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KKR Sees Looser Credit Greasing Deals | Carlyle Ready to Gain From IPO Market Reopening
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Good morning! Today we have a report from our Rod James on the outlook for KKR, where co-CEO Scott Nuttall said the firm anticipates an acceleration in its private-equity operations this year as credit markets loosen.
Also, our Maria Armental writes that leaders of Carlyle also see things picking up as the year heads toward the halfway mark.
We have these and many other deals, exits, fundraisings and more boiled down and linked up for you below, so please jump in...
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Buyout firm KKR has its headquarters in this recently built tower at 30 Hudson Yards in New York, with a triangular observation deck jutting out near its peak.
PHOTO: GABBY JONES FOR THE WALL STREET JOURNAL
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The market for private-equity deals shows strong signs of recovering and leaders of buyout firm KKR see an acceleration in their transaction pipeline after a drop-off during this year’s first quarter, WSJ Pro Private Equity’s Rod James reports. Co-Chief Executive Scott Nuttall referred to a loosening in credit used to support deals as the year began as a key to providing financial grease for the wheels of dealmaking. “The leveraged credit market opened up in January. We are starting to see this impact all our businesses…in particular, the private-equity pipeline, which is up significantly,” Nuttall said during an earnings call Wednesday. More readily available bank financing will make
it easier for KKR to sell, refinance and publicly list the companies it already owns, he added.
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Carlyle Group notched some sizable exits in the first quarter, driving a key profit metric to its best quarterly result since 2022, Maria Armental writes, citing firm officials. Despite recent exits, however, first-quarter revenue fell below the same period a year ago, as one of Carlyle’s flagship funds slipped below the threshold return to remain eligible to garner the firm’s share of profits.
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$65.6 Billion
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The amount raised for midmarket buyout funds last year, a 29% gain from the previous year, according to data provider Preqin
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WSJ Pro is currently conducting our survey of secondary buyers for our 2024 Guide to the Secondary Market. WSJ conducts this annual survey of buyers to gauge deal activity in the private-equity secondary market. We are seeking information about secondary buyer portfolios and expectations for secondary market dealmaking in 2024. The deadline for completing the survey is May 9. Secondary investors can access the survey here.
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CoreWeave rents out processors housed in data centers across the U.S. PHOTO: CFOTO / ZUMA PRESS
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Coatue Management led a $1.1 billion growth investment in cloud-computing startup CoreWeave that nearly tripled its valuation to $19 billion, Asa Fitch reports for The Wall Street Journal. Other participants in the growth investment included Magnetar Capital, Altimeter Capital and Lykos Global Management. The valuation highlights booming demand for the cutting-edge systems that power artificial intelligence. A $642 million investment round about five months ago valued the business at about $7 billion.
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Blackstone said it has closed its $3.5 billion take-private deal for Toronto home builder Tricon Residential, acquiring all the company’s stock outstanding for about 15.17 Canadian dollars, or $11.25, a share. Tricon has around 38,000 single-family rental homes in the U.S. Sun Belt as well as multifamily apartments in Canada and plans to add $1 billion of new rental homes in the U.S. and $2.5 billion of new apartments in Canada.
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Bain Capital-backed Rocket Software said it has completed a nearly $2.28 billion carveout of the application modernization and connectivity business of OpenText, based in Waterloo, Ontario. Under the deal announced in November, more than 770 employees of the unit joined Waltham, Mass.-based Rocket, which said the acquisition would lift its revenue by 60%.
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Property and related credit specialist Pretium Partners said it has acquired BH Management Services, a provider of residential building operations and maintenance support. The Des Moines, Iowa, company focuses on apartment buildings, student housing and single-family homes.
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Mudrick Capital Management in New York is expanding a credit facility for car-sharing services provider Getaround, delivering up to an additional $50 million in financing to the publicly traded company. San Francisco-based Getaround offers an online marketplace where users can rent or offer cars and trucks for hire.
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Growth-focused BVP Forge has recapitalized mortgage loan-origination software company Mortgage Automator, acquiring a majority interest in the business. The Toronto-based company works with more than 375 clients including lenders in the U.S., Canada and Australia.
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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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Viking's shares debuted Wednesday on the New York Stock Exchange, above. PHOTO: STEFAN JEREMIAH / REUTERS
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Cruise operator Viking Holdings, backed by TPG and the Canada Pension Plan Investment Board, saw its valuation rise to about $11 billion as trading began for its shares following an initial public offering that priced them at $24 each. Viking stock opened 9% higher Wednesday. Both TPG and CPP Investments held stakes of more than 31% and both planned to sell about 21 million shares each in the IPO, leaving both with stakes of roughly 71.1 million shares, according to a securities filing ahead of the offering. Viking’s shares closed up nearly 9% on Wednesday at $26.10 each.
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Buyout firm Inflexion has sold its stake in Automotive Transformation Group for just under £200 million, or about $250.4 million, to strategic buyer Keyloop, Sebastian McCarthy reports for sister publication Private Equity News in London, citing people familiar with the situation. The deal signals London-based Inflexion’s exit from an auto-focused rollup strategy that began in 2019.
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Macquarie Group’s asset-management arm said it is selling a 10% interest in a U.K. wind-energy project to clean-energy investment specialist NTR in Dublin. The buyer is investing in the East Anglia ONE development through its L&G NTR Clean Power (Europe) Fund, along with the Development Bank of Japan. Macquarie Asset Management is retaining a 10% stake. The 102-turbine project is expected to generate as much as 714 megawatts of power, or enough for more than 630,000 homes.
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Last month, BC Partners said it had realized about €8 billion from investment exits in the past year, but now the firm is poised to hand over its Dümmen Orange flower business to lenders that include Intermediate Capital Group, ICG, Triton and J.P. Morgan Asset Management, Sebastian McCarthy reports for sister publication Private Equity News in London, citing people familiar with the matter. BC Partners acquired the Dutch business in 2015 in a deal valued at about €503
million, or $536.5 million, according to its website.
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Consumer-focused Swander Pace Capital in San Francisco said it has sold feeding tube formula maker Functional Formularies to strategic buyer Danone. The company supplies organic medical products used in institutions and by consumers at home, according to its website. The firm first backed the West Chester, Ohio-based business in 2018.
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Private-equity firm First Reserve in Stamford, Conn., said it has sold its stake in industrial cleaning company USA DeBusk to H.I.G. Capital in Miami. First Reserve initially backed the business in 2019. The Deer Park, Texas-based company works with manufacturers, energy and utility businesses, providing services that include infrastructure support.
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GreyLion Partners has sold portfolio company MTL Holdings to publicly traded Carlisle Cos. for $410 million. GreyLion has backed the producer of metal edge systems and metal wall structures since 2020, according to the private-equity firm’s website.
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Marsh McLennan's Mercer unit wasted no time in getting investors to back its new fund. PHOTO: JHVEPHOTO / SHUTTERSTOCK
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Mercer Investments is already raising its next fund designed to offer investors access to a range of private markets, indicating it aims to collect $1 billion for Mercer Private Investment Partners VIII, less than a week after announcing the closing of the seventh vehicle in the strategy. The unit of New York-based insurance giant Marsh & McLennan has already picked up more than $113.5 million for the new fund, listing eight investors so far with the first commitment recorded on April 18, a securities filing Wednesday shows. Mercer said last Thursday that it had wrapped up the seventh pool with $3.9 billion. The strategy aims to appeal to institutional
investors that lack the capability to pick the best-suited managers for their needs.
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HighVista Strategies in Boston said it has wrapped up HighVista Private Equity X with about $675 million, including a commitment from the firm. The fund entered the market last September as abrdn U.S. Private Equity X but was renamed after HighVista acquired the U.S. private-markets business of U.K. financial services company abrdn, formerly called Standard Life Aberdeen, in October. The firm indicated in a February securities filing that it had a $550 million goal for the vehicle. HighVista aims to invest from the fund in lower midmarket companies, generally with enterprise values of less than $150 million.
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Halifax Group, a lower-midmarket firm focused on health and wellness, outsourced business services and franchising, has raised at least $444 million so far for Halifax Capital Partners V, according to a regulatory filing. Halifax closed the fund’s predecessor in 2017 at a $650 million upper limit.
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Bernhard Capital said it has hired Jeff Baudier as a senior managing director in charge of infrastructure investments. Baudier served as chief executive of electric distribution company CORE Electric Cooperative, but before that he spent three years as a managing director at Bernhard.
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Baird Capital in Milwaukee said it has hired Anthony Zhu as principal with its private-equity team, based in Chicago, and Samuel Pollard as investment associate in London. Zhu joins from Madison Dearborn Partners while Pollard comes aboard from PricewaterhouseCoopers.
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Funds specialist Kenneth Burdon has joined Simpson Thacher & Bartlett as a partner and will help staff the law firm’s new Boston office, alongside Partner Nathan Somogie, according to the firm. Burdon left Skadden, Arps, Slate, Meagher & Flom, where he was a partner in the investment-management group in Boston. Somogie is relocating from Simpson Thacher’s New York office.
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Silver Lake-backed game and app development tool maker Unity Software made a management change that will see Jim Whitehurst return to the firm as a managing director as he steps down as interim chief executive at Unity in San Francisco. He’s being replaced as CEO by Matthew Bromberg, a Blackstone senior adviser. Whitehurst was formerly a senior adviser to Menlo Park, Calif.-based Silver Lake. Whitehurst also moves to role of executive chairman of publicly traded Unity, where Silver Lake is one of its largest shareholders.
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Bowmark Capital in London said it has appointed Steve Moore as a portfolio director and promoted Sam Price and Sam Beesley to portfolio director and portfolio manager, respectively. Moore joins from the Boston Consulting Group.
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Aon Center in Los Angeles recently sold at a huge discount from its price a decade earlier. PHOTO: ERIC THAYER / BLOOMBERG NEWS
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Defaults are reaching historic levels in the office market, as a growing number of owners capitulate to persistently high interest rates and weak demand, Peter Grant writes for the Journal. More than $38 billion of U.S. office buildings are threatened by defaults, foreclosures or other forms of distress, according to data firm MSCI. That is the highest amount since the fourth quarter of 2012 in the aftermath of the 2008-2009 financial crisis.
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DigitalBridge Group, an investor in data centers and other digital infrastructure, saw its shares drop as much as 16% Wednesday after reporting a narrower net loss on fee revenue that jumped 21% in this year’s first quarter from a year ago. The Boca Raton, Fla.-based firm also said it raised about $1.1 billion in fresh capital during the period, in a presentation posted late Tuesday. DigitalBridge said revenue from fees climbed to $72.8 million while fee-related earnings rose 28% to about $19.6 million for the just-ended quarter and distributable earnings came to $2.2 million, or 1 cent a share, compared with a year-earlier loss of $7.4 million, or 4 cents per share. The company highlighted power supply
constraints on data center operations and development in its presentation to investors. DigitalBridge shares closed down 14% at $14.11 Wednesday in New York.
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Announced mergers and acquisitions in the Americas this year through April jumped 57% in terms of value but the number of deals dropped 36% compared with the same period of last year, data released by the London Stock Exchange Group show. The value rose to almost $646.21 billion while the number of announced transactions fell to 4,802, the lowest level for the first four months of any year since 2016, LSEG data indicate.
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An “unusually uncertain” outlook for the economy and interest rates as well as fiscal management and politics are creating opportunities for credit investors, Oaktree Capital Management Co-Chairman Howard Marks said in a recent report. Tailwinds from high liquidity levels in the global financial system have boosted asset prices in recent months and aren’t likely to subside soon, Oaktree said. However, the Brookfield-controlled credit specialist said “countervailing headwinds” may be strengthening, creating an opportune time for private-debt investments.
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