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TC Latin America Eyes 'Nearshoring' Opportunity | Proskauer Adds Fund Finance Partner | A Junior VC's Dilemma
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Welcome back readers! Over the past few years, Covid lockdowns in China combined with rising political tensions and other supply chain disruptions have prompted more North American companies to shift manufacturing operations closer to home, particularly in Mexico. As Luis Garcia writes this morning, one Latin America-focused investment firm sees opportunities to capitalize on such nearshoring. Meanwhile, Rod James has the scoop on a new addition to the fund finance team at law firm Proskauer Rose and WSJ Pro Venture Capital’s Yuliya Chernova looks at how junior venture capitalists are trying to prove themselves in a more challenging market for startups.
Read on for more…
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The Monterrey, Mexico region is among the areas benefiting from the nearshoring trend. Photo Credit: Daniel Becerril, Reuters
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More industrial companies are setting up factories in Mexico, and private-equity firm TC Latin America Partners wants to be their landlord, Luis Garcia writes for WSJ Pro Private Equity. The New York real estate specialist has invested about $120 million in the past three years or so to acquire industrial properties in Mexico, fix them up and rent them to manufacturers newly arrived from offshore, said Gregorio Schneider, TC Latin America’s founding partner and chief investment officer. Mexico benefits from so-called nearshoring, or moving production closer to target markets, as manufacturers seek to avoid a repeat of the supply disruptions that occurred during the height
of the Covid pandemic, analysts and factory managers said.
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Law firm Proskauer Rose LLP has bolstered the senior ranks of its fund finance practice in anticipation of strong growth in 2023, Rod James writes for WSJ Pro Private Equity. The New York-based law firm has hired Matthew Kerfoot as a partner to start in late February, according to people familiar with the matter. He will advise on preferred equity transactions, net-asset-value-backed loans and collateralized fund obligations, among other types of fund finance deals.
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Many venture investors early in their careers are facing a new question: How do I prove myself in a declining market? “It’s a pressure-cooker environment for emerging VCs,” Adam Dawkins tells WSJ Pro Venture Capital’s Yuliya Chernova. Mr. Dawkins is the founder of the Emerging Venture Capitalists Association, a nonprofit with about 1,350 members who mostly hold titles such as analyst, associate, vice president and principal at venture firms. The push to contribute to a firm’s success by sourcing and closing deals is especially high now, he said, as firms re-evaluate team sizes due to worries about fundraising. But getting new deals done is harder, because the market is contracting, given
that venture firms are becoming conservative and founders are reluctant to raise capital in a bearish environment.
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WSJ Pro Event: Investing Through The Cycle
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Join us on Feb. 15 for a virtual webinar to discuss how limited partners view the investment outlook. In one panel, Sara Bowdoin from Siguler Guff will consider allocations while a second panel on finding diverse managers will feature Katie Moore from Hamilton Lane Inc. and Pamela Pavkov from TPG Inc. You can register here.
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$223 Billion
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The cumulative amount of capital called by buyout firms in excess of what they have distributed to fund investors since 2000, according to a Kroll Bond Rating Agency LLC report citing Preqin Ltd. data
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A worker at a Seattle shipyard of Vigor Industrial, a unit of Titan Acquisition Holdings. Photo: Ted S. Warren, Associated Press
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Lone Star Funds has agreed to buy ship repair services and marine fabrication company Titan Acquisition Holdings from fellow private investment firms Carlyle Group Inc. and Stellex Capital Management, according to a press release. Titan consists of three main units: Portland, Oregon-based Vigor Industrial LLC, Norfolk, Va.-based MHI Holdings LLC and Continental Maritime of San Diego, the release stated. Titan was formed in 2019 through the acquisition and merger of Vigor and MHI
Holdings.
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Lowe’s Companies has completed the sale of its Canadian retail business to private-equity firm Sycamore Partners, according to a press release. Lowe’s announced in November it would sell the unit to Sycamore for $400 million in cash and performance-based deferred consideration.
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Singapore sovereign wealth investor GIC and Oak Street, a real estate investment unit of Blue Owl Capital Inc., have completed the acquisition of publicly traded real estate investment trust Store Capital Corp. in a deal valued at around $15 billion, according to a press release. The $32.25-per-share deal was announced in September. Store has more than 3,000 properties ranging from pre-schools to metal fabrication plants and restaurants.
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KKR & Co.-backed Canadian graphics software company Alludo, formerly known as Corel Corp., failed to win enough shareholder votes to move forward with a $372 million bid to acquire Nitro Software Ltd. in Australia, with about 68% of the shares voted in favor – short of a 75% requirement. Alludo then launched an off-market bid at the same price of 2.15 Australian dollars per share that only requires a simple majority to succeed, Reuters reported. While Nitro directors
recommended the A$2.15 offer, private-equity firm Potentia Capital made a rival bid late last year. The firm holds a roughly 19% stake in Nitro.
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Dallas-based private-equity firm Craftsman Capital Partners LLC has acquired MSB School Services, an Austin-based provider of special education software for educators focused on grades K through 12, according to a press release.
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Existing investor Lincoln Park Capital Fund LLC is adding to its investment in publicly traded Kiora Pharmaceuticals Inc.
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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 Viveon Health Acquisition Corp. said it has terminated a planned $250 million combination with medical aesthetics technology developer Suneva Medical Inc. after nearly all Viveon investors sought redemptions of their investments in the special purpose acquisition company. The SPAC raised around $201 million in December 2020 to finance a combination with a healthcare or medical technology business and its leaders include Rom Papadopoulos, the founder and managing partner of healthcare
investment firm Intuitus Capital in Atlanta. Viveon agreed to combine with Suneva in January 2022 in a transaction that valued the San Diego company at about $511 million. Viveon said it remains in pursuit of a combination target.
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A blank check company led by private investment firm executives in China aims to extend its deal deadline to May 2 from last Thursday, according to a news release. Blue World Acquisition Corp. raised $92 million about a year ago to combine with a business focused on maritime activities, including shipping, energy, tourism and hospitality, outside of China, a regulatory filing shows. The special purpose acquisition company’s leaders include Liang Shi, a partner with growth investor Ningbo Zenin Investments Management Partners, and Tianyong Yan, the general manager of Shanghai Green Storm Asset Management, filings show.
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Axial Reade Capital has raised over $205 million so far for Axial Reade Capital Fund II LP and a related parallel fund, according to a regulatory filing. The amount raised puts the fund more than halfway to a $350 million offering amount indicated in the filing. New York-based Axial Reade was founded in 2018 by Founding Partner Michael Sirignano, a former senior executive of MHR Fund Management. The firm targets midmarket companies across transportation and logistics, business services and industrial services and closed its debut fund in 2019, according to its website.
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H.I.G. Capital has raised at least $206 million so far for H.I.G. Technology Partners A LP and related parallel funds, a regulatory filing indicates. H.I.G.’s technology fund focuses primarily on private equity investments in established and growing midmarket technology businesses, according to the firm’s latest registered investment adviser filing.
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Carlyle Group Inc. is in talks to hire Harvey Schwartz, a former Goldman Sachs Group Inc. president, as its new chief executive, according to several reports citing people familiar with the matter. The negotiations aren’t complete and it isn’t clear if other candidates remain in the mix. Carlyle has also been considering internal candidates including Peter Clare, a veteran dealmaker who is the chief investment officer of its private equity unit, and Mark Jenkins, head of its fast growing credit investment operations, Reuters said. The Washington-based firm has been searching for a permanent CEO since last summer after Kewsong Lee resigned abruptly. Co-founder Bill Conway stepped in as interim CEO.
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Kern County Employees’ Retirement Association in Bakersfield, Calif. is mulling a private-markets pacing plan that would allocate around $260 million in commitments annually across private equity, venture capital, private credit and private real estate, according to a report prepared by consultant Cambridge Associates for consideration at the public pension’s upcoming board meeting. The pacing plan aims to bring the pension system to its 15% total target allocation to private markets by 2026, according to the report. The memo also noted that it expects 2023 to be a lighter year for re-ups with existing manager relationships.
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A New York state judge on Friday said he will not sanction a law firm representing two women who have accused Apollo Global Management Inc. co-founder Leon Black of rape, Reuters reported Friday. Justice David Cohen in Manhattan denied the billionaire private equity investor's motion to sanction Guzel Ganieva and her lawyers at the Wigdor LLP law firm. In the same ruling, Justice Cohen denied a competing request by Ms. Ganieva for sanctions against Black. Ms. Ganieva, a Russian model, sued Mr. Black in 2021, claiming he abused her sexually and then lied and falsely accused her of extortion when she spoke out. Mr. Black has denied the
allegations.
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Rising interest rates, a potential recession, the frozen initial public offering market, inflation and weaker private company valuations all present headwinds for private-equity fund sponsors that borrow money against the assets on their balance sheets or held by their funds, Kroll Bond Rating Agency LLC said in a report distributed Friday. Each factor could increase the risk associated with so-called net-asset-value loans, said KBRA, as the agency is known. KBRA currently rates 54 NAV loans totaling $27.5 billion, including 35 with a total worth of about $18 billion that are secured by secondary assets, or holdings of limited partner interests owned by secondaries funds. Another 19 rated
NAV loans totaling $9.5 billion are backed by pools of equity held in buyout funds. KBRA said its analysis of the macroeconomic outlook and issues particular to each rated NAV loan determined credit risks are within the scope of its ratings and remain stable.
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The volume of failed transactions in the market for secondhand private equity stakes increased dramatically last year, according to a survey by advisory firm Setter Capital in Toronto, WSJ Pro Private Equity’s Rod James reports for Dow Jones Newswires. Among the nearly 100 investors surveyed, 36% said a higher proportion of deals fell apart last year than in 2021, compared with only around 9% of buyers who said that in response to a similar survey two years ago. More than 7-in-10 investors in the most recent survey said the main reason deals fell apart was that sellers backed away.
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Shares of a biopharmaceutical company backed by Eight Roads Group, F-Prime Capital Partners and Sequoia Capital China surged more than 70% in their trading debut Friday, Corrie Driebusch reports for The Wall Street Journal. Eight Roads owned more than 8.3% of the company’s shares before the IPO, while F-Prime had a 7.5% stake and Sequoia owned 10.3%, a regulatory filing shows. The stock’s pop has brightened the outlook for the U.S. IPO market, which fell to the lowest level in decades last year, based on the amount of capital raised.
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A Carlyle Group Inc.-backed fund stands to gain from police raids in the Antwerp, Belgium area aimed at recovering debts originally owed by Eurostar Diamond Traders NV to Standard Chartered PLC and acquired by the private-equity firm’s distressed debt strategy, Bloomberg News reported. The raids seized around €50 million worth of gemstones, equivalent to $54.6 million. Carlyle worked with Grant Thornton International Ltd. on the asset recovery.
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Deutsche Bank AG’s net profit rose in the fourth quarter on the back of higher interest rates and a tax gain, driving the lender to post its strongest year since 2007, The Wall Street Journal’s Patricia Kowsmann writes. Like in the third quarter, the bank’s star was its bread-and-butter lending business, which is charging customers more on loans because interest rates are rising.
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Blackstone Inc. has agreed to acquire $3.6 billion of collateralized loan obligations from American International Group, Bloomberg News reported. The acquisition will bring Blackstone’s CLO assets to some $51 billion.
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