Welcome back! Previously we asked you about the recent run on private-credit interval funds, specifically, how much of the baby you thought was being thrown out with the bathwater. A few of you took the time to share your thoughts.

Stacey Schacter, chief executive of specialty finance company VION Investments: “This is not a system-wide collapse of credit quality. It is a repricing of liquidity expectations within illiquid structures. For now, much of what is being thrown out is indeed bathwater. But if the redemption cycle persists, more of the baby will inevitably go with it, and in that scenario, the differentiators will be clear: capital structure, asset duration and the ability to generate real, recurring cash flow.”

René Canezin, managing partner of credit investor Evolution Credit Partners: “There is some baby here in the form of real, albeit gradual, fundamental pressure. But a meaningful portion of the current dynamic is bathwater—a function of structural design flaws in semi-liquid products and sentiment-driven liquidity demand. The key risk is not the current level of redemptions, but whether they persist long enough to become self-reinforcing, particularly in a market that is already facing challenges around refinancing weaker credits.”

Now, onto the news of the day ...

Investors are increasingly worried that private-equity assets are overvalued, and are questioning whether regulators and auditors will hold firms accountable, as WSJ Pro’s Chris Cumming reports.   The Securities and Exchange Commission is trying to get valuations back in line with reality, by punishing firms that mismark their companies, and auditors that look the other way.  The SEC has issued several valuation-related penalties this year, and is forming a new group to investigate misconduct by audit firms. The agency wants “to crack down on bad actors in the profession” and protect investors, a spokesman said. Some observers, however, question whether the agency has the capacity to really do so.

Madison Dearborn Partners-backed drone maker Aevex went public Friday in an initial public offering that valued the key player in Ukraine’s fight against Russian invaders at more than $2 billion, Maria Armental writes for WSJ Pro. The company’s $320 million IPO came as investors look to capitalize on surging defense-sector demand amid conflicts in the Middle East and Ukraine, where Aevex systems were put to the test. Shares closed at $26.93 the first day of trading, on the New York Stock Exchange, up about 35% from the $20 IPO price.

Clearlake Capital co-founder José E. Feliciano and his wife, Kwanza Jones are nearing a deal to buy the San Diego Padres for $3.9 billion in a transaction that would set a new record for a major league baseball team acquisition, the Journal reports, citing people familiar with the matter. The previous record was Steve Cohen’s $2.4 billion purchase of the New York Mets in 2020.

Consumer debt has become one of the hottest categories in private credit, increasingly sought after by funds and investment arms of insurance companies on the hunt for high-yielding investments, AnnaMaria Andriotis reports for the Journal. Private-credit funds held $350 billion of consumer-loan balances last year, compared with less than $200 billion in 2019, according to estimates from Jefferies. Those sums are a mixture of previously originated loans that lenders unload to private credit and increasingly so-called forward-flow arrangements, which involve agreements to buy future loans that haven’t been originated.

Valor Equity Partners has led a $95 million investment in Loop, a provider of AI-driven technology for logistics and supply chain companies. Other investors that backed the latest transaction include 8VC, Founders Fund, Index Ventures, J.P. Morgan Growth Equity Partners and Tao Capital Partners.

Cartesian Capital Group is anchoring a $30 million private investment in public equities to support the merger of NorthStar Earth & Space with special-purpose acquisition vehicle Viking Acquisition Corp. 1 in a deal that values the space-focused geospatial intelligence services provider at about $300 million. Cartesian previously led a $35 million growth round investment in NorthStar back in 2023.

Kinderhook Industries has formed water management and specialty liquids containment company Ironclad Powered by Mersino through the merger of separate portfolio companies the firm already backs. The merged companies include Ironclad Environmental Solutions, Mersino Water Solutions and Global Pump.

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

Alta Partners-backed clinical-stage biotechnology company Kelonia Therapeutics is in advanced buyout talks with strategic acquirer Eli Lilly & Co. about a deal for more than $2 billion, Lauren Thomas reports for the Journal, citing people familiar with the matter. The price could also include additional consideration if Kelonia reaches certain milestones, they said. Alta and Venrock have numbered among the Boston company's backers since at least 2022.

Northislet-backed Saga Diagnostics has agreed to be acquired by Swiss strategic buyer Roche Holding for as much as $595 million, including future payments based on reaching certain milestones. Stockholm-based growth investors Northislet and Segulah Medical Acceleration have been among the backers of the cancer-focused Morrisville, N.C. business since at least 2021, according to industry researcher PitchBook. Roche aims to integrate key Saga products into its Foundation Medicine affiliate.

Jeito Capital and TPG-backed biopharmaceutical company Odyssey Therapeutics has registered for an initial public offering, without saying how many shares it plans to sell or at what expected price, Josh Beckerman reports for Dow Jones Newswires. Other holders of a significant number of shares in the Boston company include SR One Capital Management, OrbiMed, Dimension Capital and Lightspeed Venture Partners, the registration filing shows.

Benchmark Capital Management-backed chip maker Cerebras Systems, whose designs are optimized for running advanced artificial-intelligence models, filed paperwork Friday for an initial public offering of shares, the Journal reports. The Sunnyvale, Calif.-based company didn't indicate how many shares it plans to sell or at what expected price. Other significant shareholders include a joint venture between Alpha Wave Global and Lunate Capital Holding as well as Foundation Capital Management, the filing shows.

Partners Group has amassed more than $9 billion in commitments across comingled funds and various parallel investment vehicles, all of which are focused on acquiring secondhand stakes in private-market funds and assets. The firm has already deployed about 60% of the money and its secondary business invested more than $4 billion globally last year alone.

Sideline Group, a firm established by former Tiger Global Partner Greg Mazlin, has raised $155 million for its debut fund to back companies at the intersection of consumer, sports, media and entertainment. The firm has already used the fund to back companies that include running brand Bandit Running, golf and fitness training company Urban Golf Performance, events company MARI, and sports and adventure experience business Milky Way Park.

Global credit firm Marathon Asset Management has added Murad Khaled as a managing director focused on origination of asset-backed loans and direct loans in Europe. Khaled previously worked as a managing director at Apollo Global Management, where he led capital solutions in Europe.

Blue Owl Capital co-chief executives Doug Ostrover and Marc Lipschultz had borrowed against their stakes in the listed firm, raising concern on Wall Street that the company’s falling stock price could open them up to margin calls and add downward pressure. As the Journal reports, Ostrover and Lipschultz have since removed those shares as collateral for their loans, according to people familiar with the matter.

Saudi Arabia’s flagship wealth fund is known for backing costly ideas overflowing with ambition, from building a futuristic city to creating a golf circuit to rival the PGA Tour. The fund’s vast financial commitments are now forcing it to rein itself in, Eliot Brown writes for the Journal.  Despite having assets above $900 billion, Saudi Arabia’s Public Investment Fund is strapped for cash. LIV Golf appears poised to join a long list of ambitious projects it has all but abandoned. The Iran war has made the fund’s outlook even shakier.

Coatue Management's Coatue Innovative Strategies Fund, a closed-end investment vehicle backed by the family offices of Jeff Bezos and Michael Dell, has become available on the iCapital trading system. Coatue formed the fund in late 2024 and opened it to investors last year with anchor commitments from the Bezos and Dell offices. The firm reported in February that the fund, which is invested in public and private securities and debt, had net assets of nearly $3.66 billion at the end of last year.

World leaders, bankers and investors who convened this week for the International Monetary Fund and World Bank’s spring meetings were in a dour mood, the Journal reports. The yearly meetings in Washington bring together heads of state and financial officials from around the world to meet with each other and consult with investors and bankers. Participants predicted that economic and financial turbulence related to the war in Iran would persist for weeks, if not months.

Send us your tips, suggestions and feedback. Write to:

Maria Armental; Ted Bunker; Chris Cumming; Luis Garcia; Laura Kreutzer; Isaac Taylor; Chitra Vemuri.