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Investcorp Looks to Main Street | DXA Tests Ordinary Investor Model
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Good morning! Now that we’re past 30,000, how long before we see 35,000 or even 40,000? It may seem pie-in-the-sky (Remember the 1999 book, "Dow 36,000"?) but perhaps less so than a generation ago. Markets are always forward-looking, so Wall Street must see much better days ahead. It may not last, but maybe the long holiday weekend will see some of us virtually partying like it’s 1999 over a future so bright, you gotta wear shades.
Coming back to earth, we have insights from Investcorp co-CEO Rishi Kapoor, who spoke with our Preeti Singh about efforts to widen the investor base for private equity to include more ordinary investors and their 401(k) retirement savings plans. Meanwhile, our Luis Garcia reports on how DXA Investments in Brazil has devised its own solution to the same issue by directly pitching private-equity deals to individual investors. In a sense, the firm is reversing the usual order by finding deals first then trying to raise the capital to get them done. All that and more below, so please read on...
A final note: Our next newsletter will arrive in your inbox on Monday as we observe the Thanksgiving holiday. Until then, enjoy and stay well!
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Rishi Kapoor, co-chief executive at Investcorp Holdings. PHOTO: INVESTCORP HOLDINGS
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The private-equity industry has made slow but steady progress in the quest to open the asset class to ordinary investors, including their 401(k) retirement plans, although so far those investors haven't exactly flooded in. However, Rishi Kapoor, co-chief executive at the $33.3 billion global asset-management firm Investcorp Holdings BSC, recently spoke to WSJ Pro Private Equity’s Preeti Singh about how his firm is betting that private equity’s Main Street push ultimately will pay off.
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Brazil’s DXA Investments has acquired a 12% stake in cold-pressed-juice company Greenpeople Participações SA, as the private-equity firm adopts a new fundraising model aimed at attracting investors with as little as $10,000 to invest, Luis Garcia writes for WSJ Pro Private Equity. DXA used the deal to test a new fundraising approach that aims to reach ordinary investors along with the wealthy and institutional funds. Instead of raising traditional private-equity funds as it has in the past, the Rio de Janeiro-based firm will use deals it has developed to offer investors a chance to back them and ultimately form their own, DXA-managed portfolios.
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30046.24
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The record closing level of the Dow Jones Industrial Average, while the S&P 500 climbed to a record of its own, settling at 3635.41
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Workers repair high-voltage power lines downed by a hurricane several years ago in Daytona Beach, Fla., near Melbourne, where First Reserve is based. PHOTO: JOE BURBANK / ORLANDO SENTINEL VIA AP
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Energy-focused First Reserve is offering to acquire electrical maintenance company Goldfield Corp. for $7 a share in cash, or about $171.7 million, in a deal that values Goldfield at roughly $194 million, including net debt, Colin Kellaher reports for Dow Jones Newswires. The bid represents a 64% premium to the Monday closing price of the company’s shares, which trade on the New York Stock Exchange, and is backed by Goldfield’s board of directors. The Melbourne, Fla.-based company provides electrical transmission and distribution maintenance services to utilities in the U.S. Southeast, mid-Atlantic and Southwest regions.
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Warburg Pincus and TowerBrook Capital Partners have reportedly won over the management of U.K. roadside-assistance company AA PLC with a 35 pence a share offer to acquire the company, the Financial Times reported Tuesday. The offer values AA at about £218 million ($291 million) and includes a £380 million investment to help the company reduce its debt, as outlined by AA in a regulatory filing on Monday. Late Tuesday, AA asked for a one-day extension of a 5 p.m. local deadline that day for the bidders to
declare their intent to make a formal offer. AA said the deal represents a roughly 40% premium to its undisturbed share price on Aug. 3, before buyout interest became known. AA was taken public in 2014 by its previous private-equity backers.
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Advent International has agreed to acquire banking technology consulting firm Sophos Solutions from majority owner Colombia Securities Exchange Group for roughly 129.6 billion Colombian pesos (equivalent to about $35.6 million). Advent also is acquiring other investor stakes and will be the majority investor in Sophos. Grupo BVC became the company’s majority owner in 2015.
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Tiger Global Management led a $131 million Series C financing round for New York-based banking company Finco Services Inc., which does business as Current, Yuliya Chernova reports for WSJ Pro Venture Capital, citing Stuart Sopp, Current’s founder and chief executive. Avenir Growth and Sapphire Ventures also participated, as did existing investors Wellington Management, Foundation Capital and QED Investors. Mr. Sopp said the deal gave the business a valuation of $750 million.
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Clearlake Capital Group is buying hardware and home-fixture supplier TKE Holdings Inc., which does business as Dimora Brands, from Jordan Co. The Dallas-based company’s products include premium kitchen and bathroom fixtures under the Top Knobs, Hardware Resources and other brands. Jordan Co. initially backed Dimora nearly five years ago.
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Asset-management firm DWS Group led an investment in DataLink Software LLC, which is backed by Denver-based Revelstoke Capital Partners. Revelstoke initially invested in DataLink in 2018 and has retained a stake in the company whose software is used by health-care providers and payers to track and manage patient population data. In addition to the growth equity investment, DataLink negotiated a senior secured credit facility led by Varagon Capital Partners, with participation from Comvest Partners and BC Partners Credit, the company said.
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A blank-check company backed by Apollo Global Management Inc. has reinflated an initial public offering of shares, pricing 30 million units at $10 each to raise $300 million, according to a news release. The Spartan Acquisition Corp. II deal was upsized from a Nov. 19 registration statement that put the target amount at $250 million, but that was down from $400 million that the special purpose acquisition company initially planned to raise, earlier filings show.
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Ares Management Corp. and real estate specialist Pretium raised their offer for rental home manager Front Yard Residential Corp. by about 20% to $16.25 a share in cash from the $13.50 initially agreed to in a deal announced last month that is now valued at roughly $2.5 billion. The sweetener came after Front Yard said it had received a competing offer from a third party it didn’t identify. The bump in price was accompanied by an increase in a termination fee, to about $40.2 million from $24 million, that the company must pay if the deal falls through for certain reasons. Front Yard said the new price represents a 63% premium over the shares’ undisturbed price on Oct. 16,
before the deal was made public. Front Yard listed more than 1.72 billion in residential rental properties at the end of September, including more than 14,500 homes.
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Bain Capital Credit and Pacific Lake Partners led a growth investment in software company OneShield Inc. The Marlborough, Mass.-based company provides applications used in the property and casualty insurance industry through software-as-a-service and cloud-based models. OneShield’s recurring revenue has nearly tripled over the past three years, according to a news release.
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Ardian is negotiating an investment in French medical diagnostic company Inovie Group. The acquisition of a minority stake has been approved by Inovie’s shareholders, Ardian said in an emailed news release.
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Growth-equity investor Provenance has invested $40 million in sleepwear maker MeUndies Inc. The brand-investment specialist said its backing will help the Los Angeles-based company expand its product line and distribution.
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Rhône Capital has agreed to invest in Italian coffee roaster Illycaffè SPA to help finance the Trieste-based company’s international expansion, including in the U.S. The deal with New York-based Rhône is expected to close by early next year.
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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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Blackstone Group Inc. has agreed to sell Phoenix Tower do Brasil to Highline do Brasil, a telecommunications infrastructure business that Digital Colony acquired about a year ago. Phoenix is a developer of mobile telecommunications tower sites and distributed antenna arrays in Brazil, with roughly 2,500 towers and antennas. Blackstone invested in Phoenix about five years ago through its tactical opportunities strategy. Boca Raton, Fla.-based Digital Colony is providing equity financing for the deal.
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Accel-KKR has agreed to sell marketing and agency management software company Insurance Technologies Corp. to Zywave Inc., a software-as-a-service provider to insurers that is backed by Clearlake Capital Group and Aurora Capital Partners. Carrollton, Texas-based ITC serves more than 9,000 property and casualty insurance brokers and over 250 carriers, while Milwaukee-based Zywave has more than 6,000 broker clients. Accel-KKR initially backed ITC in 2018.
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H.I.G. Capital collected €1.1 billion (equivalent to about $1.3 billion) for its third European fund focused on deals in the lower middle market. The Miami based firm with $42 billion in equity capital under management listed a target of almost $1.18 billion for the fund in a regulatory filing in July, before it had received any commitments to the vehicle. The firm said its H.I.G. Europe Capital Partners III LP fund would concentrate on deals in Western Europe.
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U.K.-focused private-equity firm CBPE Capital has raised £561 million (or about $747.4 million) for its latest pool, CBPE Capital Fund X, Mark Latham reports for sister publication Private Equity News in London. The London firm had targeted £525 million for the fund, which is its third since it separated from Close Brothers Group in 2008, according to a news release. The new vehicle is about 22% larger than its predecessor, which closed with £459 million in commitments in August 2016.
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Technology infrastructure-focused Digital Colony has named Liam Stewart as a managing director and the firm’s chief operating officer, succeeding Jeff Ginsberg, who remains the Boca Raton, Fla.-based firm’s chief administrative officer. Mr. Stewart joins the firm from Macquarie Infrastructure Corp., where he was most recently the chief financial officer. He previously worked with Marc Ganzi, Digital Colony’s chief executive, when both held leadership roles at Global Tower Partners.
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Rosewood Private Investments is partnering with chemical industry executive Andy Harris to pursue deals in the sector and related areas. Mr. Harris was most recently the chief executive of Vantage Specialty Chemicals and before that was CEO of Accella Performance Materials from 2012 to 2017, leading acquisitions by both companies.
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A Northwest Hardwoods lumberyard in Buena Vista, Va. The company has filed for bankruptcy, citing trade disputes and disruptions from the pandemic. PHOTO: ZACH GIBSON FOR THE WALL STREET JOURNAL
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A lumber supplier backed by private-equity firm Littlejohn & Co. is seeking bankruptcy court protection, citing damage from U.S.-China trade tensions and disruptions from the coronavirus pandemic, Jonathan Randles reports for WSJ Pro Bankruptcy. The Tacoma, Wash.-based company aims to cut about $270 million in debt from its balance sheet through a bankruptcy reorganization. Secured bondholders that would end up owning the bulk of the company’s equity under the pre-packaged plan include Glendon Capital Management, CVC Credit Partners and Blackstone Credit.
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Baring Vostok-backed online retailer Ozon Holdings PLC priced its initial public offering of American depositary shares at $30 each late Monday and the stock soared as much as 45% in its trading debut Tuesday. The Russian e-commerce company’s IPO raised more than $926 million after fees and discounts, a regulatory filing shows. Baring Vostok funds held about 37% of the shares after the deal, while Index Ventures held about 4.7%.
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A proposed £90 million (about $116.5 million) recapitalization of U.K. property services company Countrywide PLC by private equity distress specialist Alchemy Partners has been rejected by the company, which said Tuesday that it was reviewing options and that Peter Long, its executive chairman, had left. Countrywide named Philip Bowcock, a former William Hill PLC chief executive, as its interim CEO. The company said it is in discussions with Alchemy about a revised proposal and with Connells Ltd., a real estate management firm that made a competing proposal earlier this month. Connells offered to buy the company for 250 pence per share.
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Billionaire hedge-fund manager Jamie Dinan told employees and investors in York Capital Management Monday that the firm was largely getting out of its struggling hedge-fund business to focus on better-performing units, Juliet Chung writes for the Journal. York still expects to run roughly $9 billion in private equity, private debt and other vehicles that lock up client capital for longer periods. Credit Suisse is set to take a $450 million fourth-quarter charge because of the move by York, in which it has a stake, Paul Clarke reports for sister publication Financial News in London. The Swiss bank said in a statement that it will take the impairment on its stake, which it has owned since 2010.
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A new research paper debunks conventional wisdom regarding what investors can expect to see when making buyout-fund commitments, finding that the top 25% of funds ranked by returns can’t be distinguished from the lowest quartile at the point when limited partners are asked to pledge capital to successor investment pools. The paper published Monday by the National Bureau of Economic Research in Cambridge, Mass., suggests that return information available to investors at the time of fundraising provides no reliable indication of future performance. “For post-2000 buyouts [funds], the conventional wisdom to invest in previously top quartile funds does not hold,” say the four authors. But they said
top-performing venture-capital funds present less of a leap of faith to investors, as the performance data at time of fundraising is a more reliable indicator of future returns.
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