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Midmarket Firms Dominate Deals | ICG Adds Life Sciences Adviser | Instacart to Raise IPO Price Target
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Happy Friday! Yesterday, shares of U.K. chip designer Arm shot up in the company’s debut on the public markets, no doubt giving some private-equity investors hope that the IPO window is reopening. Meanwhile, Instacart is preparing to raise the target price for its IPO following the successful debut of Arm. We’ll see how long the exuberance lasts. In this morning’s newsletter, Maria Armental looks at data from PitchBook Data that illustrates the resilience of midmarket private equity, while Rod James reports on ICG’s newest adviser to its life sciences strategy. Finally, our WSJ Pro Bankruptcy colleague Alexander Gladstone has news that L Catterton is injecting additional equity into fishing and boating supplies retailer West Marine as part of an out-of-court
restructuring.
Read on for more details and have a good weekend...
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Midmarket deals and fundraising are humming along, but private-equity firms in the segment face challenges in exiting their investments in midsize companies, according to analytics firm PitchBook Data. PHOTO: RICK WILKING/REUTERS
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Buyout firms focused on midsize companies are on track for a record year in private-equity fundraising and deal making even as the broader market has slowed, new research from analytics firm PitchBook Data shows. As WSJ Pro Private Equity’s Maria Armental writes, the middle market, which includes deals that range from $25 million to $1 billion in value, shows strength across the board except when it comes to exits, which remain depressed, PitchBook said.
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Global investment management firm ICG has hired a well-known research scientist and pharmaceuticals executive to advise its life sciences unit, Rod James reports for WSJ Pro Private Equity. Dr. Samantha Budd Haeberlein joins the London investment manager as a senior adviser to the seven-person investment team, which backs companies that aim to address unmet medical needs, the firm told The Wall Street Journal.
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Grocery-delivery company Instacart now is expected to sell shares for $28 to $30 apiece, it plans to disclose in an amended filing with the Securities and Exchange Commission as early as Friday, people familiar with the matter said. Instacart had been seeking a price of between $26 and $28 when the stock starts trading next week, WSJ's Jaewon Kang and Corrie Driebusch report. At the high end of the new range, Instacart would be valued at nearly $10 billion on a fully diluted basis. On Thursday, shares of Arm surged in the
company's highly anticipated stock-market debut, in a sign of the reviving fortunes of an IPO market that has been in the doldrums for most of the past two years.
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L Catterton-backed retailer West Marine, a chain that offers boating and sport fishing supplies, has reached a deal to restructure its roughly $800 million of debt out of court, WSJ Pro Bankruptcy’s Alexander Gladstone reports, citing people familiar with the matter. The Fort Lauderdale, Fla.-based company will receive $125 million of new funds from L Catterton as well as a group of existing lenders, the people said. Greenwich, Conn.-based L Catterton is providing roughly two-thirds of the new money, and will retain control of the business, the people said.
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Asset-based lending is a growing area of private finance, supported by a retrenchment by banks and economic conditions. At the same time, pockets of corporate weakness could create a favorable environment for distressed investing. Our webinar on Sept. 19 will delve into the opportunities in both areas, with perspectives from Evan Carruthers, chief investment officer and co-CEO of Castlelake; Cindy Chen Delano, partner at Invictus Global Management; and Andie Goh, managing director with Ares Management’s Ares Credit Group. You can register here.
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$380.8 Billion
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The value of private-equity-backed M&A worldwide through Sept. 14, down 41% from the same period of last year, according to Refinitiv data.
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Inside the offices of KKR & Co. Photo: Sarah Blesener for The Wall Street Journal
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Multistrategy investment firm KKR & Co. in New York said it has acquired a 42% stake in phase one of energy company Sempra’s liquefied natural gas project in Port Arthur, Texas, held by subsidiary Sempra Infrastructure Partners and co-owned by oil producer ConocoPhillips. San Diego-based Sempra began building the project earlier this year and expects to start production in 2027. In 2021, KKR agreed to buy a 20% interest in Sempra Infrastructure Partners, which held LNG and natural gas assets, for
$3.37 billion in a deal that valued the unit at $25.2 billion including debt totaling $8.37 billion. KKR agreed to invest in the $13 billion Port Arthur LNG project in March 2023 without specifying the size of the stake it would acquire, according to a release at the time.
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Hipgnosis Songs Fund plans to sell 29 catalogs and a portfolio of non-core songs for $465 million to Blackstone-controlled Hipgnosis Songs Capital to fund a share buyback program and reduce debt in hopes of boosting its share price, Ian Walker reports for Dow Jones Newswires. The London-listed music investor said Thursday that it is planning to buy back up to $180 million worth of shares and repay $250 million that has been drawn under the company’s revolving credit facility.
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Francisco Partners has joined H.I.G. Capital in its acquisition of audiobook publisher RBmedia from KKR & Co., investing alongside company management, according to a news release. Miami-based H.I.G. planned to pay more than $1 billion for the business, The Wall Street Journal reported in July. KKR first backed the company in August 2018 and said in July, when it announced a sale of the Landover, Md. business to H.I.G. Capital, that under its equity sharing program, all RBMedia
employees would receive cash payouts from the deal, with some in line to get as much as twice their annual earnings. RBMedia has more than 66,000 works recorded and available in its catalog, according to a news release.
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Macquarie Group’s asset management arm led an €850 million growth investment, equivalent to about $912.2 million, in electric vehicle battery maker Verkor, with Meridiam joining in, subject to regulatory approvals, according to a news release. The fresh capital, combined with €600 million in European Investment Bank debt support and around €650 million in French government subsidies, will finance the development of a factory in France to produce high performance low-carbon battery cells. The Grenoble, France-based company’s project is also supported by existing backers including EQT AB’s venture investment arm and carmaker Renault Group, according to
the release.
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T. Rowe Price Associates led a more than $500 million investment in artificial intelligence company Databricks in a deal that values the business at some $43 billion, according to a press release. Other investors that participated in the latest funding include new backers Capital One Ventures, the Ontario Teachers’ Pension Plan and strategic investor Nvidia, according to the release. San Francisco-based Databricks is also backed by Baillie Gifford, ClearBridge Investments, Tiger Global and Morgan Stanley’s Counterpoint Global, according to the
release. The company said it has grown rapidly and now has more than 10,000 customers for its generative AI system called Databricks Lakehouse and related services.
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Insiders including founding firm Flagship Pioneering, the Abu Dhabi Investment Authority, ARCH Venture Partners and March Capital participated in a $273 million growth investment in clinical-stage biotherapeutics developer Generate:Biomedicines, along with every other Series B investor, according to a news release. The Somerville, Mass.-based company is developing treatments for cancer, asthma and other conditions through 17 different programs, according to a news release.
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Tikehau Capital in Paris said it is backing packaging, merchandising and display procurement company Brandart, acquiring a 25% stake in the business controlled by founder Maurizio Sedgh. The growth investment is expected to help Brandart, based near Milan, expand its global operations, which generated revenue of about €215 million last year, equivalent to $230.7 million, according to a news release. Tikehau is investing through its strategy focused on decarbonisation.
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Newly formed Touring Capital, whose founders hail from Microsoft’s M12 venture investing arm, led an $85 million growth investment in artificial intelligence infrastructure company Pixis, joined by Grupo Carso, General Atlantic, Celesta Capital and Chiratae Ventures, according to a news release. The Chicago-based company, legally named Aiquire Inc., develops no-code visualization tools to generate brand marketing images,
according to the release.
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Audax Group’s strategic capital unit is joining Sunstone Partners to provide fresh capital to EverService, a Sunstone holding that works with clients to acquire customers and help them engage with those they have, according to a news release. The Phoenix-based company aims to use the new support to acquire iLawyer Marketing, which works with law firms, according to the release.
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Growth-focused PSG Equity in Boston said it is backing financial technology company Versatile Credit, which provides software used by merchants at the point of sale to facilitate purchase loans. The Mechanicsburg, Pa.-based company’s programs also tie in some 30 lenders that stand ready to provide consumers with financing options, according to a news release.
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Midmarket firm Waud Capital Partners in Chicago said it is backing drug development consulting firm BioBridges, making it the first unit of newly formed PharmAlliance Holdings, led by Mark Bouck. The business was acquired from Olympus Partners-backed Soliant Health, according to a news release. The strategy calls for building out PharmAlliance as a pharma services operator within what Bouck said is a fragmented market for such offerings.
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Specialist investor SK Capital Partners is backing biodegradable packaging maker Ecopol, acquiring a majority interest and backing the Italian company alongside Chief Executive Mauro Carbone and Tikehau Capital, which now holds a minority interest, according to a news release. Tikehau first invested in the business in June 2021, according to the firm’s website.
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Ardian in Paris said it is acquiring renewable energy provider ICQ Holdings through its Ardian Clean Energy Evergreen Fund. ICQ operates a portfolio of renewable energy assets in southern Italy, including six wind farms, two hydroelectric projects and two biogas plants, and an additional pipeline of wind projects currently under development, according to a news release.
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Editor’s Note: Each week, we will share selections from WSJ Pro that provide insight and analysis we hope are useful to you. The stories are unlocked for The Wall Street Journal’s subscribers.
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Sponsors of the New York Jets and Aaron Rodgers are putting on a brave face after the star quarterback’s season-ending injury.
Flexport founder Ryan Petersen is back at the top of the digital freight startup, but the hard part of executing on the Silicon Valley-style disruption he promised is still ahead.
Company board directors say ESG efforts have brought about real benefits, but the political backlash has had an impact.
🎧 Listen to the Tillamook County Creamery Association’s Paul Snyder discuss why ESG is fundamental to the way the farmer-owned cooperative manages long-term risks.
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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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Bowmark Capital is selling European data infrastructure company ASK4 to midmarket-focused GI Partners in Scottsdale, Ariz., according to a news release. Sheffield, England-based ASK4 provides managed internet, and Internet-of-Things (IoT) technology across 12 European countries and is GI Partners’ first data infrastructure investment in Europe, the release stated. Bowmark initially backed the company in 2018, according to the firm’s website.
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Investcorp has agreed to sell its majority stake in Danish design brand Georg Jensen to strategic buyer Fiskars Group for €151.5 million, the equivalent of $161.81 million, according to a news release. Investcorp acquired its stake in the Copenhagen-based company in 2012 for $140 million, a news release issued at the time indicated.
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European private-equity firm Verdane Group has closed Verdane Capital XI with €1.1 billion, the equivalent of $1.18 billion, according to a press release. The fund’s final size is nearly double the €610 million that the firm raised for its previous fund, according to the release. Verdane invests €20 million to €150 million or more in technology-enabled and sustainable European companies, according to the release.
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Newly established Glentra Capital said it has collected €443 million, or roughly $475.4 million, for its Glentra Fund I, which it plans to invest in energy transition businesses. Backers include foundation investment firm Novo Holdings and pension fund PKA, according to a news release. Glentra is led by Partners Henrik Tordrup and Lars Villadsen.
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Upfront Ventures is seeking $200 million for growth fund Upfront Growth IV and $280 million for early-stage venture fund Upfront VIII, according to two separate regulatory filings. The offering amounts for the two new funds equal the capital raised by the firm for two predecessor pools.
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Recurring Capital Partners, a firm that offers debt financing for software-as-a-service companies, has rounded up more than $73.9 million from 56 investors for its Recurring Capital Fund IV, a regulatory filing shows. The Austin, Texas-based firm indicated in the filing that it has a $150 million target for the fund.
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Ardian, the $156 billion private asset manager in Paris, said it has established a general management team to “strengthen the governance and overall management” of the firm. The team comprises President Dominique Senequier along with executive vice-presidents and longstanding Ardian executives Mark Benedetti, Mathias Burghardt, Vladimir Colas and Jan Philipp Schmitz, according to a statement. Nicolò Saidelli has been appointed as an adviser to Senequier on strategy and acquisitions. The moves are designed to coincide with Ardian’s “next stage of growth,” which includes expanding its offerings to wealthy
individual investors and as well as its infrastructure investment business in Europe and the U.S., according to the statement.
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Distressed company and turnaround investment specialist Black Diamond Capital Management in Stamford, Conn., said co-founder Jim Walker is returning to the firm as president and senior managing director. After starting Black Diamond with co-founder Stephen Deckoff in 1995, the firm’s managing principal, Walker joined Fir Tree Partners in 2008 and was the New York firm’s managing partner responsible for overall management, according to a news release.
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Shares of SoftBank Group-backed chip designer Arm surged in their highly anticipated stock-market debut Thursday, in a sign of the reviving fortunes of an IPO market that has been in the doldrums for most of the past two years, Corrie Driebusch and Asa Fitch report for The Wall Street Journal. Arm’s stock closed up 25% from its $51 initial public offering price, rising to $63.59. The market reaction to the biggest offering of the year will be met with a sigh of relief from investors, as well as companies waiting in the wings to go public and Wall Street firms that reap lavish fees from underwriting IPOs.
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Investment bank DC Advisory said it has hired Tommaso Zanobini as a managing director in its Tech & Software team. New York-based Zanobini joins from Moelis & Co., where he was global head of fintech. Zanobini will work alongside Mark Litz, who joined DC Advisory in July as a London-based managing director. The firm said Zanobini was the 28th senior appointment made by the bank, owned by Daiwa Securities Group, in the past two years.
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Midmarket private-equity firm Beringer Capital said it has hired Karim Mashnuk as a principal. Mashnuk previously worked in the credit solutions team at Silicon Valley Bank, according to his LinkedIn page.
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Technology-focused OceanSound Partners said it has bulked up its professional staff, adding Sam Todd as a vice president and Laurie Hadick as compliance director, while also hiring a senior associate and four associates. Todd previously held a similar role with Thoma Bravo, while Hadick was in a similar role with fund manager HealthCor Management, according to a news release.
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Angelo Gordon & Co. said it has added Maja Lindstrom as a managing director within the firm’s client partnership group to lead development of relationships in northern Europe and Israel, based in Copenhagen and reporting to Alan Isenberg, global head of the client partnership group. She joins from Barings, where she was a managing director in the EMEA business development arm, according to an emailed news release.
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The Canada Pension Plan Investment Board, also known as CPP Investments, has pledged an additional 200 million Canadian dollars, the equivalent of $147.9 million, to Toronto-based fund sponsor Northleaf Capital Partners to back small and midmarket Canadian private-equity and growth funds, as well as for their secondary deals and co-investments, according to a news release. Northleaf now manages a total of C$2.4 billion in Canadian private equity on behalf of CPP Investments, according to the release.
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Brookfield and Elliott Investment Management took private broadcast ratings juggernaut Nielsen last year and now they are replacing the chief executive a week after job cuts reduced the staff by almost 10%, Joe Flint reports for The Wall Street Journal. The shake up comes amid a tumultuous time for the media measurement business, which faces both increased competition and a rapidly shifting media landscape that has made measurement methodologies more complex. Advertisers depend on the metrics to set prices
for billions of dollars in commercials, and Nielsen dominated the market until recent years as internet streaming services blossomed.
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Oakley Capital in London said it is joining with recently formed Touring Capital to invest in businesses developing generative artificial intelligence software, making growth investments in startups with proven operations and strong expansion potential. Touring’s principals in the past have backed successful startups including video teleconferencing software supplier Zoom and traffic mapping app Waze through Microsoft’s in-house venture investment arm, according to an emailed news release.
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The U.S. IPO market is stirring as Refinitiv data show a 74% increase in new issues this year through Sept. 14, with 41 IPOs raising about $8.8 billion on U.S. markets. Western Europe also showed a 74% gain, but had fewer issues with 38 IPOs raising $7.9 billion, the data show. But Japan topped both developed markets with a nearly fourfold-jump to 66 IPOs raising $3.1 billion while IPOs declined in every other Asian market listed.
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The software-as-a-service industry appears poised for a rebound later this year or early next year, global accounting network BDO said, citing research into publicly traded SaaS companies. The research cites slowing inflation, a rebound in research and development spending and a decline in the number of providers with negative cash flows.
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Mergers and acquisitions of all types involving companies valued at less than $500 million reached a low point in the second quarter, dropping about 16% compared with the same period last year, but overall M&A fell 25%, indicating that deals involving smaller companies remained resilient, according to investment bank Capstone Partners in Boston. The firm said dealmakers anticipate a rebound in activity as the start of next year approaches.
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Movie theater company AMC Entertainment Holdings said it has raised about $325.5 million through a secondary sale of 40 million shares, selling the stock at an average price of $8.14 each. The offering has eased liquidity concerns along with revenue for successful films, such as a concert movie about singer Taylor Swift, according to a news release from the Leawood, Kan.-based company.
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