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Democrats Best Trump in Race for PE Cash | Kline Hill's Secondary Fund | Vision Fund's C-Suite Intrigue
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Good morning! While coronavirus fears reverberate through global markets, private-market activity has been robust, with a slew of deal news that continued through midweek. Details of large and small transactions are summarized below. The end of this week also brings Americans their last presidential primary contest before Super Tuesday next week, when roughly a third of U.S. voters get the chance to give a thumbs-up to the candidate of their choice. To provide an industry frame for these events, our Chris Cumming takes a look at campaign giving by people who work for private-equity and investment firms. Three Democrats trounced President Trump.
Also, our Laura Kreutzer has details on the latest secondary-focused fundraising campaign from Kline Hill Partners, while Preeti Singh offers some tips gleaned from an emerging-manager conference in Texas. And last but not least, Bradley Hope and Jenny Strasburg of the Journal present a look at behind-the-scenes intrigue in the Vision Fund’s C-suite. All that and much more awaits, so please take a spin...
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Several of the Democrats running for president, shown above at their South Carolina debate on Tuesday, have gotten more cash support from private-equity executives than President Trump, public records show. PHOTO: PAUL HENNESSY/SOPA IMAGES VIA ZUMA PRESS
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Private-equity executives are lining up behind their favored presidential candidates, with support ranging from Donald Trump to moderate Democrats, based on an analysis of campaign-finance records, WSJ Pro’s Chris Cumming reports. Employees of private-equity firms spent more than $41 million on 2020 races for the White House and Congress through Feb. 3, and many of the industry’s big names have taken sides in the presidential race.
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Kline Hill Partners, a Greenwich, Conn.-based secondary firm focused on small transactions, is seeking a total of up to $600 million for two new secondary funds, Laura Kreutzer writes for WSJ Pro, citing people familiar with the offerings. The firm, which is nearing a first closing of the funds, is one of a number of secondary firms closing on capital for new offerings so far this year.
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The chief executive of SoftBank Group’s $100 billion Vision Fund, Rajeev Misra, rose to the job in part by striking at two of his main rivals inside the firm with a dark-arts campaign of personal sabotage, Bradley Hope and Jenny Strasburg report for The Wall Street Journal, citing people familiar with the matter and documents. The alleged tactics included planting negative news stories about the rivals, concocting an investor campaign to make SoftBank fire them and even attempting to lure one into a “honey trap” of sexual blackmail. A spokesman for Mr. Misra denied the allegations as old and “consistently denied,” but the company said it will be “reviewing the inferences” in the Journal
article.
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Singh’s Take: Do’s and Don’ts for Emerging Managers
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More than 1,800 people attended the 2020 Texas Emerging Manager conference in Austin, Texas, on Feb. 26, including our own reporter Preeti Singh. The conference, which was hosted jointly by two of the state’s largest public pensions, Employees Retirement System of Texas and the Teacher Retirement System of Texas, addressed a range of challenges faced by first- and second-time fund managers. Preeti shares some emerging manager do's and don’ts from the conference.
Avoid Hackneyed Buzzwords: Most fundraising pitch books from emerging managers look similar and investors say they place little credence on oft-used buzzwords like "top quartile" and "proprietary deal sourcing." Instead they focus more on the energy levels emerging managers demonstrate and the ways they engage in decision making.
Get a Referral: Investors said they generally ignore cold calls or unsolicited emails. Instead, an emerging manager should focus on getting an introduction to a prospective limited partner from another investor.
Consider placement agents: Placement agencies act as the first gatekeepers for emerging managers and add credibility to the process, making investors more inclined to evaluate the new manager.
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$83 Billion
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The value of secondary market transactions in 2019, including $28 billion in sponsor-led deals, up from $75 billion and $24 billion, respectively, in 2018, according to Lazard Frères & Co. estimates
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IQ caters to students across several major U.K. campuses, including that of Edinburgh University.
PHOTO: JANE BARLOW/PA WIRE/ZUMA PRESS
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Blackstone Group agreed Wednesday to acquire IQ Student Accommodation from a group led by Goldman Sachs for £4.66 billion ($6.06 billion) including debt, the latest bet by the U.S. buyout giant on the growth of student housing in the U.K, Ben Dummett reports for The Wall Street Journal. The deal is also an endorsement of Britain’s economy as its government faces the challenge of reaching a new trade deal with the European Union by the end of the year. It is also an early but significant sign of a rebound in European deal-making despite a global slowdown.
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Five Point Energy-backed WaterBridge Holdings LLC has agreed to buy the water-infrastructure assets of publicly traded oil-and-gas producer Centennial Resource Development Inc. in the Southern Delaware Basin of West Texas. The deal is valued at $225 million, consisting of $150 million in cash and $75 million in future payments tied to performance targets. The deal is expected to close in April, when WaterBridge will sign a 15-year contract to manage the water produced from Centennial’s oil-and-gas fields in the basin.
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BlackRock Long Term Private Capital, a private investment strategy of BlackRock that typically backs companies for longer periods of time than traditional private-equity funds, has agreed to take a majority stake in luxury fragrance company Creed. Javier Ferrán, a Spanish businessman and former partner at consumer-focused Lion Capital, is investing alongside BlackRock and will become chairman of the company’s board of directors, BlackRock said in a news release.
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Arsenal Capital Partners has acquired BresMed Health Solutions Ltd., a Sheffield, England-based research and communications company serving the pharmaceuticals industry. Arsenal said the company would help form the basis for a more wide-ranging enterprise that would also produce economic and outcomes research for drug makers and marketers.
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Beekman Group has recapitalized Midwest restaurant chain Condado Tacos alongside founder and Chief Executive Joe Kahn. New York-based Beekman invested in the Columbus, Ohio-based company through its Beekman Investment Partners IV LP fund.
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Goldman Sachs and Aquiline Technology Growth have participated in a $131 million Series B financing round for Unqork Inc. led by CapitalG, the growth equity investment fund of Google parent Alphabet Inc. Unqork provides tools and pre-coded components that companies can use to build software applications without writing any new programming code.
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BV Investment Partners has acquired a minority stake in Topbloc LLC, a Chicago-based maker of software used by midsize businesses to implement Workday, a cloud-based program used for personnel and financial management.
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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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Oaktree Capital-backed Star West Generation LLC has agreed to sell power generation company Griffith Energy LLC to ArcLight Capital Partners. Griffith operates a 570-megawatt gas-fired generator in Arizona’s Mohave County near the California and Nevada state lines. Oaktree invested in the company about nine years ago, according to John Van Benschoten, a managing director.
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H.I.G. Capital’s Growth Partners arm has sold digital marketing company Centerfield Media Holdings LLC to Platinum Equity. The California company makes software used to target and acquire online customers. H.I.G. recapitalized the company in 2015 along with its founding managers.
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Mill Road Capital-backed R.G. Barry Brands has sold its Foot Petals shoe insole insert business to Remington Products Co. The foam inserts are made for women’s shoes. Mill Road acquired Barry at an enterprise value of about $215 million in a deal announced in May 2014.
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Part of Santa Monica, Calif., where Ocean Avenue is based, as seen from its popular pier. PHOTO: JOHN ANTCZAK/ASSOCIATED PRESS
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Ocean Avenue Capital Partners has raised at least $338.7 million for its Ocean Avenue Fund IV LP, out of the $350 million it targeted when it began accepting commitments last year, regulatory filings show. In February 2019, WSJ Pro reported that the Santa Monica, Calif.-based firm sought $300 million for the new fund, or roughly 50% more than it raised for its third flagship fund in 2016. The firm focuses on smaller businesses, particularly those attempting to turn around their operations, need restructuring or facing other challenges, according to the firm’s website.
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Growth-focused Birch Hill Equity Partners has raised roughly 1.75 billion Canadian dollars ($1.32 billion) of commitments for its latest fund, including parallel vehicles, the Toronto-based investment firm said in a regulatory filing. At least 49 investors made commitments to Birch Hill Equity Partners VI LP, the filing shows. The firm’s predecessor fund, Birch Hill Equity Partners V, closed with C$1.3 billion in commitments in January 2016, exceeding its $1 billion initial target, the firm says on its website.
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Health-care investor MPM Capital has raised a $100 million fund through a collaboration with the Dana-Farber Cancer Institute that aims to promote cancer research and new oncology-drug startups, WSJ Pro’s Brian Gormley reports. MPM and Boston-based Dana Farber raised the MPM Oncology Innovations Fund while also collecting more than $26 million in pledges for the Dana-Farber Innovations Research Fund to support early-stage oncology research at the institute.
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Ridgewood Infrastructure has collected $600 million for its Ridgewood Water & Strategic Infrastructure Fund LP, blowing past its initial $500 million target and reaching its hard cap. The New York firm focuses on lower-midmarket opportunities and has made three investments through the new fund, including a 142-mile water pipeline supplying San Antonio and a regional natural gas utility.
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Blackstone private-equity head Joe Baratta is joining the publicly traded firm’s board of directors, effective March 2. Mr. Baratta has been with the firm for 22 years, and led the corporate private-equity business since 2012 and has been a member of the firm’s management committee for the past eight.
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Barbara Novick, who made BlackRock a force in Washington, is stepping down as vice chairman, Dawn Lim reports for The Wall Street Journal. As the face of BlackRock’s public-policy efforts and a co-founder of the firm, Ms. Novick, 59, built a lobbying machine that helped the firm avoid the regulatory burdens imposed on big banks and fueled its growth to hold $7.4 trillion in assets under management. .
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Meketa Investment Group has hired Orray Taft as a risk manager in its Portland, Ore., office. He joined Boston-based Meketa from R.V. Kuhns & Associates, where he assisted clients in designing investment strategies, and previously worked for the Federal Reserve Bank of New York.
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Growth investor T-street Capital has named Greg Peterson as a vice president. The Stamford, Conn.-based firm said Mr. Peterson joined from Goldman Sachs Group Inc., where he was an associate in investment banking.
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Lower-midmarket-focused Balance Point Capital has promoted Nathan Elliott to managing director and Adam Sauerteig to senior vice president. Mr. Elliott joined the Westport, Conn., firm as a vice president in 2014 and Mr. Sauerteig rejoined the firm as an associate in 2015.
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A bankruptcy judge gave a green light to Southland Royalty Co. to continue drawing on $70 million in chapter 11 financing that the oil-and-gas business needs to keep operating and to pay its bills, Becky Yerak writes for WSJ Pro Bankruptcy. Judge Karen Owens of the U.S. Bankruptcy Court in Wilmington, Del., approved Southland’s request at a hearing Wednesday.
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L Brands Inc. took a nearly $700 million charge to write down the value of its Victoria’s Secret chain, an accounting hit that pushed the retailer into a loss for the holiday quarter, Khadeeja Safdar reports for The Wall Street Journal. The company agreed last week to sell a 55% stake in the lingerie business, which includes the Pink chain, to private-equity firm Sycamore Partners for $525 million.
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Send us your tips, suggestions and feedback. Write to:
Ted Bunker, Laura Cooper, Chris Cumming, Luis Garcia, Laura Kreutzer, William Louch, Preeti Singh, Chitra Vemuri.
Follow us on Twitter: @wsjpe, @LCooperReports, @LHVGarcia, @LauraKreutzer, @william_louch.
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