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Carlyle, KKR Report Income Declines Amid Asset Growth | Sidley Austin Nabs Secondary Partner
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Good day Pro PE readers! This week is a busy one for listed private markets firms, a number of which report their earnings for the fourth quarter and the full year of 2022. This morning, Carlyle Group Inc. and KKR & Co. Inc. report earnings that tell a similar story, with declines in each of the respective firms’ net income compared to a year ago but growth in overall assets under management. Meanwhile, law firm Sidley Austin LLP has poached a partner from rival firm Kirkland & Ellis to help strengthen its secondary practice, as our own Rod James reports.
Stay tuned for more earnings reports this week from the likes of Ares, Apollo and Brookfield, to name only a few.
On a final note, Jay Wilkins of Harvest Partners died unexpectedly over the weekend. Jay was well-liked and respected by many in the private-equity industry, particularly among those who invest in healthcare. Our condolences go out to his colleagues and his family.
Now onto the news..
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KKR & Co. Inc. said it ended the fourth quarter with $108 bilion of uncalled capital to make new investments, down 4% from the end of 2021. Credit: Brendan McDermid, Reuters
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KKR & Co. stemmed losses in its private-equity holdings during the fourth quarter to close out a difficult year, Rod James writes for WSJ Pro Private Equity. The New York-based private-equity firm said fourth quarter net income declined about 84% to $83.2 million, or 9 cents a share, from $507.6 million, or 82 cents a share, in the same period a year earlier. The firm’s assets under management increased 7% to $503.9 billion at the end of December from $470.56 billion a year earlier.
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Carlyle Group Inc. reported a roughly 80% drop in net income during the quarter ending Dec. 31 from the same period a year ago, while its total assets increased to $373 billion, thanks largely to growth in its global credit strategy, Maria Armental writes for WSJ Pro Private Equity.
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Sidley Austin LLP is making a push into the secondaries private-equity market with a top-level hire in a segment where the law firm has been a peripheral player. As Rod James writes for WSJ Pro Private Equity, the Chicago-based law firm has named Nicholas Cassin as a partner to advise investors and fund sponsors on a range of transactions involving secondhand private market assets.
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WSJ Pro Event: Investing Through The Cycle
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Join us on Feb. 15 for a virtual webinar to discuss how limited partners view the investment outlook. In one panel, Sara Bowdoin from Siguler Guff and Michael Flood of Northleaf Capital will consider allocations, while a second panel on finding diverse managers will feature Katie Moore from Hamilton Lane Inc. and Pamela Pavkov from TPG Inc. You can register here.
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$101.51 Billion
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The volume of secondary market transactions last year, down about 29% from 2021, according to advisory firm Setter Capital
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A family crest featuring a five arrows outside the Rothschild & Co. offices in the City of London, UK, on Monday, Feb. 6, 2023. Credit: Nathan Laine, Bloomberg News
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The family that controls European investment bank Rothschild & Co. is offering to buy out other shareholders, sending the firm’s stock up 17% Monday, Ben Dummett reports for The Wall Street Journal. The holding company for the family, Concordia, offered €48 per share, equivalent to $51.83, for the stock it doesn’t already hold or control. The deal values the firm at around $4 billion, Paul Clarke reports for sister publication Financial News in London. The offer represents a 19% premium to Friday’s closing price. The
bid's timing also looks like a wager on a revival in dealmaking.
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Canadian pension investment manager Caisse de dépôt et placement du Québec said it has agreed to acquire a half interest in a 7.2 kilometer toll road in the Montreal area for 355 million Canadian dollars, equivalent to about $264 million, from Transurban Ltd. in Australia. Transurban owns a 100% interest in the six-lane highway and its 1.2 kilometer Olivier-Charbonneau Bridge over the Rivière des Prairies, according to its website. The company has a concession to operate the road until 2042.
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A medical clinic operator backed by investors including General Atlantic and Newlight Partners is close to being acquired by CVS Health Corp. in a transaction valued at about $10.5 billion, The Wall Street Journal reported, citing people with knowledge of the matter. CVS and publicly traded Oak Street Health Inc. are discussing a price of about $39 a share, the people said. Chicago-based Oak Street, which has more than 160 primary care centers across 21 states, focuses on serving patients enrolled in Medicare, the federal health insurance program. General Atlantic and Newlight both first backed the company in 2015, according to their websites.
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CVC Capital Partners is acquiring a majority stake in transportation company Scan Global Logistics A/S in Denmark from a group led by AEA Investors, according to an emailed news release. CVC is backing the company from its CVC Capital Partners Fund VIII and AEA and company management are co-investing alongside the firm. AEA first backed the business in 2016. Scan Logistics generates revenue of more than $3 billion and has over 3,300 professional employees.
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Ara Partners has acquired a majority interest in energy-efficiency company Wattstor Ltd. with a growth investment, joining existing investor Janom, a private-equity firm in Slovakia, in backing the business, according to a news release.
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Syntagma Capital in Belgium is in exclusive negotiations to acquire the Telecom Systems business of Paris-based Nexans SA, according to a statement from the would-be seller. The group that private-equity firm Syntagma could acquire has around 680 employees and generates revenue of about €200 million, equivalent to $216 million, Nexans said.
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Columbia River Partners said it is backing software developer and systems integrator Business Solution Partners. The Roslyn, N.Y.-based software-as-a-service provider specializes in Oracle NetSuite systems and focuses on financial automation, according to a news release.
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Thompson Street Capital Partners in St. Louis is backing biosafety consulting and compliance company Sabai Global in Chesterfield, Mo. Sabai works with clients in the pharmaceuticals research and manufacturing, academic and healthcare sectors, 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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A blank check company set up by a group of Oaktree investment professionals is withdrawing its plan to raise $225 million to pursue a combination with a private business to bring it public, regulatory filings show. Oaktree Acquisition Corp. III first registered for an initial public offering of shares almost two years ago. Its founders included Patrick McCaney, Alexander Taubman, Zaid Pardesi and Mathew Pendo. The special purpose acquisition company didn’t provide a reason for withdrawing the
plan.
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Tikehau Capital-backed manufacturer EuroGroup Laminations SpA aims to raise as much as €448 million, equivalent to about $480.6 million, through an initial public offering priced from €5 to €6 per share, regulatory filings show. The Italian maker of electric motor parts maker plans to list on the Milan stock exchange by Friday. Tikehau and Italian multi-family office Euro Management Services both plan to reduce their holdings in the company through the IPO.
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VSS Capital Partners in New York said it has sold part of its interest in educational publisher Really Great Reading LLC to Vistria Group. VSS remains a minority backer of the Cabin John, Md.-based provider of digital subscriptions to scientifically aligned literacy courses and materials. The firm initially backed the business in June 2020 through its third Structured Capital fund, according to its website.
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Greenbriar Equity Group in Greenwich, Conn. said it has raised nearly $3.48 billion for Greenbriar Equity Fund VI LP, including $225 million from the firm and its network of operating executives. The firm said it had a $2.75 billion target for the growth-investment vehicle when it started seeking commitments roughly midway through last year. Investors in the fund include the Arkansas Teacher Retirement System and the Los Angeles Fire and Police Pensions, which pledged $50 million, according to the WSJ Pro Private Equity LP Commitments database.
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Planet First Partners has raised €450 million, the equivalent of $485.9 million, for its debut fund focused on growth investments in European companies whose technologies contribute to a more sustainable economy, according to an emailed press release. The fund, which surpassed a €350 million target, has secured commitments from investors that include Ingka Investments, the investment arm of IKEA retailer Ingka Group, the release stated. Planet First plans to back investments of up to €50 million in minority stakes of growing companies, according to the release.
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Vantage Capital in Johannesburg, South Africa said it collected $377 million for its fourth mezzanine debt fund, including commitments from development finance agencies and institutions. The firm provides financing to midsized businesses in Africa. So far, it has backed residential housing developer Seaton Estates in South Africa and Egyptian private equity firm Compass Capital.
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John “Jay” Wilkins Jr., president of midmarket focused firm Harvest Partners, died unexpectedly on February 4, according to an announcement issued by the New York-based firm. Mr. Wilkins joined Harvest in 2010 and was promoted to president of the firm in 2021. He was known for his work in the healthcare sector, along with his frank yet humble approach to dealmaking. He held board seats on companies that included Advanced Dermatology & Cosmetic Surgery, Affordable Care, Dental Care
Alliance and EyeCare Services Partners. He is survived by his wife McCartney and son Jack.
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Paul Bodnar, BlackRock Inc.’s head of sustainability policy and engagement, is leaving the fund giant to join Jeff Bezos’s $10 billion climate-focused initiative, Kristen McGachey reports for sister publication Financial News in London. Mr. Bodnar said in a post on his LinkedIn page that he would leave the New York firm in April for the Bezos Earth Fund after a two-year stint. A White House veteran who served as senior director for energy and climate change during the Obama administration, Mr. Bodnar was previously BlackRock’s global head of sustainable investing, and stepped into his current role following a reshuffle last October.
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Consumer-focused firm San Francisco Equity Partners said it has added Hywel Robinson as a principal to focus on deal origination, execution and operational initiatives, according to an emailed press release. Mr. Robinson previously served as a principal at Paine Schwartz Partners, a firm focused on investing in companies that support a sustainable food chain, according to the release.
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Waud Capital Partners in Chicago has entered into a partnership with healthcare executive Steve Jakubcanin to pursue an investment in the sector, backed by the firm’s commitment of more than $100 million. Mr. Jakubcanin was most recently the chief executive of Cornerstone Healthcare Group, an operator of nursing homes, behavioral health clinics and other businesses that was sold to ScionHealth, a hospital operator legally named Knight Health Holdings LLC in Louisville, Ky.
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Edison Partners said it has promoted Steve Zieja to principal, Grace Hahn to senior associate and Dylan Kiger to associate. John Shearburn, a former Warburg Pincus managing director, has been hired as a senior adviser.
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Eurazeo's Virginie Morgon is stepping down as chief executive. PHOTO: BENOIT TESSIER / REUTERS
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Virginie Morgon, one of the most influential women in private equity, has been ousted as the boss of publicly traded buyout firm Eurazeo SE, Sebastian McCarthy reports for sister publication Private Equity News in London. The Paris firm said Ms. Morgon has left the business after stepping down as chief executive and as a member of the private-equity firm’s executive board. Questions over the firm’s future leaders arose last year when founder Michel David-Weill died. Ms. Morgon is being replaced after
14 years at the helm by co-Chairman William Kadouch-Chassaing, who joined the firm a little less than a year ago as chief investment officer and general director finance and strategy. He came aboard from Société Générale CIB. Newly named co-Chairman Christophe Bavière is set to rotate into the CEO job in a year, according to an emailed news release. He joined the firm when it acquired Idinvest Partners, where he was the founding chairman, in 2018. Eurazeo said both Nicolas Huet and Marc Frappier are also stepping down as general secretary and head of the mid-large buyout division, respectively. They will remain in their current jobs until the end of April. Other members of the firm’s newly named executive board include Sophie Flak, managing partner in charge of ESG and digital, who joined
the firm in 2013. Eurazeo said last month that it raised €3.1 billion, or roughly $3.35 billion, last year and has assets under management of €32.4 billion.
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More restaurant companies are aiming to test investors’ demand for new listings after the sector weathered the Covid-19 pandemic and as dining sales have largely held up so far this year, Connie Driebusch and Heather Haddon write for The Wall Street Journal. Fogo Hospitality Inc., the parent company of a Brazilian-style steakhouse chain, is aiming for an initial public offering as early as spring, according to people familiar with the matter. Other restaurant companies including Panera Brands Inc. and Cava Group Inc., the parent company of a Mediterranean chain, are aiming for an offering in the first half of the year as long as markets keep improving,
according to people briefed on the plans.
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Apollo Opportunity Foundation, a charitable foundation supported by employees’ of private markets firm Apollo Global Management, said it has awarded $3 million in grants, the organization’s first such grants since its formation early last year with plans to award at least $100 million over the next decade, according to an emailed press release. The 11 organizations that received grants so far include Braven, Echoing Green, Girls Who Invest and The National Education Equity Lab, among others. The foundation focuses on expanding opportunities for economic prosperity across three main mission areas: career education, workforce development and economic empowerment, according to the press release.
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TA Associates in Boston topped the latest performance rankings of private-equity firms by Professor Oliver Gottschalg at the HEC Business School Paris. Second and third place in the 2022 HEC-Dow Jones Private Equity Performance Ranking for Large Cap Buyout Firms went to Veritas Capital in New York and Francisco Partners in San Francisco, Mark Latham reports for sister publication Private Equity News in London. The rankings are based on aggregate performance for their investors, with 563 firms examined.
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A State Street Corp. survey of 480 institutional investors indicated that roughly half of respondents expect further cuts in asset valuations and some three-quarters anticipate that discounted investment opportunities will arise because of tougher economic conditions. Continued allocations at current target rates are planned by 68% of respondents and 63% expect private-equity to receive the largest amount out of all private-markets strategies, according to results of the survey by the Boston-based provider
of trust and administration services as well as asset management.
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More restaurant companies are aiming to test investor demand for new listings after the sector weathered the Covid-19 pandemic and as dining sales have largely held up so far this year, Corrie Driebusch and Heather Haddon report for The Wall Street Journal. Fogo Hospitality Inc., the parent company of a Brazilian-style steakhouse chain, is aiming for an initial public offering as early as spring, according to people familiar with the matter. Other restaurant companies including Panera Brands Inc. and Cava Group Inc., the parent company of a Mediterranean chain, are aiming for IPOs in the first half of the year as long as markets keep
improving, according to people briefed on the plans.
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Fidelity International analysts say the global slowdown in mergers and acquisitions will continue this year, with almost three-quarters of those surveyed predicting any deals will be smaller bolt-ons, David Ricketts reports for sister publication Financial News in London. The firm’s annual survey of 152 in-house analysts conducted in December shows that there is no region where the respondents expect M&A to increase this year, marking the first time in recent annual surveys where deals are forecast to be less prevalent.
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