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Brockman Charged With Tax Fraud | Leonard Green Eyes Service Logic | Milken Panel Sees Opportunity in Crisis
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TGIF! The week is ending on a dramatic note with news that Robert T. Brockman, the lone backer of Vista Equity Partners’ debut fund, has been indicted by the U.S. Department of Justice in a massive tax-fraud case, as the Journal reported yesterday. Vista founder Robert Smith, who settled with the DOJ over unpaid taxes of his own without being prosecuted, is cooperating with the Brockman investigation, the Journal writes.
One big question here will be how other investors in Vista’s funds view the situation. Vista told LPs that the firm itself wasn't a subject of the inquiry, WSJ previously reported. Many LPs also have proven to be quite forgiving toward a fund manager when that manager is delivering strong returns. At the same time, however, LP attention on corporate governance is higher than ever these days.
Also in today’s news, our own Preeti Singh has an update from the Milken Institute’s global conference, which went virtual this year, and Ted Bunker reports that Leonard Green & Partners is buying Service Logic from fellow private-equity Warburg Pincus.
Enjoy the news and have a great weekend...
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Jim Lee, chief of criminal investigations at the Internal Revenue Service, called the alleged tax evasion ‘brazen, intentional and significant.’
PHOTO: ERIN SCOTT/REUTERS
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Houston software executive Robert T. Brockman was charged Thursday with hiding approximately $2 billion in income from U.S. tax authorities over 20 years, in what officials said was the largest criminal case ever brought against a person accused of evading U.S. taxes, Dave Michaels and Miriam Gottfried write for the Wall Street Journal. Mr. Brockman is the sole investor in the first private-equity fund managed by Vista Equity Partners, a firm founded by billionaire Robert Smith. Authorities said Mr. Brockman concealed gains he made in Vista’s funds from the Internal Revenue Service. Mr. Smith agreed to a roughly $140 million settlement with the U.S. Department of Justice over unpaid tax
liabilities but will not be prosecuted.
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Leonard Green & Partners is in the process of acquiring Service Logic, a HVAC services company backed by Warburg Pincus, Ted Bunker reports for WSJ Pro Private Equity. The deal is expected to exceed $1 billion based on information disclosed by ratings agencies about the transaction. Warburg is exiting the company around three years after it acquired it from midmarket private-equity firm Sterling Investment Partners.
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Recovery from the coronavirus pandemic is looking longer than deal makers originally anticipated but firms with money to spend see plenty of investment opportunities, according to a group of executives who spoke at the 2020 Milken Institute Global Conference Thursday, as Preeti Singh writes for WSJ Pro Private Equity.
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Mid-market companies are facing a highly uncertain outlook, with the world economy undergoing massive disruption as a result of the coronavirus pandemic, the potential of marked policy changes after the U.S. elections, and escalating trade and political disputes with China. Join WSJ Pro Private Equity for a free virtual event on The Path Forward for the Middle Market on November 16 from 11 am to noon EST. Register to participate here.
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74%
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The percentage of alternative investment professionals that predict deal activity will return to levels seen prior to the coronavirus pandemic by the end of the fourth quarter of 2021, according to a survey of more than 250 such professionals that attended a virtual alternative investment summit sponsored by EisnerAmper in September.
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Virtual primary-care startup 98point6 Inc. has raised $118 million in venture capital, amid rising demand for telehealth services.
PHOTO: 98POINT6 INC.
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Consumer-focused firm L Catterton and technology-focused growth equity investor Activant Capital have led a $118 million series E funding round for 98point6, a text-based on demand primary care telemedicine service, Brian Gormley writes for WSJ Pro Venture Capital. Other investors that provided funding include Goldman Sachs’ merchant banking division, according to a press release.
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Proterra, an electric vehicle company focused on heavy duty transportation such as buses, said it has received a $200 million investment, $150 million of which comes from Cowen Sustainable Advisors LLC and the remaining $50 million from Soros Fund Management, Generation Investment Management, and Broadscale Group.
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Chicago-based midmarket firm Wind Point Partners said it has acquired Handgards, Inc., which manufactures disposable products used in the food services industry, such as gloves, bags, protective apparel and flexible packaging.
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PQ Group Holdings Inc. said it is selling its performance materials business to an affiliate of The Jordan Company for $650 million, Allison Prang writes for Dow Jones Newswires. The company said it expects the deal to close by year end.
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Technology-focused growth equity firm Accel-KKR has made a majority equity investment in Surgical Information Systems, which provides software used by ambulatory surgery centers and hospitals.
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Arcadia Consumer Healthcare, an over-the-counter health care products platform backed by Avista Capital Partners, said it is buying vitamin and supplements brand Naturelo.
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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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Blank-check company H.I.G. Acquisition Corp. on Thursday changed the terms for its planned initial public offering, Stephen Nakrosis writes for Dow Jones Newswires. The company, whose sponsor, H.I.G. Acquisition Advisors, LLC, is an affiliate of H.I.G. Capital, said it now planned to offer 32.5 million units in its IPO at the price of $10 per unit. In a Sept. filing, the company said it expected to offer 45 million units at $10 per unit. H.I.G. Acquisition Corp. said it intends to apply to list its units on the New York Stock Exchange under the symbol "HIGA.U." Credit Suisse, Morgan Stanley and BofA Securities are listed as the offering's book-running managers.
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Ardian has sold Gantner Electronic Austria Holding GmbH, an electronic access, ticketing and billing services provider, to Salto Systems. Ardian said that Gantner has doubled its revenue since the private-equity firm initially backed the company in 2016.
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Bain Capital has collected around $1.1 billion for its midmarket tech fund Bain Capital Tech Opportunities Fund LP, according to a regulatory filing. One investor that disclosed a commitment to the fund is the New Mexico State Investment Council. Bain has backed at least two deals out of the tech-focused fund, including cloud computing training platform A Cloud Guru and cybersecurity company BioCatch.
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Fund-of-funds manager 747 Capital is seeking $125 million for 747 Stuyvesant VII, L.P., according to a regulatory filing. New York-based 747 focuses exclusively on backing private-equity funds focused on small buyout deals as well as co-investments alongside those funds. The firm focuses on funds that typically raise from $50 million to $350 million in investor capital, according to its website.
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Global Infrastructure Partners said it has appointed Jim Amine to the firm as a partner. Mr. Amine previously worked at Credit Suisse where he spent 25 years, including as head of investment banking and capital markets.
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HIG Capital said it has hired Ahmad Atwan as a managing director to its infrastructure team. Before joining HIG, Mr. Atwan was a managing director at Morgan Stanley Infrastructure Partners and before that he held the same title in BlackRock Inc.’s global private-equity team, where he was head of energy and resources investing, according to a press release.
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The administrators of Virgin Australia Holdings Ltd. said Chief Executive and Managing Director Paul Scurrah will leave the airline upon the completion of its takeover by Bain Capital, to be replaced by former Qantas Airways Ltd. executive Jayne Hrdlicka, Stuart Condie reports for Dow Jones Newswires.
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Blackstone Group Inc. is extending its big bet on biotechnology and other life-science buildings, a hot field in the real-estate world that is heating up even more as scientists pursue a vaccine for Covid-19, Craig Karmin writes for the Journal. The New York investment firm said it looked at selling or taking public BioMed Realty Trust, the second-largest U.S. owner of life-science buildings with 93 properties, which Blackstone acquired in 2016. The Blackstone fund that owns the company eventually needs to exit all holdings and return money to investors.
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Lenders to private-equity backed Equinox Holdings Inc., the high-end gym operator, have hired advisers for restructuring talks with the company as the coronavirus pandemic continues to curtail the fitness sector, according to people familiar with the matter, Soma Biswas reports for WSJ Pro Bankruptcy.
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Private-equity-backed YogaWorks Inc. has filed for bankruptcy and plans to permanently close its dozens of studios across the U.S. but keep offering virtual classes, Jonathan Randles and Colin Kellaher write for WSJ Pro Bankruptcy. The California-based yoga studio chain is the latest fitness business to succumb to shutdowns and restrictions on gyms and in-person gatherings related to the coronavirus pandemic. Great Hill Partners acquired YogaWorks in 2014.
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Morgan Stanley on Thursday said its quarterly profit rose 25% from a year ago, another big U.S. bank to skate unscathed through the rockiest economy in years, Liz Hoffman writes for the Wall Street Journal. Profit of $2.72 billion, or $1.66 a share, was higher than a year ago and beat analysts’ forecasts. Revenue rose 16% to $11.66 billion.
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