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Sciens Capital's Water Play | MidOcean to Exit Nutrabolt | Crypto Enforcement Pressure Mounts
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Another week is done and dusted! The dismal state of water infrastructure across the U.S. has attracted increased attention in recent years, including from a growing number of private investors. In this morning’s news, our own Luis Garcia catches up with a senior professional from one such investor, Sciens Capital Management, who discusses how his firm is investing its recently raised water infrastructure fund. Meanwhile, MidOcean Partners is exiting its stake in sports drink company Nutrabolt and pressure is mounting on the Securities and Exchange Commission to step up its enforcement efforts over the crypto industry following the collapse of crypto exchange FTX.
Read on for more details on these stories and more, and have a great weekend...
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Municipal water systems are a fragmented industry, Sciens says.
PHOTO: GERALD HERBERT/ASSOCIATED PRESS
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As infrastructure investors pour money into renewable energy, Sciens Capital Management focuses on a less popular sector—water. The New York firm said it has invested roughly $600 million so far in businesses such as Central States Water Resources Inc. in St. Louis, an operator of water systems and wastewater plants that Sciens has helped expand to operations in 12 U.S. states, said John Rigas, the firm’s chairman and CEO. WSJ Pro Private Equity’s Luis Garcia spoke to Mr. Rigas about his firm’s plans to capitalize on consolidation in the U.S. water infrastructure sector.
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Publicly traded Keurig Dr Pepper Inc. has agreed to buy a 30% stake in sports nutrition products brand Nutrabolt, a deal that paves the way for mid-market firm MidOcean Partners to exit its investment in the company, Will Feuer and Laura Kreutzer write for WSJ Pro Private Equity. MidOcean initially backed the company in 2014 and under its ownership Nutrabolt’s revenue roughly quadrupled.
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Pressure is mounting on the Securities and Exchange Commission to step up enforcement of key hubs of the crypto industry after the collapse of FTX last month, Dave Michaels reports for The Wall Street Journal. FTX’s bankruptcy put the focus on crypto exchanges, the primary hubs for individual investors that offer such services as digital-coin sales, lending and the safekeeping of assets. Despite investigating parts of the industry for over six years, the SEC has yet to sue a major crypto exchange.
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We’re interested in hearing your thoughts on some of the topical stories from our reporters here at WSJ Pro Private Equity. In case you missed it, our own Chris Cumming looked at private equity’s efforts to raise capital using blockchain technology, which some firms say will allow certain investors to access the asset class more efficiently.
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Q:
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Should private-equity firms embrace blockchain technology to bring in more investors? — Join the conversation here.
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Cyndi Lauper is one of the many artists whose songs are part of a $1.8 billion asset-backed securitization of sounds and songs that is structured and anchored by Apollo Global Management. Photo Credit: Dafydd Owen/UPPA via ZUMA Press
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Apollo Global Management’s capital solutions unit has structured and anchored a $1.8 billion asset-backed securitization deal of songs and sounds recordings for music publisher Concord, according to a news release. The five-year facility is backed by a catalog of more than one million unique music assets that include more than 300 Grammy award winners, according to a press release. The catalog is valued at more than $4 billion and includes songs from Phil Collins, Creedence Clearwater Revival, Daft Punk, Miles Davis, Pink Floyd and Cyndi Lauper, among others, the release stated.
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Partners Group Holding AG in Switzerland said it has agreed to back Sunsure Energy in India by acquiring a majority interest in the company and committing to invest as much as $400 million to develop its utility-scale renewable-power projects. The plan calls for the development of solar, wind and battery storage projects totaling more than 3 gigawatts of operational capacity, according to a news release. Partners is investing through its private infrastructure Asia strategy.
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Regulators acted Thursday to block software and information services giant Microsoft Corp.’s $75 billion acquisition of game developer Activision Blizzard Inc., taking one of their biggest shots under the Biden administration at halting a merger of technology giants, Sarah E. Needleman and Dave Michaels report for The Wall Street Journal. The legal action sets the stage for a court challenge over the deal, pitting Microsoft against the Federal Trade Commission. The FTC earlier sued to block another technology deal, and asked a federal judge on Thursday to halt Meta Platforms Inc.’s planned acquisition of virtual-reality startup Within Unlimited Inc.
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Greenbriar Equity Group said it has acquired Applied Aerospace Structures Corp., which designs, makes and tests aircraft and aerospace components for commercial customers and government agencies. The Rye, N.Y. firm plans to back the Stockton, Calif.-based company’s growth.
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Agilitas Private Equity is pushing back the expected closing of its carveout of NNIT Group’s infrastructure outsourcing operations, citing a few customers of the business that are still in the process of approving the deal, which requires the consent of all customers. The deal was expected to close this month. The firm also said the transaction is still under review by regulators. NNIT agreed to sell the business, which has about 1,500 employees, to the London-based firm in June for 1.5 billion Danish kroner, equivalent to $211.8 million. At the time, closing was expected within six months. Now the anticipated closing will be in the first quarter of next year.
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A special purpose acquisition company backed by growth investment firm 7 Global Capital GP S.à r.l. has agreed to combine with video marketing company Banzai International Inc. in a deal that values the business at about $380 million post-transaction, according to data provider Boardroom Alpha. As part of the agreement, Banzai will acquire Hyros Inc., a digital marketing support services provider, for about $110 million immediately prior to combining with the SPAC, 7GC & Co. Holdings Inc., according to a news release. The SPAC is led by firm co-founder Jack Leeney.
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Valesco Industries, a Dallas-based private investment firm focused on manufacturing, distribution and business-to-business services, has backed North American Kitchen Solutions Inc., an Elyria, Ohio-based manufacturer of commercial kitchen ventilation systems, according to a press release.
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Investment firm Stephens Group in Little Rock, Ark. said it has acquired Quality Valve Inc., a distributor of industrial valves and related components based in Mobile, Ala., from Pfingsten Partners in Chicago. Family-owned Stephens Group provides investment banking services among other operations and invests with nearly $2 billion in private-equity assets under management. Pfingsten acquired Quality Valve in July 2018, according to its website.
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First Ascent Ventures in Toronto and Felicitas Global Partners in Pasadena, Calif. led a $38.4 million investment in Darwin CX LLC, joined by Metropolitan Partners Group in the growth investment. The Bunnell, Fla.-based software-as-a-service company focuses on customer acquisition and retention for client brands.
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New Water Capital, a lower midmarket firm focused on investments in consumer products and industrial manufacturing and services businesses, said it has invested in Bulk Lift International LLC and Bagwell Supply Ltd. The two companies design, manufacture and distribute flexible intermediate bulk containers and related packaging products, 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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IDG Capital-backed online retail-services provider Dmall Inc. in China plans an initial public offering in Hong Kong instead of the U.S. as it seeks to raise money for expansion, Bingyan Wang reports for Dow Jones Newswires. The Beijing-based e-commerce services specialist tied to the Wumei Group of supermarkets didn’t specify an amount or a timeline for the IPO. Aside from IDG Capital, which owns about 7.7% of the company, other backers include technology giant Tencent Holdings Ltd. The money-losing company was valued at around $3.05 billion in its most-recent private investment round.
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A Red Ribbon Asset Management-backed company, Modulex Modular Buildings PLC in the U.K., has agreed to combine with blank-check company PHP Ventures Acquisition Corp. to give it a Nasdaq listing, according to a news release. The agreement values the company at about $600 million, according to a news release. Modulex, which is publicly traded in India, develops prefabricated steel buildings using advanced technologies and has a 40-acre manufacturing plant under construction in India and plans for five more. Impact investor Red Ribbon in London backed the development of Modulex with money it raised in 2016, according to a Forbes India report.
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ASK Group’s ASK Capital investment arm said it plans to raise $500 million for a new vehicle, the ASK Indian Entrepreneur Fund, over the next three years. ASK plans to model the new fund’s strategy on its ASK Indian Entrepreneur Portfolio, which backs entrepreneurs in the country and has generated an 18% compound annual growth rate.
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Hellman & Friedman in San Francisco said it has added Aron Ain as an operating partner and member of its H&F CEO Council. Mr. Ain is executive chair of software maker UKG Inc.
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Private-equity firms raised $111.5 billion so far this year in Europe, 39% less than the $184.2 billion they collected during the same period of last year, according to data provider Preqin. The fall in public markets is increasing the weight of private-equity allocations in investors’ portfolios, while a weak exit environment will slow the pace of capital recycling, the private market-data provider says. “Successful fundraisings such as Nordic Capital’s EUR9B Fund XI show there’s still demand for buyouts in Europe,” Preqin adds. “But [fund managers] may have to look further afield to markets such as the Middle East and [Asia Pacific], or to new sources of capital such as private wealth.”
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Venture investments in cryptocurrency startups this year are set to surpass last year’s record of $21.2 billion, with 616 deals valued at $19.9 billion through the third quarter, according to a PitchBook Data Inc. analysis. The researcher said the amount committed to crypto startups for the first nine months of this year is 41% more than the total for the same period of last year, although the pace has been slowing. Just $4 billion worth of deals were done in the just-ended quarter, down about 38% from the year-earlier period.
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A Disruptive Capital-linked special purpose acquisition company, Disruptive Capital Acquisition Co. in the U.K., said it has abandoned a plan to combine with Saxo Bank A/S in Denmark, saying “the timing is not optimal” in a regulatory filing. The deal announced in September valued the bank’s outstanding shares at at least €2 billion, or roughly $2.1 billion, according to an earlier filing. The SPAC raised £125 million, equivalent to $152.6 million, through an initial public offering in Amsterdam in October 2021.
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Publicly traded companies face questions from the Securities and Exchange Commission about their exposure to distressed cryptocurrency businesses after the collapse of crypto trading facilitator FTX, Paul Kiernan reports for The Wall Street Journal. In a notice posted to its website Thursday, the SEC said companies may have disclosure obligations related to effects of recent crypto bankruptcies on their businesses. It provided a list of sample questions that companies may face based on their circumstances.
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Sen. Elizabeth Warren (D-Mass.) and Sen. Tina Smith (D-Minn.) are calling for tougher enforcement of rules designed to prevent asset managers who have been convicted of financial felonies in foreign countries or that have settled fraud allegations from managing retirement money, Beth Pinsker reports for sister publication MarketWatch. Currently, the Labor Department can grant exemptions but the senators say the agency should take a more stringent approach and broaden categories of offenses that would prevent
managers from having a role in overseeing retirement funds.
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