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Offshore Biotech Investors Pull Back From China | IPO Price Values SoftBank's Arm at Over $54 Billion
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Good day. Today we have a look at the flow of growth capital to pharmaceutical companies in China from WSJ Pro Venture Capital's Brian Gormley and a look into the forthcoming Arm IPO, which promises to be the year's biggest U.S. new issue, from our Journal colleagues.
We have these and many more stories summarized and linked for you below, so please read on...
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Biotech workers in Hefei, China. The value of biotech venture deals in mainland China that included U.S. investors fell from over $1 billion in 2021 to $102.6 million last year.
PHOTO: CHINA DAILY / VIA REUTERS
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Venture capitalists from the U.S. and other countries have reduced investment in Chinese drugmakers, denting momentum in China’s developing biotechnology industry, Brian Gormley writes for WSJ Pro Venture Capital. Their retreat reflects a global pullback in venture investment as well as China’s faltering economy and rising geopolitical tensions, analysts said. Biotech venture investment in China, as in the U.S., jumped in the years leading up to 2021. Venture funding for Chinese biotechs rose from $1.2 billion in 2015 to $19.3 billion in 2021, but fell to $8.9 billion last year, according to market tracker PitchBook Data.
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SoftBank Group-backed technology company Arm set an IPO price of $51 a share as the British chip designer lays the groundwork for the biggest U.S. public offering of the year, The Wall Street Journal reports. The pricing followed meetings Wednesday afternoon between underwriters and company executives, according to people familiar with the matter. Initially, the company had eyed a price of $52 a share. At $51, Arm would have an equity value of $54.5 billion on a fully diluted basis. That is below the $64 billion that SoftBank recently valued the company at when it bought out a stake held by its Vision Fund.
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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, Sara McGinty, managing director with Ares Management’s Ares Credit Group and Randy Raisman, managing director at Marathon Asset Management. You can register here.
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$15.23 Billion
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The value of announced private-equity and venture-capital deals in the discretionary-consumer sector this year through Aug. 30, compared with $48.34 billion for the first nine months of last year, according to data provider S&P Global Market Intelligence
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Veterinarians give a pug a check up. / Photo: Piroschka van de Wouw, Reuters
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General Atlantic in New York said it is backing veterinary chain GoodVets Group with a growth investment, joining existing backer SkyKnight Capital. The Chicago-based company operates 22 veterinary clinics in 11 markets, including Chicago, Atlanta, Miami and Denver and plans to enter New York, Dallas and Los Angeles in the near term, according to a news release.
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Buyout shop TPG has agreed to invest $336 million in data-management company Denodo, acquiring preferred equity from the company and existing backer HGGC, which remains a significant investor. TPG is investing through its midmarket growth strategy, according to a news release. HGGC backed the Palo Alto, Calif. company through a preferred equity investment in 2017, helping the business expand its market reach across the world, according to the release.
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BDT & MSD Partners has led a $150 million incremental investment in EquipmentShare, technology company serving the construction industry. The additional $150 million brings to $440 million the total series E growth funding that the company has raised in 2022 and 2023, according to a press release.
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Asset manager GCM Grosvenor in Chicago has agreed to back renewable energy developer Vesper Energy with growth investments totaling as much as $100 million over the coming year and joining Magnetar Capital as an investor in the business, according to a news release. GCM Grosvenor will acquire a minority stake in Vesper through the transaction. The Irving, Texas-based company has projects under development with an aggregate capacity of 17 gigawatts, according to the release.
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Buyout firm GTCR in Chicago said it has acquired philanthropy-focused Foundation Source, which provides management and other services to charitable foundations. The firm also tapped Joseph Mrak to take the chief executive’s role with the Fairfield, Conn., company through GTCR’s Leaders Strategy. He succeeds Sunil Garga, who will remain in an advisory capacity, according to an emailed news release. The business works with more than 2,000 organizations that control assets of over $20 billion.
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Insight Partners and OA Private Capital are backing a strategic growth investment in Advantive alongside the software provider’s existing backer TA Associates, according to a press release. TA initially formed Advantive in 2022 alongside ST6, a group of software operating executives that partner with private-equity firms to help transform software companies. Advantive offers software used by specialty manufacturing and distribution companies, the release stated.
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Digital infrastructure-focused investor Digital Alpha Advisors led a $50 million growth investment in Tarana Wireless, which provides fixed access points to broadband networks for wireless internet service providers in areas where connectivity options are limited. Milpitas, Calif.-based Tarana generated nearly $100 million in its first full year of selling its technology, which is now deployed in 41 states and 19 countries, according to a news release.
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Vista Equity Partners said its credit arm is backing advertising technology company VideoAmp with $150 million in funding to accelerate its growth in the media industry. The Los Angeles-based company helps measure audiences across cable television, smart TVs and other types of services and devices, according to a news release.
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Consumer specialist L Catterton led a $13 million growth investment in Gooder Foods brand Goodles packaged foods, joined by several existing backers of the business as well as company managers and a variety of sports and entertainment figures, according to a news release. The Santa Cruz, Calif.-based startup said it expects to triple its sales this year.
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Eden Global Partners led a $70 million investment in waste recycler UBQ Materials, joined by existing backers TPG, Battery Ventures and M&G. The company said it makes thermoplastic materials from waste diverted from landfills and incinerators for use in products including footwear and car parts. TPG backs the Tel Aviv-based company through its Rise and Rise Climate impact strategies and M&G through its catalyst strategy, according to a news release.
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Midmarket specialist Bow River Capital said it participated in the recapitalizing of in-home diagnostics and pain-relief products distributor Veridian Healthcare by HealthEdge Investment Partners, United Western Group and Advantage Capital Holdings, investing through the Denver firm’s credit strategy, which was formed in June. Gurnee, Ill.-based Veridian supplies healthcare products to national and regional retailers and pharmacies as well as online outlets, according to a news release.
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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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An Ares Management-backed blank-check company that plans to combine with a developer of modular nuclear reactors, X-Energy Reactor, said it has cut the equity value of the company used for the transaction by 42% to $1.05 billion, while Ares has agreed to invest $50 million in the deal through a private investment in public-equity agreement. That PIPE deal will give the asset manager preferred shares in the combined entity.
The reduction in X-Energy's value follows a similar through less dramatic move in June which dropped the company's equity value to $1.8 billion from $2.08 billion in December, a separate securities filing shows.
Ares Acquisition Corp., the special purpose acquisition company, or SPAC, also said that X-Energy founder and Executive Chairman Kam Ghaffarian has agreed to provide $30 million to the combined company to pay down debt and will get $30 million in PIPE shares once the deal closes. Ares said it has already invested $30 million, bringing the firm’s total commitment to $80 million.
Rockville, Md.-based X-Energy agreed to combine with the SPAC in December, saying then that it expected to close the deal by the second quarter of this year. The company is developing its low-scale reactors with support of as much as $1.2 billion from the federal Energy Department, a December securities filing shows.
Ares Acquisition raised about $1 billion through an initial public offering of shares in February 2021 and more recently had less than half of that amount remaining in its trust account, according to data provider Boardroom Alpha. Ares co-founder David Kaplan leads the SPAC alongside Ares Chief Financial Officer Jarrod Phillips, according to Boardroom Alpha.
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In an unrelated deal, a blank check company led by a former Invesco private-equity executive, Carl Stanton, and the founder of lower midmarket-focused buyout firm HiGro Group, Ernest Lyles, has agreed to combine with de-carbonization company DevvStream Holdings in a deal that values the Canadian business at $212.8 million, according to a news release and data provider Boardroom Alpha. The deal comes as Focus Impact Acquisition Corp., the special purpose acquisition company in the deal, has around $60.4 million left from the roughly $230 million it raised through an initial public offering of shares in October 2021 as
shareholder redemptions depleted its capital, according to the release. The result of the combination would be a Nasdaq listing for DevvStream and the delisting of its shares in Canada, the release indicates.
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Munich-based Mutares said it has sold lawn mower and garden care products company SABO-Maschinenfabrik to Sabo Holding, marking Mutares’ sixth exit of 2023, according to a news release. Mutares acquired the company back in 2020 from U.S. tractor maker John Deere.
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General Atlantic is selling down its stake in publicly traded Squarespace through a secondary stock offering, according to a news release. The company is offering 5 million shares at $29 a share, while also granting underwriters the option to offer an additional 750,000 shares, the release stated. General Atlantic initially backed a $40 million growth round for the online publishing and e-commerce technology provider in 2014 and supported another investment round in 2017. The company went public in 2021 on the New
York Stock Exchange.
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TGP Investments’ TGP Capital Partners unit has rounded up at least $29 million so far for TGP Capital Partners III, according to a regulatory filing. The amount raised so far puts the fund more than half way toward a $50 million offering amount indicated in the filing. Kansas City, Mo.-based TGP backs majority and minority investments in manufacturing and business-services companies with revenue generally between $15 million and $50 million, according to the firm’s website.
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Midmarket firm Palladium Equity Partners is promoting three professionals to partner at the firm and one to managing director, according to a press release. Alexander Funk, Nancy Mitchell and Katherine Lehman will become partners effective January 2024 while Dale O'Connell has been promoted to managing director and head of investor relations effective immediately. Funk and O'Connell joined the firm in 2015, while Mitchell joined in 2021 and Lehman in 2022, according to the release.
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Angeles Equity Partners said it has added Steve Tamjidi to its business development team. Tamjidi previously led business development at El Segundo, Calif.-based lower midmarket firm Architect Equity Partners, according to a press release.
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Consulting firm Ernst & Young said it has invested $1.4 billion in artificial intelligence, the latest among a series of peers to announce a billion-dollar commitment to the rapidly developing technology, Isabelle Bousquette reports for CIO Journal. In addition to the $1.4 billion investment, the professional-services provider said it has created its own large language model, EY.ai EYQ, and that it would train its 400,000 employee workforce on using AI.
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Blackstone said it has set up a new group that bundles its insurance, credit and asset-based finance operations under the Blackstone Credit & Insurance heading. The group also includes the New York firm’s business development corporation, or BDC, and accounts for roughly $295 billion in assets under management. Blackstone appointed Gilles Dellaert, its global head of insurance, to lead the new group, with Dwight Scott, head of global credit, serving as its chairman.
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Global alternative asset manager Sagard said it is opening its first Middle East office in Abu Dhabi and hiring Firas Mallah as a managing director to lead it. Mallah’s career includes stints as managing partner at alternative investment firm MMK Capital and chief executive for MENA at Gilded, a financial technology firm that trades gold using blockchain technology, according to his LinkedIn profile and company websites.
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