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Private-Equity Firms Turn to Blockchains | Thoma Bravo's New Tech Buyout Fund Sets a Record
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Good day. The maybe not-so-shocking events in the world of cryptocurrencies got the attention of David Solomon of Goldman Sachs, apparently. He recently wrote a few lines for the Journal's Opinion pages extolling the virtues of blockchain technology, which rose to prominence with the development of bitcoin and other digital scrip.
Our Chris Cumming today lays out why some of the biggest private-equity firms—including Apollo and KKR—agree with Mr. Solomon's basic argument. That is, don't condemn an innovative and disruptive technology because some people choose to abuse its power. As Chris shows, firms are using blockchains to craft new ways to attract wealthy individuals by making it easier to invest in their funds.
Also, our Maria Armental reports on Thoma Bravo's more than $32 billion haul across three new funds, including $24.3 billion for its latest flagship buyout vehicle. The firm set a record for a technology-focused fund raised by an independent firm.
We have these stories and more laid out for you below, so please read on...
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Blockchain technology has been making its way into the mainstream for years.
PHOTO: ARND WIEGMANN / REUTERS
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Private-equity firms are making their funds available on the blockchain in an effort to reach rich investors, despite the crypto scandals that have left the technology under a cloud, Chris Cumming reports for WSJ Pro Private Equity. Asset managers Hamilton Lane Inc., KKR & Co., Apollo Global Management Inc. and Partners Group Holding AG are pushing forward with efforts to market their funds on the blockchain, the technology that functions as a decentralized ledger for financial transactions. People close to the firms’ efforts estimate that the total sum raised by blockchain-based private-equity vehicles so far is perhaps around $100 million—pocket
change for asset managers that command hundreds of billions of dollars in their traditional funds. The hope is that blockchain technology can unlock access to wealthy individuals by simplifying the cumbersome, paperwork-intensive process of private-fund investing.
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Technology-focused Thoma Bravo raised more than $32 billion for buyouts and growth investments, including a record haul for its main buyout fund, against a challenging fundraising backdrop this year, Maria Armental reports for WSJ Pro Private Equity. The Chicago-based private-equity firm collected $24.3 billion for its flagship buyout vehicle, Thoma Bravo Fund XV, easily topping the $17.8 billion it collected for a predecessor pool. The latest amount sets a record for a tech-focused buyout fund raised by an independent private-equity firm, according to data from Preqin Ltd.
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85%
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The proportion of investment managers who say the U.S. economy is in a recession or will be by next year, and 54% said they think a recession is needed to tame inflation, according to a Natixis survey
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Avant said it has issued around 1 million credit cards to nonprime consumers. PHOTO: JOHN RAOUX / ASSOCIATED PRESS
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Ares Management Corp. is providing $250 million of debt financing, including preferred equities, to fintech lender Avant LLC, which focuses on providing credit to underserved nonprime consumers, according to a news release. The firm is backing the Chicago-based company through its alternative credit strategy.
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Growth investor Verdane led a €110 million investment, equivalent to $115.1 million, in Danish furniture supplier Nornorm A/S, formerly known as A Place That Works A/S, according to an emailed news release. The company operates on a subscription model to distribute furnishings made from sustainable materials to commercial clients. Verdane invested from its Idun I impact fund, which had €300 million when the firm closed the vehicle in January.
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Canadian pension investor Caisse de dépôt et placement du Québec said it is increasing its investment in Québec-based construction company Pomerleau, adding 150 million Canadian dollars, equivalent to $109.9 million, to its support for the business. CDPQ said it initially backed the company with a C$50 million investment in 2018.
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KKR & Co. co-founder Henry Kravis joined a $43 million growth investment in real estate transaction infrastructure developer Setpoint Technologies, participating in a Series A investment led by Andreessen Horowitz and joined by a half dozen other venture firms as well as strategic investors, according to a news release. Austin, Texas-based Setpoint also makes programs used in asset-backed lending and other types of transactions.
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Public infrastructure-focused investment firm Meridiam said it has acquired a majority stake in the operator of an Italian airport shuttle system involving autonomous electric vehicles from cable-based transportation company Leitner SpA. The PisaMover SpA system takes people to and from Pisa International Airport, the city’s central train station and two satellite airport parking lots, according to an emailed news release. In operation since March 2017, the PisaMover system handles 1,100 passengers per hour in each direction.
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Technology-focused BV Investment Partners said it is backing administrative support technology and services company Imagenet LLC, which focuses on clients in the healthcare insurance sector. The Tampa, Fla.-based company helps carriers process claims, according to a news release.
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Growth investor Knox Lane said it has acquired a majority stake in commercial services company Ruppert Landscape Inc. The Laytonsville, Md.-based company has more than 1,800 professionals working from 30 branch offices serving over 3,500 customers in the Eastern U.S., according to an emailed news release.
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IceLake Capital is backing human-resources consulting company HeadFirst Group in the Netherlands, according to a news release. The company’s backers include Kartesia in London.
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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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Arlington Capital Partners said it has agreed to sell digital services company Octo Consulting Group to International Business Machines Corp. The Reston, Va.-based systems integrator focuses on providing services to federal government agencies, helping them convert processes to digital systems and implementing new technology. Arlington Capital first backed the business in early 2019.
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Encore Consumer Capital said it has sold snack brand Brownie Brittle LLC to CapVest Partners-backed Second Nature Brands. Encore has backed West Palm Beach, Fla.-based Brownie Brittle since at least January 2014, according to a news release at the time.
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Sentinel Capital Partners said it has closed on $4.3 billion for its Sentinel Capital Partners VII LP midmarket buyout fund and $835 million for its Sentinel Junior Capital II LP structured finance vehicle. Investors in the latest main fund included the Alaska Retirement Management Board, which committed $40 million, and the Pennsylvania State Employees' Retirement System with a pledge of up to $100 million, the WSJ Pro Private Equity LP Commitments Database shows. The New York firm listed a $3.75 billion target for the main fund in a July regulatory filing, and in a separate filing indicated that it was seeking $1.25 billion for the new junior capital vehicle. Sentinel said in a separate filing in March that it had assets of about $5.17 billion at the end of last year.
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Warwick Investment Group aims to raise $750 million for its latest energy and real assets-focused fund, regulatory filings show. The Oklahoma City-based firm's energy funds typically back oil and natural gas producers and companies that own or operate assets in the industry, according to a report filed with the Securities and Exchange Commission in July. Warwick said then that it managed about $1.2 billion. The firm said it has yet to receive any commitments to its new vehicle, Warwick Partners V LP, in a separate report Wednesday.
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The Ontario Teachers' Pension Plan Board said it has appointed Anna Murray as a senior managing director and global head of sustainable investing. Ms. Murray was previously global head of environmental, social and governance for Sun Life Capital.
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FFL Partners in San Francisco said it has promoted Jonathon Bunt and Karen Winterhof to partner. Ms. Winterhof joined the firm in 2015 and focuses on deals in the healthcare sector, according to an emailed news release. Mr. Bunt came aboard in 2017 and specializes in technology-enabled services businesses.
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Blackstone's Steve Schwarzman said investors in its BREIT fund are "happy people," citing its 9% return so far this year. PHOTO: GARY HE / REUTERS
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Blackstone Inc. Chief Executive Steve Schwarzman said that recent elevated redemptions from the firm's $69 billion real-estate investment trust have been "preponderantly" coming from Asian investors, and that the fund is well-positioned with a focus on apartment buildings and warehouses, Andrew Bary reports for sister publication Barron’s. Speaking at the Goldman Sachs U.S. financial-services conference in New York, Mr. Schwarzman said that "the idea that something is going wrong" at the fund "because some people are redeeming" is incorrect. The firm limited redemptions last week after hitting a 5% quarterly cap since Sept. 30.
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A creditor group that includes Apollo Global Management Inc., Pacific Investment Management Co., or Pimco, and Ares Management Corp. has formed as used-car distributor Carvana Co. hired a financial adviser, Alexander Saeedy and Ben Foldy report for WSJ Pro Bankruptcy, citing people familiar with the matter. Carvana shares plunged 43% on fears of a restructuring move. The creditor group controls around 70% of Carvana’s debt— about $4 billion—and agreed to cooperate in responding to any attempt by the company to borrow more money.
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Blockchain technology can support responsible innovation across the financial industry and shouldn’t be stigmatized by cryptocurrency collapses, Goldman Sachs Group Inc.’s David Solomon wrote in a Wall Street Journal opinion piece. The technology helps make financial transactions more efficient, he said, citing the bank’s proprietary trading platforms, contracting and settlement systems that are based on the technology. In one case he cited, a bond trade that would typically take five days to complete settled in 60 seconds through a blockchain-based system.
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