Good day! Markets dropped modestly yesterday as investors anticipate the outcome of today’s Federal Reserve meeting and the interest rate decisions that result. In the private-equity world, the new investment chief at the California Public Employees’ Retirement System gave the retirement system a less than stellar performance review, as Heather Gillers writes for The Wall Street Journal. Also in this morning’s news, blank check company promoter Chamath Palihapitiya is going to wind down and return cash from two special-purpose acquisition companies after failing to find targets to take public. He’s not the first to make that call and probably won’t be the last. Finally, panelists at the WSJ’s CIO Network online summit predicted that legislation aimed at bolstering U.S. semiconductor chip manufacturing will help unlock innovation that extends well beyond the industry itself.

Dive in for more details…

The nation’s largest pension fund got a scathing performance review Monday when its new investment chief highlighted the retirement system’s underperforming returns and estimated it missed out on $11 billion in gains during a “lost decade” for private equity, Heather Gillers writes for The Wall Street Journal. The unusually candid presentation to board members of the California Public Employees’ Retirement System, known as Calpers, showed returns lagging behind other large pensions in almost every asset class during the past 10 years, with private equity trailing the most, 1.3 percentage points.

One of the biggest promoters of SPACs is shutting down two deal-making efforts that together hold more than $1.6 billion after the market collapsed, wiping out tens of billions in startup market value and punishing individual investors, Amrith Ramkumar writes for The Wall Street Journal. Chamath Palihapitiya will wind down and return cash from the two special-purpose acquisition companies to shareholders after failing to find companies to take public. Giving up is an admission by the brash venture capitalist dubbed the “SPAC king” that the market that helped make him a mainstay on business television has effectively shut down.

U.S. efforts to boost domestic semiconductor manufacturing will have a beneficial impact on homegrown innovation, in part by ensuring tech startups have the resources they need to scale emerging technologies, Angus Loten writes citing industry experts. In turn, they said, startups that depend on a stable supply of semiconductors stand to draw more private-market investors, as the availability of chips becomes less vulnerable to the kinds of supply-chain disruptions unleashed by the Covid-19 pandemic or Russia’s invasion of Ukraine—easing risk for venture-capital investors.

Join us on Oct. 3 for a members-only event to discuss how private-equity firms can foster female talent and how women can succeed in launching their own firms. Speakers include Michelle Dipp from Biospring Partners, Hollie Haynes from Luminate Capital Partners and JoAnn Price from Fairview Capital Partners. Sign up here.

KKR & Co. and Indian industrial company Hero Group are investing $450 million into Hero’s renewable energy arm Hero Future Energies to support the unit’s expansion across technologies such as solar and wind power, battery storage, green hydrogen and into future new markets, according to a press release. KKR is investing in the deal out of its Asia Infrastructure Fund strategy, the release stated. KKR joins development investor International Finance Corp. as a backer of the renewable energy unit. The IFC invested $125 million in the company back in 2017 to support the development of solar and wind power plants across India, according to a press release issued at the time.

Midmarket-focused LLR Partners has backed a growth investment in PCS Software Inc, a transportation management software provider for shippers, carriers and logistics brokerages in North America, according to an emailed press release. Capstreet, which has backed the company since 2019, will retain a minority stake in the company.

British Columbia Investment Management Corporation, which manages assets on behalf of public sector clients of British Columbia, is acquiring a significant minority stake in Authority Brands, according to a press release. The Canadian institutional investor joins private-equity firm Apax Partners as an investor in the company, which owns 12 different franchisors offering home services that include plumbing, tree trimming and removal, painting, air conditioning and heating, pest control, pet care or house sitting, among other services. Apax initially invested in the platform in 2018, the release stated.

Private-equity firm Littlejohn & Co. made a growth investment in Hiller Cos., a Mobile, Ala.-based provider of fire and life-safety services, according to a news release. Dutch conglomerate Pon Holdings BV continues to be a large investor in the business, the release said.

Goldman Sachs Group's growth equity unit and GiantLeap Capital have invested in a $90 million funding round of Fortanix Inc., a cybersecurity company. Also participating in the funding round were existing investors Foundation Capital, Intel Capital, Neotribe Ventures, and In-Q-Tel, the firms announced.

Canadian private-equity firm Fulcrum Capital Partners is investing in VODA Backyard Leisure Group, a Canadian backyard products and accessories company, according to a press release. The company is comprised of three business units: Aquiform Distributors, Club Piscine and Pool Supplies Canada, according to the release.

MiddleGround Capital, a midmarket firm focused on business-to-business industrial and specialty distribution companies, has acquired bicycle parts and accessories distributor HLC Inc., according to a press release.

Swiss sustainable investment firm responsAbility Investments and private markets firm Avenue Capital Group are leading a growth investment in sustainable agriculture company Agro Vision Corp, according to a press release. Los Angeles-based Agro Vision produces berries year round using sustainable farming practices and precision farming techniques, according to a press release. Avenue invested in the company through its sustainable solutions strategy, which targets credit oriented investments in companies and projects that seek to advance select social and environmental impact themes.

Paine Schwartz Partners, a private-equity firm that focuses on the food and agribusiness sectors, has backed Humic Growth Solutions Inc., according to a news release. The Jacksonville, Fla.-based company produces humic and fulvic acids, which are used in fertilizers, the release said.

Lone Star Funds’ affiliates have acquired a portfolio of multi-family properties from Transcontinental Realty Investors and Macquarie Capital, the Texas firm announced. The portfolio covers 46 properties in 17 markets across the Sunbelt.

Audax Private Debt, the credit arm of midmarket-focused firm Audax Group, helped its private-equity peer Madison Dearborn Partners finance its acquisition of Unison Software Inc., according to a news release. Dulles, Va.-based Unison provides procurement- and contract-management software to U.S. government agencies and contractors, the release said.

A European private-equity firm agreed to buy a controlling stake in Eataly SpA, with the aim of helping the Italian-marketplace chain continue to expand globally, the WSJ's Cara Lombardo writes. Investindustrial is taking take a 52% stake in Eataly, the companies said Wednesday. The deal, which The Wall Street Journal reported Tuesday was imminent, involves an investment of around 200 million euros, equivalent to $199 million, as well as the purchase of additional shares.

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

Welsh Carson Anderson & Stowe will exit its stake in Shields Health Solutions as a result of Walgreens Boots Alliance Inc.’s planned acquisition of a roughly 30% remaining ownership interest in the specialty pharmacy company for around $1.37 billion. The New York-based private equity firm initially made an equity investment in the company alongside Walgreens in 2019 and Walgreen’s further expanded its holding in 2021, investing around $970 million and growing its stake to 71% of the company.

Clearlake Capital Group has raised more than $2.5 billion for Clearlake Opportunities Partners III LP, ahead of the fund’s $1.5 billion target, according to a press release. The fund is earmarked for non-control equity and debt investments across technology, industrial and consumer businesses. The firm has already invested the fund in portfolio companies that include software provider AMCS, and English professional football club Chelsea Football Club, the release stated.

Healthcare-focused WindRose Health Investors has rounded up $1.22 billion for WindRose Health Investors VI LP and related parallel vehicles, according to a regulatory filing. The amount raised so far puts the fund ahead of a $1.15 billion offering amount indicated in a separate regulatory filing from 2021. Investors that have disclosed commitments to the fund include Florida State Board of Administration and a listed private equity investment trust managed by global asset management firm Abrdn, according to publicly disclosed documents.

Razor’s Edge Management LLC, a venture-capital firm focused on investing in national-security startups, has closed a $340 million fund, the latest example of the increased interest investors and corporations have in backing young companies developing defense-related technology, WSJ Pro Venture Capital’s Marc Vartabedian writes. The Reston, Va.-based firm said it is aiming to deploy the capital into startups helping the U.S. maintain technological superiority over its adversaries.

Digital Transformation Capital Partners has held a first closing of $300 million for its third growth equity fund, according to a press release. The fund has attracted commitments from Deutsche Telekom and SoftBank Group International. It is focused on growth investments in cloud-based software and software-as-a-service companies across sectors that include cybersecurity financial technology, artificial intelligence, IT applications and cloud-based infrastructure, according to a press release.

Arctos Sports Partners announced the addition of four new operating advisers to its team. They include former professional basketball player Shane Battier; Jessica Gelman, chief executive of sports analytics company Kraft Analytics Group; Chris Grove, co-founder and general partner of venture capital fund Acies Investments; and Normand Legault, president of advisory and mergers and acquisition firm GPF1 Inc. Arctos has invested in more than 20 sports franchises and adjacent businesses.

Ara Partners said it has hired David Touhey as a managing director in the portfolio services group focused on project development. Before joining the firm, Mr. Touhey served as an executive vice president for Kent, a global engineering company in the oil and gas and low carbon energy industry, according to a press release.

Blackstone Inc. said it would hire 2,000 refugees across its portfolio companies and real estate properties, including 1,500 in the U.S. alone, according to a press release. The firm also said it is joining non-profit Tent, a network of major corporations committed to supporting refugees. The firm also announced it had joined the Welcome U.S. CEO Council, an organization focused on accelerating private sector support for refugees from Afghanistan and Ukraine, according to a press release.

More bad news on the debt syndication front. Bloomberg News is reporting that a group of banks led by Bank of America and Credit Suisse Group is being forced to offer discounts on the more than half of the $15 billion debt package to finance the buyout of Citrix Systems Inc. A $4 billion secured high yield bond portion of the debt is being offered at 83.6 cents on the dollar, Bloomberg reports.

The medium-term outlook for global inflation is likely to be "higher-for-longer" compared with the past decade's low and benign inflation, according to Singapore's central bank, Ronnie Harui reports for Dow Jones Newswires. “A fair guess is that we are likely to see more recurrent bouts of higher price increases compared to the last two decades," after the current bout of high inflation is contained, the Monetary Authority of Singapore's managing director Ravi Menon said at the SuperReturn Asia Conference in Singapore. This outlook is being supported by the four structural factors of supply-chain developments, labor market dynamics, energy transition and the impact of climate change, he said.

Morgan Stanley will pay $35 million to settle allegations that it scrapped computer servers and hard drives without ensuring they no longer held sensitive customer information, Dave Michaels writes for the Journal, citing regulators. Some of the computer hardware was resold with customer data still on it, according to the Securities and Exchange Commission. The brokerage and money-management firm agreed to pay the fine without admitting or denying wrongdoing, the SEC said.

Federal antitrust enforcers are investigating Amazon.com Inc.’s proposal to buy Roomba maker iRobot Corp., Dave Michaels reports for the Journal, citing a securities filing. The Federal Trade Commission this week formally requested documents from both companies explaining the proposed $1.7 billion deal’s purpose and rationale, iRobot disclosed on Tuesday. The FTC’s review is the latest investigation involving Amazon. The agency also is examining Amazon’s $3.9 billion deal to buy 1Life Healthcare Inc., which operates One Medical primary care clinics in 25 U.S. markets.

Chinese firms for years were among the most aggressive buyers of U.S. luxury hotels, office towers and other commercial real estate. Now they are running for the exits, as Konrad Putzier writes for the Journal. Chinese companies have sold a net $23.6 billion of U.S. commercial properties since the start of 2019, according to data provider MSCI Real Assets. That marks a dramatic turnaround. Between 2013 and 2018, Chinese firms were net buyers of nearly $52 billion of U.S. commercial properties, according to MSCI.

A federal judge Monday ruled against a Justice Department antitrust challenge to UnitedHealth Group Inc.’s $13 billion acquisition of health-technology firm Change Healthcare Inc., rejecting government claims that the deal would unlawfully suppress competition and limit innovation in health-insurance markets, The Wall Street Journal’s Anna Wilde Mathews and Brent Kendall report.

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