastrointestinal diagnostics to improve the accuracy of the results.
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Apis Partners has invested $50 million in loyalty program manager Giift, backing the Singapore company through its Apis Growth Fund II. The fresh capital is expected to finance further international expansion, according to a news release.
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Healthcare-focused InTandem Capital Partners is backing post-acute and end-of-life services provider Providence Care in Rock Hill, S.C., according to a news release. The growth investment is expected to help the company expand beyond the more than 3,000 patients it serves in South Carolina.
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Shore Capital Partners is backing retirement fund third-party administrator and payroll services provider HowardSimon LLC in Riverwoods, Ill., to help the business expand, according to a news release.
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Cove Hill Partners is backing software provider MyDigitaloffice.com LLC in Bethesda, Md., with a growth investment, according to a news release.
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The Halifax Group has backed Case Facilities Management Solutions, a North Attleboro, Mass.-based provider of snow management and commercial landscaping services.
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Family office Kidd & Co. has recapitalized systems integrator Pierce Washington LLC in San Francisco, making a growth investment in the business, according to a news release. Ignite Labs, Spring Capital and Southfield Mezzanine also backed the deal.
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NPX Capital has bumped up its investment in digital animated and graphics content developer Copin Communications Co. in Seoul, pumping in an additional $43 million on top of a $13 million deal in September, according to a news release.
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SureSwift Capital has acquired social-media contact organizing application MeetEdgar, which is used with Facebook, LinkedIn, Twitter and Pinterest web pages. The fully remote-work company uses SureSwift’s Edina, Minn., address as its own.
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Nautic Partners has made a growth investment in SPS Health, the operating name of Summit Pharmacy Solutions in Milwaukee, a provider of technology for post-acute-care pharmacies and pharmacy benefit managers.
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BroadOak Capital Partners has made a growth investment in biotechnology company PhenoVista Biosciences LLC in San Diego, according to a news release.
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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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Riverside Co. has sold food-service equipment parts distributor REPA Holding GmbH in Germany to strategic buyer PT Holdings LLC in Addison, Ill., according to an emailed news release. Riverside first backed REPA about five years ago.
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DigitalBridge Investment Management, an investment unit of publicly traded DigitalBridge Group Inc., said it has closed its second digital infrastructure fund with $8.3 billion, ahead of a $6 billion goal. The new fund is more than double the size of its predecessor, which closed with $4.05 billion in 2019. DigitalBridge has already invested the second fund in nine portfolio companies across cell towers, easements, data centers and other digital infrastructure assets, according to a press release.
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Portfolio Advisors has rounded up at least $2.67 billion so far for its Portfolio Advisors Secondary Fund IV LP, a regulatory filing shows. A Pennsylvania pension fund document indicates the firm had a $1.5 billion target for the vehicle. Investors in the fund include the Houston Firefighters Relief and Retirement Fund, the Pennsylvania Public School Employees’ Retirement System and the Missouri State Employees' Retirement System, public documents show.
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Monomoy Capital Partners has closed its fourth private-equity fund with more than $1.1 billion. The final tally of Monomoy Capital Partners IV LP exceeded the $768 million that the firm raised for the fund’s predecessor back in 2016. Monomoy said in a press release that it has already invested the fund into four main portfolio companies and one add-on acquisition.
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Growth investor Ten Coves Capital has closed its third flagship fund with $293 million in commitments, according to an emailed news release. The Darien, Conn.-based firm, formed in December 2020, said with the closing of Ten Coves Capital III LP, it now has more than $600 million in aggregate commitments to invest in financial technology, or fintech companies.
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Permira has hired Barry O’Sullivan as a senior adviser focusing on technology deals, according to an emailed news release. He was most recently an executive vice president and general manager of digital and AI for Permira portfolio company Genesys Cloud Services Inc.
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MSD Partners has hired Kevin Silva as a partner and head of its strategic partners group, according to an emailed news release. He joins the New York firm from Bardin Hill Investment Partners.
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Odyssey Investment Partners has promoted nine investment professionals, including elevating Jennifer Rogg to managing principal, capital raising and investor relations, according to an emailed news release.
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Pathway Capital Management has hired Andrea Almeida Mack as senior vice president and head of consultant relations in the firm’s Providence, R.I., office. Ms. Mack was previously managing director of institutional marketing and consultant relations at TCW Group, according to a news release.
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Multifamily investment office Pennington Partners said Graham Bachman has joined the firm as a managing director to help Pennington expand its relationships with family offices and registered investment advisers. Mr. Bachman previously served as director of business development for specialty finance firm Context Business Lending.
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Greenwich, Conn.-based lower-midmarket firm Southfield Capital said it has hired Jason Perlroth as principal and head of business development. Mr. Perlroth previously worked as a principal and head of business development for Westport, Conn.-based lower-midmarket firm BHMS Investments.
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Värde Partners has promoted three investment professionals–Jim Dunbar, Aneek Mamik and Carlos Sanz Esteve–to partner, with Mr. Dunbar based at the firm’s headquarters in Minneapolis, Mr. Mamik in New York and Mr. Sanz Esteve posted in London.
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Water Asset Management, an investment firm that backs public and private companies seeking to secure water quality and supply, has hired Erin Heitkamp as vice president of sustainability and farm product marketing. Ms. Heitkamp most recently oversaw sustainability, marketing, branding, communications and industry affairs at Pipeline Foods, a Minneapolis-based food supply chain services company.
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Tower Arch Capital has promoted Aubrey Burnett to partner and Christian Little to chief compliance officer at the Salt Lake City firm. Mr. Burnett joined in 2016 and Mr. Little came aboard in 2020.
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Andrew Pardo, a former senior member of the healthcare team at Clayton Dubilier & Rice, and Chris Petrini, a former senior professional from WindRose Health Investors, have formed Cypress Ridge Capital, a new U.S. growth-equity firm focused on healthcare deals. Cypress Ridge will target control and noncontrol investments of $10 million to $50 million, according to a press release.
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Newly formed Fairway Capital Management, co-founded by former Adams Street Partners executives, is raising a vehicle to invest in primary and secondhand fund stakes and make co-investments alongside private-equity fund sponsors and venture-capital firms, according to a news release. The fund for qualified individual investors, called Fairway Private Equity & Venture Capital Opportunities Fund, requires an initial minimum investment of $250,000 for its class I shares and increases of at least $10,000 can be made quarterly.
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MidOcean Partners-backed beauty brand BHCosmetics Holdings LLC sought bankruptcy court protection on Friday after celebrity endorsements, new products and millions of social-media followers failed to reignite sales, Andrew Scurria reports for WSJ Pro Bankruptcy. The California company filed under chapter 11 to liquidate inventory and sell off the company’s assets, owing nearly $23.5 million in secured debt and nearly $15 million to landlords and other unsecured creditors, court records show.
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Private equity-backed insurance agencies accounted for more than three-quarters of 1,034 broker mergers and acquisitions in the U.S. and Canada last year, according to boutique investment bank Optis Partners in Chicago. The number of deals last year rose 30% from 2020 driven by ageing agency owners, concerns about potential capital gains tax hikes and investment firms flush with cash, Optis said in a report. PE firms that acquired stakes in brokers last year included KKR & Co., Blue Owl Capital Inc.’s Owl Rock unit, J.C. Flowers & Co. and Abry Partners, Optis said.
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EQT AB’s assets under management rose 40% last year to about €73.4 billion, or $83.14 billion, while earnings more than doubled to €1.1 billion, on an adjusted pre-tax basis, according to a news release from the Stockholm asset manager. Net income more than tripled to €0.928 a share from €0.297 a share in 2020, the release shows.
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Golub Capital in Chicago has set up the Golub Capital Social Impact Lab at the University of Chicago’s Booth School of Business and is working with the Chicago Urban League to create training and professional development programs for leaders of nonprofit groups that serve communities of color, according to a news release. Golub has made a five-year commitment to the effort, which includes a leadership program.
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