Welcome back! As the countdown to Memorial Day begins this week, the weather is getting warmer here in Massachusetts and I’m glad to have finally turned off the heat for the summer. In this morning’s news, our own Luis Garcia has news of progress that energy-focused NGP Energy Capital Management has made on two new funds, while Chris Cumming shares some takeaways from first-quarter earnings by listed private-equity firms. Finally, The Wall Street Journal reports that yet another bank CEO is stepping down, this time from Morgan Stanley.

Read on for more…

NGP Energy Capital Management has rounded up a total of more than $1.2 billion for two separate funds, one focused on clean-energy industry service and equipment providers and another targeting investments in energy royalties and mineral rights, Luis Garcia reports for WSJ Pro Private Equity. The firm has rounded up $700 million for its latest energy-transition fund and recently closed on $527 million for NGP Royalty Partners II LP.

Private-equity firms are rushing to adapt to an economy in which their longtime cash cow—big leveraged buyouts—has grown a little tired. As Chris Cumming reports, recent first-quarter results reported by large private-equity managers showed firms trying to adjust to a new economy. Financing is tight, so big buyouts are scarce. Valuations are low, so asset sales are out. Instead, firms are rapidly trying to expand in private credit, an investment strategy expected to thrive as interest rates rise and traditional lenders retreat.

James Gorman said he is stepping down as chief executive at Morgan Stanley in the next year, marking an end to a 13-year run in which he overhauled the Wall Street bank to make it less sensitive to the ups and downs of the financial markets, AnnaMaria Andriotis writes for the Wall Street Journal. Gorman said at Morgan Stanley's annual shareholder meeting Friday morning that he expects a new CEO to be chosen within the next 12 months.

Technology-focused Silver Lake in Menlo Park, Calif., is acquiring a €600 million minority stake, equivalent to $646.2 million, in business and accounting software company TeamSystem from Hellman & Friedman, which remains the majority owner of the Italian business. San Francisco-based Hellman & Friedman first backed the company in 2016, when TeamSystem had about 200,000 customers, according to a news release. The company now serves around 1.8 million businesses in Italy and Spain.

Blackstone has acquired gemstone rating company International Gemological Institute from insurer Fosun International and Roland Lorie, a member of the founding family of the business, for around $570 million, according to local news reports and Reuters, citing a person with knowledge of the matter. The reports cited a statement from Blackstone, but the New York firm’s website didn’t offer the statement on Sunday.

KKR & Co. and consumer focused L Catterton have agreed to co-lead a $135 million investment for Restaurant365, a provider of enterprise software for the restaurant industry, according to a press release. Existing backers ICONIQ Growth and Bessemer Venture Partners are also contributing to the deal, the release stated, adding that the company’s valuation exceeds $1 billion. Both KKR and L Catterton are backing the investment out of their respective growth funds, according to the release.

Brookfield-affiliated Brookfield India REIT and Singapore sovereign wealth investor GIC have acquired two commercial properties in India from Toronto-based Brookfield Asset Management in a transaction that gives the assets an enterprise value of about $1.4 billion, according to news releases. The properties in Powai and Gurugram total about 6.5 million square feet.

A Bain Capital-backed bidding group for Finnish building and construction technology company Caverion came up short in its effort to take the company private, with tenders and the group’s holdings totaling just 29% of Caverion’s shares, the company said on Friday following the expiration of the group’s tender offer on Wednesday. The group needed to gain acceptance from holders of more than 50% of the shares to move forward. The Bain group has offered as much as €8.50 per share, or about $9.15 each, Dominic Chopping has reported for Dow Jones Newswires. But a rival bidder, investment firm Triton countered with an €8.95 per share bid, leading the company’s directors to withdraw their support for the Bain Capital group’s proposal. Triton already controls about 24% of the shares.

Pegasus Capital Advisors in Stamford, Conn., has been rejected in its roughly $21.1 million take-private proposal for digital marketing company Creative Realities, Will Feuer reports for Dow Jones Newswires. Pegasus initially offered $2.49 a share for the Nasdaq-listed business in March, then raised its bid to $2.85 a share on May 1, but the Louisville, Ky.-based company said Friday that the revised offer undervalues the company. Pegasus shares closed Friday at $2.42. Pegasus already owns a roughly 19% stake in Creative Realities.

The Subnational Climate Fund managed by sustainable investor Pegasus Capital Advisors has committed $43 million to back Mexican renewable-energy company Grupo Luxun, according to a news release. The company provides rooftop solar-energy installations to businesses through a model that includes a power purchase agreement and leasing, according to a news release. The five-year commitment is expected to help the company install solar and battery projects with more than 160 megawatts of capacity

Manulife Financial’s investment management arm in Toronto is buying a controlling stake in data-center company Serverfarm, investing through Manulife Infrastructure Fund II, according to news releases. The El Segundo, Calif.-based company operates eight data centers, including five in North America, two in Europe and one in Israel.

JIC Venture Growth Investments in Tokyo said it is backing gene-editing company C4U, customer-verification business Trustdock and increased its bet on fusion-power developer Kyoto Fusioneering. The firm said it increased its investment in the fusion developer spun out of Kyoto University through its JIC Venture Growth Fund 1. The asset manager said it backed Trustdock and C4U through its JIC Venture Growth Fund 2.

Celesta Capital is backing microelectromechanical systems maker Stathera through a $15 million growth investment co-led with BDC Capital. The Montreal-based business describes itself as a “fabless semiconductor company” developing technology for controlling timing applications and synchronization.

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

Energy-focused firm Kimmeridge has collected at least $712 million of the $1 billion that it is seeking for its latest flagship fund Kimmeridge Fund VI LP, a regulatory filing indicates. Kimmeridge closed its fifth flagship fund in 2019 at the fund’s $800 million cap, according to a press release issued at the time. One investor that disclosed a commitment to the newest fund is the Canada Pension Plan Investment Board, which approved a $100 million commitment, according to a press release issued by the pension manager.

Buyout firm KKR said it has appointed partner Dan Pietrzak as global head of private credit from co-head of the strategy with Matthieu Boulanger, who is leaving the New York firm. The unit includes direct lending, junior debt and asset-based-finance strategies and manages $76 billion, up from $8 billion when it began in 2017, according to a news release. Pietrzak joined the firm in January 2016 from Deutsche Bank, according to his LinkedIn page. In addition, KKR said Michael Small, a partner in London overseeing its global junior debt strategy is taking on additional tasks as manager of direct lending in Europe. He joined the firm in 2021 from Park Square Capital.

Adil Rahmathulla, one of three managing partners that co-founded global infrastructure firm I Squared Capital in 2012 is leaving the firm in June 2024, according to a news release. The firm said it has named co-founder and managing partner Gautam Bhandari as chief investment officer at the firm. Bhandari will lead the firm’s global investment strategy alongside founder and Chairman Sadek Wahba, the release stated. In addition, the firm has named Mohamed Adel El-Gazzar and Harsh Agrawal as senior partners and members of a newly formed executive committee that will lead strategic development for the firm, according to the release.

Note: This item is reprinted from Friday’s newsletter to correct the number of bankers joining Mediobanca to 80 from 69 reported earlier as a result of its acquisition of Arma Partners:

Italian lender Mediobanca has acquired specialist boutique investment bank Arma Partners, parachuting in 80 bankers specializing in technology deals in the latest sign of consolidation in the industry, Paul Clarke reports for sister publication Financial News in London. Mediobanca is upping its investment-banking ambitions with the acquisition of the boutique firm run by former Goldman Sachs banker Paul-Noël Guély. Arma Partners has built a reputation as a leader in software, cloud services, financial technology and internet deals and has built a roster of senior bankers from larger rivals since its beginnings 20 years ago.

London-based Allen & Overy and New York firm Shearman & Sterling said Sunday they plan to merge, representing one of the largest tie-ups in recent history with a projected $3.4 billion in annual revenue, Erin Mulvaney reports for The Wall Street Journal. The proposed merger, pending approval by partners, would create Allen Overy Shearman Sterling, or A&O Shearman, with 3,900 total lawyers and 800 partners in 49 offices in 29 countries. In terms of revenue, it would be the third-largest firm globally, the firms said. Kirkland & Ellis and Latham & Watkins are the largest firms in terms of revenue, with DLA Piper currently third, according to annual rankings by legal magazine The American Lawyer.

Shell Asset Management Company has appointed LGT Capital Partners to provide management and advisory services for private-equity and infrastructure assets for five of its pension clients, according to a news release. Although the release did not specify the exact size of the combined portfolio LGT would advise, it did note that it was in a multibillion euro portfolio. As part of the agreement, LGT is opening an office in The Hague, Netherlands and the six professionals from Shell Asset Management that currently oversee the portfolios will join LGT Capital Partners in that office, the release stated.

Abu Dhabi sovereign wealth investor Mubadala Investment said it ended last year with assets of more than 1 trillion dirhams, equivalent to about $272.35 billion, with roughly 36% invested in private equity, and 15% in real estate and infrastructure. The investor said it deployed 107 billion dirhams during the year and received 106 billion dirhams in proceeds from exits. While saying it outperformed benchmarks, Mubadala said it doesn’t report net income and no longer releases its total comprehensive income.

Even if the property world gets a lot rockier, landlords with the deepest pockets should be able to service their debts. That doesn’t mean they will. Recent high-profile defaults show that creditors still face risks even from star borrowers, Carol Ryan reports for The Wall Street Journal. Canadian money manager Brookfield Asset Management, with $825 billion in assets, has skipped payment on a property, and not the first one in this cycle: This time it was a $275 million loan on the EY Plaza office building in Los Angeles, according to Trepp. Brookfield isn’t alone. Pimco-owned Columbia Property Trust defaulted on a huge $1.7 billion office loan earlier this year. Blackstone has sent two separate loans on a Manhattan office block and residential building to special servicing, where a third party steps in to manage debts at risk of not being paid off. Among a Trepp list of office loans valued at $7.7 billion that have been sent to special servicing, more than a quarter is owed by big-name institutions.

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Maria Armental; Ted Bunker; Chris Cumming; Luis Garcia; Rod James; Laura Kreutzer; Chitra Vemuri.

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