Last week ended on an uncertain note as stock markets plunged more than 700 points following news of a surge in new Covid-19 infections across several states including Florida and Texas. The infection resurgence poses fresh uncertainty for an economy that seemed to be emerging from the dark days of April and May. What this means for private-equity portfolio companies remains to be seen. However, as Chris Cumming reports this morning, the industry’s ability to dip into its deep well of dry powder to shore up their own portfolio companies will prove tricky at best, especially for those companies that are struggling. Meanwhile, our own Preeti Singh reports details on the formation of Catalio Capital and Isaac Taylor explains why VMG Partners’ latest promotion marks a step forward in the firm’s efforts to promote gender diversity across portfolio companies. 

Dive in for more on these and other stories….

The mountain of cash held by private-equity firms is turning out to be a mirage for companies they own that are struggling due to the coronavirus pandemic, Chris Cumming writes for WSJ Pro Private Equity. The buyout industry has spent years building up its dry powder, or money that investors have committed to private-equity funds that hasn’t yet been spent. That pile was at a record $1.45 trillion globally as of June, excluding venture-capital funds, according to data provider Preqin Ltd.

A majority of investors in the Nexus funds of Camden Partners supported the spinout this month of its Nexus Management group into a new company, Catalio Capital, Preeti Singh reports, citing people familiar with the situation. Baltimore-based Catalio’s spinout came amid fundraising for the second Nexus fund, which has been transferred to the new firm, the people said.

Eaton Vance Corp. mutual-fund manager Craig Russ isn't an activist, but when he heard that distressed-debt investors were going after Serta Simmons Bedding LLC, endangering his $200 million investment in the ailing company, he went to the mattresses, Matt Wirz writes for The Wall Street Journal. Mutual funds have long shied away from fights with savvy hedge funds and other investors who specialize in troubled companies. But Mr. Russ and other fund managers got into a dogfight with the investors, including Apollo Global Management Inc. and Angelo Gordon & Co., and won in New York State Supreme Court last week. It is the latest example of how large money managers are upending the balance of power on Wall Street. Mr. Russ was joined by Invesco Ltd. and Credit Suisse Asset Management, among others.

VMG Partners has promoted Cassie Nielsen from vice president to talent partner, less than a year after the firm helped launch a nonprofit focused on gender diversity at portfolio company boards that Ms. Nielsen helps lead, Isaac Taylor writes for WSJ Pro Private Equity. 

Blackstone Group Inc. is in advanced talks to form a venture with Hudson Pacific Properties Inc., the Los Angeles owner of film and television production facilities, in a partnership valued at more than $1.4 billion,Craig Karmin writes for The Wall Street Journal, citing a person familiar with the matter.

A growth-investing arm of Providence Equity Partners led a $50 million investment round in customer relationship management software maker SevenRooms Inc. The Providence firm made its investment in the Series B round for the New York-based company, which serves the hospitality industry, through its Providence Strategic Growth Capital Partners LLC operation.

One Equity Partners has agreed to purchase the contract manufacturing unit of Sparton Corporation, which provides engineered products for the defense industry. Sparton’s Manufacturing & Design Services unit engineers, designs, and manufactures complex electronic and electromechanical devices for a variety of industries. The deal is slated to close in the third quarter, according to a press release.

General Atlantic-backed Brazilian drugstore chain Empreendimentos Pague Menos SA plans to go public, Reuters reported, citing a regulatory filing. The offering is expected to raise as much as 1.2 billion reais ($223.92 million) through sales of shares by the company, also known as Pague Menos, and current investors, the news agency said, citing two people familiar with the matter. The New York private-equity firm, which had about $37 billion in assets under management at the end of last year, initially backed Pague Menos in December 2015. Reuters said the firm isn’t expected to sell any of its shares in the IPO, which is expected to price in August or September. The drugstore chain is one of Brazil’s largest, with 1,124 stores as of March.

Multi-strategy alternative investment firm LDA Capital has agreed to acquire as much as 800 million Philppine pesos ($16 million) worth of equity in Roxas and Co., which has interests in real estate, agri-business, real estate development, hotel operations. The company said it would use the funds invested over the next three years to reduce debt and for general purposes. The deal also provides LDA with a call option to acquire up to 99 million Roxas shares for 2.38 pesos each during the same period.

Private financing firm Nice & Green SA has agreed to provide a €2.4 million ($2.7 milion) equity line to Paris-based medical technology company SpineGuard SA. The Nyon, Switzerland-based firm structured the line as a series of commitments over 12 months, which the company said will provide cash as it strives to survive a coronavirus pandemic-related downturn in elective surgeries and a planned Chapter 11 bankruptcy filing in the U.S. and a similar move in France. SpinGuard technology is used to help place skeletal implants.

Growth-equity investor Eterus Capital led a $2 million funding round in GroupSolver Inc., a San Diego-based developer of market research surveys using artificial intelligence to analyze results. Tech Coast Angels joined in the financing round, alongside the Slovak private-equity firm.

Our add-on deal interactive tool allows you to sort and analyze volumes of add-on deal data compiled by WSJ Pro. View more.

RedAwning, a vacation rental marketing company backed by firms that include Alpine Pacific Capital and Silversmith Capital Partners, has sold Blizzard Internet Marketing, a website design, hosting, and booking engine provider, to Beyond Pricing, a vacation rental revenue management software provider.

Camden Partners has wrapped up raising commitments for its Strategic Partners Fund VI with $100 million. The firm focuses on investing in U.S. lower middle-market businesses through its Strategic Partners funds, targeting the technology-enabled services and software as well as education sectors.

Perry Creek Capital has raised more than $300.3 million so far for its Perry Creek Capital Partners LP fund, after recording its first commitment on June 16, a regulatory filing shows. A separate filing shows that Perry Creek Strategic Partners LP has collected more than $63.1 million so far, with its first commitment received on May 8. The New York firm reported having more than $723 million under management at the end of last year. Perry Creek is owned by Adeel Qalbani and Brian Zingale as principals and the Rohri Trust, of which Mr. Qalbani is a Trustee.

Aisling Capital, a private-equity firm focused on life sciences, has rounded up at least $144 million so far for Aisling Capital V LP, according to a Securities and Exchange Commission filing. New York-based Aisling invests across private and public health-care companies using a range of investment structures, including venture capital investments, royalty investments, development capital, structured debt or buyouts.

Pennsylvania State Employees’ Retirement System has hired Seth Kelly as its new chief investment officer after an executive search of almost 11 months.  Mr. Kelly previously served as chief investment officer of the Missouri State Employees’ Retirement System or MOSERS, where he spent almost 16 years,including four as CIO. He resigned from the $11 billion pension system in December. At Mosers, Mr Kelly’s achievements included portfolio diversification and fee reduction, and under his guard hedge fund fees reduced by half at the pension system. The start date for Mr Kelly joining the pension system was still being worked out, a spokesperson for the pension plan told WSJ Pro Private Equity. Last year, Bryan Lewis, the $31.1 billion Pennsylvania pension system’s chief investment officer for almost three years, left the system to join United States Steel Corporation as its CIO.

California Public Employees' Retirement System announced several promotions of investment staff. Sarah Corr has been named managing investment director of real assets and will oversee the pension system’s real estate and infrastructure portfolios. Meanwhile, Jean Hsu has been named managing investment director of opportunistic strategies and Anne Simpson has been named interim managing investment director of board governance and sustainability.

The $670 billion Paycheck Protection Program to help struggling small businesses survive fallout from the coronavirus pandemic faces a “significant risk” of fraud because of confusing rules and a lack of safeguards, Yuka Hayashi reports in The Wall Street Journal, citing a Government Accountability Office report. The investigative arm of Congress said that in its haste to get money to businesses quickly, the Small Business Administration allowed banks to rely on borrowers’ own certifications to determine their eligibility for loans, which can be forgiven if borrowers meet certain conditions. Shortcomings in the program were compounded by rules issued by the Treasury Department and the SBA after the program had begun, leaving borrowers and lenders further confused and increasing the likelihood that funds were misused, the GAO said.

West Texas fracker Sable Permian Resources LLC has filed for bankruptcy protection after years of riding the ups and downs of commodity prices in out-of-court restructurings, Peg Brickley writes for WSJ Pro Bankruptcy. Talks continue between the company and its top lenders, though secured bondholders owed more than $707 million say they have concerns about the company’s corporate governance.

About $184 billion of notional amounts of bonds have fallen into high-yield status so far this year, according to Goldman Sachs Group Inc., but the white-shoe bank said many U.S. corporate issues that have been downgraded below investment grade have performed well, Lorena Ruibal reports on Dow Jones Newswires. Downgrades have been concentrated in the energy sector, along with cyclical issuers such as Ford Motor Co. and Kraft Heinz Co., which was downgraded before the coronavirus pandemic hit.

Black executives at U.S. companies have recently shared their experiences of everyday life in America with colleagues, many for the first time, as a way to raise awareness of how being black can draw unwarranted attention and worse, report Khadeeja Safdar and Keach Hagey in The Wall Street Journal. For Target Corp. executive Kamau Witherspoon, it was the night that police arrived at his Minneapolis home, guns pointed at him, shortly after a jog. For Mike McGrew, Constellation Brands Inc.’s communications chief, it was the realization that a manager was tailing him as he shopped at a store supplied by the company. For Kim Seymour, WW International Inc.’s chief people officer, it was the way she instinctively holds merchandise aloft in clothing stores to make it clear that she’s not shoplifting.

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