Good morning. Today, we lead off with Heather Gillers’s look at a riskier investment strategy that U.S. institutional investors can’t seem to get enough of: private companies in China. The sudden cancellation of Ant Group Co.’s IPO hasn't hurt the appetite of U.S. public pension funds for Chinese private markets, which are projected to offer high returns due in part to China’s explosive economic growth. State pension plans so far are shrugging off legal and regulatory risk to back private-equity funds behind the biggest names in the Chinese private sector.

Also in the Journal, Toast Inc., a private-equity and venture backed software provider to the restaurant industry is planning an initial public offering that could value the company at around $20 billion and private-equity backed Cyxtera Technologies is nearing a deal to combine with a blank check company. 

Finally, we have an interview by Isaac Taylor with Macquarie Asset Management’s Andrea Mody on the challenges of fundraising during the pandemic, and what to expect in the coming year.

Now on to today's news...

U.S. state pension funds that invested in Ant Group Co. were stung when the financial technology firm’s initial public offering was suddenly pulled on orders of China’s president. But few of these investors are swearing off Chinese private markets, where they still hope to reap big returns, Heather Gillers reports for The Wall Street Journal.

Toast Inc. is planning an initial public offering that could value the privately held restaurant-software provider at around $20 billion, Cara Lombardo and Maureen Farrell write for The Wall Street Journal, citing people familiar with the matter. The Boston company was valued at around $4.9 billion in a $400 million fundraising round roughly a year ago that included Bessemer Venture Partners, TPG, Greenoaks Capital and Tiger Global Management LLC.

A special-purpose acquisition company backed by shareholder activist Starboard Value LP is nearing a deal to combine with data-center provider Cyxtera Technologies Inc., Cara Lombardo reports for the Journal, citing people familiar with the matter. Starboard Value Acquisition Corp is discussing a deal that would value Cyxtera at around $3.4 billion including debt, the people said. It could be finalized by Monday assuming the talks don’t fall apart, they said.  Cyxtera’s existing owners, including private-equity firms BC Partners and Medina Capital, plan to roll their equity stakes into the combined company, the people said.

In the final installment of our In Their Own Words series on 2020 fundraising, Andrea Mody, head of alternatives for the client solutions group at Macquarie Asset Management, shared her insights into the challenges and opportunities that private-equity firms and their limited partners faced last year. One surprise was the speed at which private-equity firms on the fundraising trail adapted to a virtual due diligence environment.

The rise of large funds is reshaping the venture industry, WSJ Pro Venture Capital’s Yuliya Chernova writes. It is moving attention away from smaller, emerging funds, for example, as fewer first-time funds get raised and the amount of capital going to new small funds is on the decline. Large funds also have tended to pour larger sums into startups, and as a result have raised the price of entry for all investors. Read more.

London-based 3i Group has agreed to invest $120 million in recruiting company Wilson Human Capital Group Inc. The Tampa, Fla.-based company, which does business as WilsonHCG, provides outsourced recruiting and talent management services and operates in more than 65 countries on six continents.

Insight Partners has led a $75 million funding round for Earnix, a technology company that uses artificial intelligence to provide rating, pricing and product personalization services for customers in the insurance and banking sectors. The latest financial round values the company at $1 billion and includes participation from existing investors JVP, Vintage Partners and Israel Growth Partners, according to a press release.

Ciruclo, an insurance technology provider focused on the Medicaid managed-care market, has raised a $50 million inaugural funding round supported by investors that include Drive Capital, General Catalyst, Oak HC/FT and SVB Capital.

A bankruptcy judge approved the sale of In-Shape Holdings to private-equity firm Aquiline Capital Partners, WSJ Pro Bankruptcy's Jonathan Randles writes for Dow Jones Newswires. The transaction allows In-Shape to continue operating under new ownership after the health club operator filed for chapter 11 protection in December. The California-based chain of health clubs is one of several gym operators that have been pushed into bankruptcy during the Covid-19 pandemic.

HIG Capital has added three residential buildings in Lisbon to its European real-estate portfolio, sister publication Private Equity News reports. Financial details weren't disclosed, but the firm said the real-estate assets in Portugal were acquired through multiple transactions.

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

A pair of blank-check companies backed by activist hedge fund Elliott Management are separately seeking to raise $1 billion and $500 million to finance the purchase of private companies, regulatory filings show. Elliott Opportunity I Corp. has registered to raise $1 billion and is led by a group of Elliott Management executives, including Jesse Cohn, Gordon Singer and David Kerko. The SPAC is targeting a technology company or a technology-enabled services business. The second SPAC, Elliott Opportunity II Corp., has filed to raise $500 million and is led by the same trio of Elliott Management executives and is targeting the same sort of business opportunity, the filing shows.

A blank-check company backed by computer entrepreneur Michael Dell’s investment firm plans to raise $500 million through an initial public offering of shares, a regulatory filing shows. MSD Acquisition Corp., the special-purpose acquisition company, is led by MSD Partners executives Gregg Lemkau and John Phelan and lists Mr. Dell as a strategic adviser. Founded by Mr. Dell in 1998, MSD Capital established MSD Partners in 2009 and together the firms manage more than $19 billion in assets. The SPAC is targeting a deal in the technology and media sectors.

A blank-check company tied to Fortress Investments aims to raise $600 million through an initial public offering of shares to finance the purchase of a business that can benefit from a management overhaul or other restructuring, according to a regulatory filing. The special-purpose acquisition company, Fortress Value Acquisition Corp. IV, is led by Joshua A. Pack, a managing partner in the credit arm of Fortress, which is controlled by SoftBank Group Corp.

A special purpose acquisition company backed by Stone Point Capital and led by current and former AmTrust Financial Services Inc. executives, including Christopher Longo and Adam Karkowsky, plans to raise $300 million in an initial public offering. Pine Technology Acquisition Corp. aims to finance the purchase of a private company involved in the insurance technology sector, a regulatory filing shows.

A Nordic Capital-backed company, Cidron Ross S.a r.l., sold shares in the initial public offering of Cint Group AB, which priced at the top of its guided range on Friday, Dominic Chopping reports for Dow Jones Newswires. The IPO valued the Swedish market-research software developer at 9.84 billion Swedish kronor (or about $1.18 billion), Cint shares priced at 72 kronor and traded at as much as 85.95 kronor on the Nasdaq Stockholm stock market. Cidron Ross sold about 61.4 million shares in the offering.

Peak Rock Capital has already surpassed the amount raised for its second flagship fund, reporting in a regulatory filing Friday that it has collected more than $1.61 billion so far from 106 investors for its Peak Rock Capital Fund III LP. The Austin, Texas-based firm indicated that the target for the fund is $1.8 billion. Peak Rock said in January 2018 that it had closed its second flagship pool with about $1.04 billion. The latest fund includes commitments from the Teacher Retirement System of Texas and the Tennessee consolidated Retirement System, WSJ Pro Private Equity data show.

Index fund provider Vanguard Group Inc. is raising investments for its second private-equity fund after raking in nearly twice as much capital as it anticipated for the first vehicle, which launched about a year ago, according to a news release. The Malvern, Pa.-based asset manager marketed its debut private-equity fund through its institutional arm and gave HarbourVest Partners in Boston the task of managing the pool. But in a paper published on Feb. 15, Vanguard executives including Fran Kinniry spell out why the strategy may be appropriate for qualified individual investors as well as endowments, pensions and foundations. Ms. Kinniry, the head of private investments at Vanguard, said demand for the first fund “further solidifies our belief that private equity can improve investor outcomes.”

HarbourVest Partners has rounded up at least $524 million so far for HarbourVest Credit Opportunities Fund II LP, according to a regulatory filing. HarbourVest has traditionally focused its private credit investments on middle market companies with up to $100 million of earnings before interest, tax, depreciation and amortization at the time of investment, according to the firm’s website. One investor that has disclosed a commitment to the fund is the State of Michigan Retirement System, which pledged $75 million, according to pension documents.

Big League Advance, an investment company that bets on the future earnings potential of minor league baseball players, stands to receive a nearly $30 million payday off of the record setting $340 million contract that Fernando Tatís Jr. has inked with the San Diego Padres, Jared Diamond writes for the Journal.

Bridgewater Associates is shuffling its management ranks after one of the most challenging years in the hedge-fund giant’s history, Juliet Chung reports for the Journal. One of Bridgewater’s top executives, Chief Operating Officer Brian Kreiter, is leaving. Nir Bar Dea, previously the co-head of Bridgewater’s “investment engine,” was promoted to deputy chief executive under Chief Executive David McCormick. Bridgewater is also creating an investment committee “to broaden the decision making” beyond Bridgewater founder Ray Dalio and co-chief investment officers Bob Prince and Greg Jensen.

Vista Equity Partners has promoted more than a dozen senior employees, including moving up Patrick Severson to senior managing director, Foundation Fund; Rod Aliabadi to managing director, Flagship Fund; Josh Gray to operating managing director, Endeavor Fund; Rebecca Hu to managing director, office of the CEO; and Brent Lanier to managing director and chief information officer.

A team of five investment professionals from Pine Brook Capital has launched BharCap Partners LLC to focus on investments in financial services. The firm, which counts among its founding team Bharath Srikrishnan, Ethan Wang, Jim Rutherfurd (who will join officially in April), Kevin Becker and Ryan Gean, will target investments between $50 million and $350 million, according to a press release. BharCap will have access to $1.8 billion in client capital, including $352 million of funded investments, $318 million of which is unfunded allocations to existing portfolio companies and $1.1 billion of capital available for new deals, according to the release.

North Atlantic Capital has agreed to be acquired by Stifel Financial Corp. in St. Louis. The Portland, Maine-based investment firm specializes in making debt and equity investments in technology companies.

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