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Private Equity Daily: Industry Breaks Political Spending Record | Thoma Bravo Collects $22.8 Billion | SEC Slaps a Firm Over Management Fees
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Good day and welcome to the Private Equity Pro newsletter. We have reached the moment every four years when, with a major election just around the corner, politics seems to swallow up all other issues in the news. This year, private equity has thrown itself into the political process like never before. The industry has spent a record-high amount on the 2020 races, as I report today for WSJ Pro PE. Most of the direct spending has gone to Democrats, a fact that may seem surprising in view of the hostility toward the industry from some well-known members of the party. But it’s not unusual for the industry to balance its spending on both parties. What is new this year is that, for the first time, private equity has spent most of its money on political action groups, which can take unlimited money and operate with very little regulation.
Next, Thoma Bravo LLC has collected $22.8 billion in a record haulf for tech-focused fundraising and the Securities and Exchange Commission has settled with EDG Partners, which will have to pay more than $1 million for allegedly overcharging its limited partners on management fees.
Now on to today’s news...
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The presidential debate Thursday night on a restaurant TV.
PHOTO: RICHARD B. LEVINE/ZUMA PRESS
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Private equity has spent more on the 2020 political races than on any previous election, setting a new high for political donations at a time of fierce debate about greater regulation of the industry, Chris Cumming writes for WSJ Pro Private Equity. Employees of private equity and other investment firms, excluding hedge funds, gave $132 million to candidates, parties, political action committees and outside groups through Sept. 30, according to the Center for Responsive Politics, a nonprofit that reports on money in politics. The data were released Oct. 16 by the Federal Election Commission. That sum is the most the industry has ever spent on an election cycle, exceeding the $117.4 million
spent on 2016 races.
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Thoma Bravo has raised $22.8 billion across three tech-focused private-equity funds, WSJ Pro's Preeti Singh reports. The funds include a $17.8 billion flagship fund that ranks as the largest such fund ever raised by a stand-alone private-equity firm, topping the $16 billion raised by Vista Equity Partners last year.
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EDG Partners, a health-care focused midmarket firm based in Alexandria, Va., has inked a settlement with the Securities and Exchange Commission over claims that the firm overcharged management fees to investors in one of its funds, Ted Bunker writes for WSJ Pro Private Equity. The firm, which did not admit or deny any wrongdoing, agreed to a $1.2 million settlement that included a $175,000 penalty.
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Midmarket 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 Nov. 16 from 11 a.m. to noon Eastern Time. Register to participate here.
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$22.8 Billion
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The amount raised by tech-focused private-equity firm Thoma Bravo LLC across three new funds. They include the $17.8 billion Thoma Bravo Fund XIV LP.
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Advertising for retirement apartments being built behind by McCarthy & Stone in London in 2018. Lone Star Funds has agreed to take the company private.
PHOTO: TOBY MELVILLE FOR REUTERS
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Dallas private-equity firm Lone Star Funds has agreed to take private retirement home company McCarthy & Stone in a £630 million (or about $821.8 million) all-cash deal, Ian Walker reports in sister publication Private Equity News. The firm would finance the transaction through its roughly $4.6 billion Lone Star Real Estate Fund VI, which closed to new investors last year and is focused on investing in commercial real estate across the world. Shareholders in the London-listed retirement-community builder and operator would receive 115 pence a share, a 39% premium to Thursday’s closing price of 83 pence. The company is supporting the deal.
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Stone Point Capital is backing real estate software company Lone Wolf Real Estate Technologies Inc., replacing Vista Equity Partners, which is exiting the Cambridge, Ontario-based business after initially investing in 2015. Lone Wolf software is used in residential real estate transactions and brokerage operations in about 8,000 agencies in North America.
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Wirecard AG’s bankruptcy administrator has sold the failed German fintech’s U.S. operations to a company backed by buyout specialist Centerbridge Partners LP, as it continues to dismantle the remains of the business and earn some cash for creditors, Patricia Kowsmann and Ben Dummett report for The Wall Street Journal. The administrator didn’t say how much Texas-based Syncapay Inc., whose investors also include private-equity firms Bain Capital Ventures and Silversmith Capital Partners, paid for the unit. The U.S. arm has remained a largely autonomous, separate legal entity since Wirecard bought the business from Citigroup Inc. in 2016. It issues prepaid cards, which are
often used as consumer vouchers or for refunds by companies.
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Carlyle Group Inc. and Pacific Equity Partners got a cold reception from Link Administration Holdings Ltd., an Australian company the private-equity firms offered to buy earlier this month. On Friday, Link said the conditional, nonbinding indicative proposal from the firms “materially undervalues” the company and wasn’t in the best interests of its investors. But Sydney-based Link said it was open to further discussion with the would-be buyers.
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CORRECTION: Countrywide PLC is a U.K. property services company and the subject of a proposed recapitalization that involves distress specialist Alchemy Partners, which would invest as much as roughly £90 million (about $116.5 million) to obtain a 50.1% to 67.7% stake in the business, according to a regulatory filing in London. The company and the status of the transaction were described incorrectly in Friday’s WSJ Pro Private Equity newsletter.
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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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Supernova Partners Acquisition Co., a blank-check company led by veteran private-equity professionals and entrepreneurs, said it had collected $402.5 million from its already upsized initial public offering last week. The special purpose acquisition company is co-chaired by Senator Investment Group co-founder Alexander Klabin and real-estate website Zillow co-founder Spencer Rascoff. Robert Reid, the SPAC’s chief executive, is a former Blackstone Group Inc. senior managing director and Michael Clifton, the company’s chief financial officer, is a former Carlyle Group Inc. senior
investment professional. The company initially sought $300 million through its IPO, and raised the amount to $350 million before the deal priced. On Friday, the company said underwriters fully exercised their over-allotment options, adding $52.5 million to the final total.
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A blank-check company started by a founder of Cleveland private-equity firm Resilience Capital Partners aims to raise $200 million through an initial public offering of shares, a regulatory filing shows. Steven Rosen, who is co-chief executive of Resilience, is also the co-CEO of Zanite Acquisition Corp. alongside aviation industry executive and investor Kenneth Ricci. The special purpose acquisition company is advised by former Northrop Grumman CEO Ronald Sugar. The SPAC is targeting the aviation, defense, urban mobility and emerging technology sectors to find a private company it can acquire and take public.
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Arsenal Capital Partners has agreed to sell health-care software maker TractManager Inc. in Dallas to Vendor Credentialing Service LLC, a Houston-based portfolio company of Clearlake Capital Group and SkyKnight Capital that does business as Symplr.
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Linden Capital Partners in Chicago has collected at least $154.6 million so far for its Linden Structured Capital Fund LP, which has a $250 million fundraising goal, a regulatory filing shows. Founded in 2004, Linden had almost $3.49 billion in regulatory assets under management at the end of last year, a separate filing indicates.
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NaviMed Capital, a Washington, D.C.-based private-equity firm focused on health-care deals, has collected at least $165.8 million for NaviMed Partners II, L.P., according to a regulatory filing. Moelis & Co. is placing the fund, according to the filing. NaviMed typically makes equity investments of $5 million to $30 million in companies with $10 million to $100 million of revenue and up to $10 million of earnings before interest, tax, depreciation and amortization, according to the firm’s website.
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Distressed debt focused Strategic Value Partners in Greenwich, Conn. has named Ranji Nagaswami and Sarah Pillmore as managing directors and members of its management council. Ms. Nagaswami is now the firm’s chief strategy and chief commercial officer while Ms. Pillmore is head of human resources and talent. Ms. Nagaswami, who joined SVP’s advisory council earlier this year, was most recently chief executive of Hirtle Callaghan & Co., a provider of investment services to endowments, foundations and ultra-high net worth families. Ms. Pillmore was HR chief at the same company and most recently worked with Oxford Sciences Innovation on personnel matters.
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More than $1 billion in unpaid bills is stacked up in the bankruptcy of Hahnemann University Hospital, an historic healthcare hub for Philadelphia’s poor and homeless that was closed by private equity operators last year, WSJ Pro Bankruptcy’s Peg Brickley reports. Hundreds of millions of dollars in claims arise out of the snarl of real estate entanglements involving Joel Freedman, the California investor who led a 2018 buyout, then shut Hahnemann in spite of protests from health officials, community groups, doctors and nurses. Mr. Freedman filed multiple claims in his own name, arguing that if he is sued over his handling of Hahnemann, the defunct hospital should pay the damages.
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A bankruptcy judge is allowing Australian company Speedcast International Ltd. to move forward with a proposed financial restructuring backed by Centerbridge Partners LP, WSJ Pro Bankruptcy’s Jonathan Randles reports. But the judge in Houston warned of problems that could prevent the satellite communications provider from ultimately exiting chapter 11 reorganization. For now, the decision lets Speedcast move forward with a planned transfer of control to Centerbridge, one of its largest lenders, in exchange for a $500 million equity investment.
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GCM Grosvenor, which is being acquired by a blank-check company, has raised its guidance for this year’s adjusted pretax earnings to $90 million to $92 million from $77.5 million while its adjusted earnings before interest, taxes, depreciation and amortization have been increased as much as 18% to $116 million to $118 million from $100.4 million. The acquiring company, Cantor Fitzgerald affiliate CF Finance Acquisition Corp., also said the private-equity firm’s fee-paying assets under management rose 1% to roughly $49.9 billion and assets not yet generating fees climbed 19% from the previous quarter to $6.6 billion. The firm is currently owned by a group of its executives and
Hellman & Friedman.
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