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Lawmakers Target Private Equity for New Rules | TPG Debuts Rubicon Carbon | Wooden Jumps to Apollo
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Good day! Today we have a report on efforts to put private equity alongside banks under rules targeting money laundering, as our Chris Cumming writes. A bipartisan group of senators is weighing whether to attach an amendment to a defense appropriations bill that is considered must-pass by year-end.
In other news, our Wall Street Journal colleague Amrith Ramkumar reports on a new carbon-credit-focused strategy from TPG that has drawn support from Bank of America and a number of large corporations. TPG chipped in $300 million to get the ball rolling for Rubicon Carbon.
Finally, our Maria Armental and Isaac Taylor report on Connecticut State Treasurer Shawn Wooden's move to Apollo, where he will become a partner and lead the firm's efforts to expand its reach into public pension funds for investment capital. Mr. Wooden began laying the groundwork for such a move not long after declaring that he wouldn't seek re-election in the Nutmeg State.
We have these stories and many more for you below, so please jump in...
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The Senate is weighing whether to attach new rules for private equity to prevent money laundering. PHOTO: LIU JIE / ZUMA PRESS
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Congress is considering a vast expansion of anti-money-laundering rules to private-equity firms and other businesses in an effort to stamp out dirty money in the financial system, Chris Cumming reports for WSJ Pro Private Equity, citing people who work with lawmakers. A bipartisan group of senators is weighing whether to include in the annual defense appropriations bill the so-called Enablers Act, which would extend to private equity many of the restrictions on handling illicit funds that banks are under. A similar measure passed the House of Representatives earlier this year. Supporters on Capitol Hill consider the Senate defense-spending measure—typically a “must-pass” piece of
legislation with a year-end deadline—as the last chance to tighten money-laundering rules before a new Congress is sworn in next year.
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Investment firm TPG Inc. has tapped Tom Montag, a former Bank of America Corp. chief operating officer and a Wall Street power broker, to lead a new carbon-credit firm called Rubicon Carbon, The Wall Street Journal’s Amrith Ramkumar reports. The firm is partnering with several corporate backers of the venture, committing $300 million to Rubicon with a $1 billion fundraising goal. Corporate backers of the strategy include the Charlotte, N.C.-based bank, the venture arm of JetBlue Airways Corp., NGP Energy Capital Management, General Electric Co., Honeywell International Inc. and McKinsey & Co. Mr. Montag is chief executive of Rubicon and Anne
Finucane, a former vice chair of the bank, is the company’s chairwoman. TPG set up the business to add transparency and boost growth in the nascent market for emissions offsets.
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Connecticut State Treasurer Shawn Wooden is joining Apollo Global Management Inc. as a partner and chief public pension strategist to help expand the New York firm’s business with retirement systems, which typically are the largest investors in private-equity funds, Maria Armental and Isaac Taylor report for WSJ Pro Private Equity. Mr. Wooden and Apollo “will comply with all relevant restrictions,” an Apollo spokeswoman said, adding that he would join Apollo in late January. Scott Kleinman, Apollo co-president, cited Mr. Wooden’s private- and public-sector experience as well as his professional network. Mr. Wooden is expected to “allow Apollo to offer tailored, aligned
investment solutions to these leading institutions,” Mr. Kleinman said.
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The Take: ECP Could Benefit From a European Partner Like Bridgepoint
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Energy Capital Partners could find itself in a better position to capitalize on Europe’s efforts to overcome its energy crisis if a potential partnership with Bridgepoint Group PLC comes to fruition, as Luis Garcia writes for WSJ Pro Private Equity. ECP is an energy infrastructure-focused investor backing businesses such as power operators, renewable-energy developers and providers of energy-efficiency services.
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57%
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The rate of decline in traditional energy investments in Europe from 2014 to 2020, while similar commitments to alternative sources dropped 22%, according to Michele Della Vigna, head of natural resources research in the research group of Goldman Sachs Group
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Natural gas is stored underground at this site. PHOTO: BING GUAN / BLOOMBERG NEWS
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GCM Grosvenor Inc. and Orion Infrastructure Capital are backing Houston-based specialist investor Caliche Development Partners II with a $268 million commitment, according to a news release. The commitment is Orion’s second to a Caliche vehicle and GCM Grosvenor’s first. Caliche focuses on assets connected to energy transition and underground gas storage and sequestration assets in North America. The funds will be used to acquire Golden Triangle Storage Inc. and Central Valley Gas Storage from Southern Co.
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Goldman Sachs Group Inc.’s asset-management arm and G2 Venture Partners led an investment round of more than $117 million in warehouse robot maker Locus Robotics Corp., joined by more than a half dozen other investors. The Wilmington, Mass.-based company partners with warehouse operators such as air freight company DHL to integrate its LocusBot machines with the people working in logistics operations and has deployed as many as 500 robots per site with more than 250 sites in operation, according to a news release. The deal values the company at nearly $2 billion, Angus Loten reports for WSJ Pro Venture Capital.
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An investment vehicle funded by AstraZeneca PLC and China International Capital Corp. led a $52 million growth investment in drug developer Rgenta Therapeutics Inc. in Woburn, Mass., joined by Korean Investment Partners and Delos Capital, according to a news release. The AZ-CICC Healthcare Investment Fund focuses on backing medical and healthcare businesses.
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Thrive Capital led a $30 million investment in Cloud Health Systems, a startup founded by Instacart Inc. co-creator Apoorva Mehta, in a deal that values the business at around $200 million, Berber Jin and Marc Vartabedian report for WSJ Pro Venture Capital, citing people familiar with the matter. The company aims to offer consumers medical consultations and other health-related services, the people said.
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Logistics and transportation specialist Bluejay Capital Partners said it has acquired Best Warehousing & Transportation Inc., which has operations in 30 locations in 15 states. The Atlanta-based company’s chief executive, Winston McDonald, retained a significant stake in the business.
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A $3.2 billion buyout led by Apollo Global Management Inc., J.F. Lehman & Co. and Hill City Capital that would take private Atlas Air Worldwide Holdings Inc. won approval from shareholders of the company, clearing one of the hurdles remaining before the deal can close, according to a news release. Atlas Air agreed to the take-private deal at $102.50 per share in August. The Purchase, N.Y.-based company operates freight aircraft in the U.S. The deal is expected to close early next
year.
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Healthcare-focused Amulet Capital Partners said it has acquired United Vein & Vascular Centers, with plans to expand the operation beyond Florida, Illinois, Colorado and Arizona. Established in 2014, the Tampa, Fla.-based company currently has more than 30 clinical locations, according to an emailed news release.
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Novacap in Montreal said it is acquiring All West Communications Inc., under an agreement for a deal that it expects to close by the end of next year’s first half. The Kamas, Utah-based company provides broadband services in Utah and Wyoming.
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Estancia Capital Partners said it is backing compliance software maker InvestorCOM Inc. with a growth investment. The Toronto company specializes in software to handle compliance monitoring for asset and wealth managers.
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Genesis Park in Houston used its GP Capital Partners LP investment fund to back managed services provider One Source Communications LLC, investing in the business alongside two private-equity firms it didn’t identify, according to a news release. The Greenville, N.C., company sets up, maintains and protects communications infrastructure for client businesses.
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WILsquare Capital, a lower midmarket investment firm in St. Louis, has acquired Resident Essentials LLC, a Weymouth, Mass.-based company that provides clothing and other products to senior care facilities and their residents, according to a press release.
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Lower midmarket firm Shoreline Equity Partners is backing Core Roofing Systems LLC with a growth investment. The Alpharetta, Ga.-based provider of commercial re-roofing, maintenance and repair services operates across the southeastern U.S.
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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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Activist hedge fund Hudson Executive Capital is preparing to liquidate a pair of blank-check companies, Hudson Executive Investment II and III, announcing plans to return money to investors starting Dec. 21, Colin Kellaher reports for Dow Jones Newswires. The hedge fund operator said distributions will be made at $10.10 per share.
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Ex-Morgan Stanley Managing Director Harold Ford Jr., a former Democratic congressman from Tennessee, plans to dissolve a special purpose acquisition company he leads, Empowerment & Inclusion Capital I Corp., and return around $276 million raised from investors in January 2021, Josh Beckerman reports for Dow Jones Newswires. The SPAC had planned to acquire a "diverse-led business or a business focused on promoting an inclusive economy and society."
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A blank-check company led by a former executive with consumer-focused L Catterton, L Catterton Latin America Acquisition Corp., is withdrawing plans for an initial public offering of shares, saying it no longer plans to pursue an IPO, a regulatory filing shows. The special purpose acquisition company is led by Ricardo Salmon, a former partner with the firm and a co-founder of Silver River Capital Advisors, an investment firm in New York.
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Jeito Capital in Paris said it has sold its stake in cancer-treatment developer Neogene Therapeutics Inc. to strategic buyer AstraZeneca PLC, which is paying as much as $320 million for the clinical-stage business. Neogene, which is focusing on developing T cell receptor therapies, was spun out of the Netherlands Cancer Institute. Jeito co-led a $110 million growth investment in the company in September 2020.
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Altus Capital Partners is selling MGC Diagnostics Holdings Inc. to Caire Inc., a subsidiary of Japanese company NGK Spark Plug Co., which said the deal is expected to close by year-end. The St. Paul, Minn.-based company produces cardiorespiratory diagnostic systems and other products used to detect and manage certain diseases. Altus has backed MGC since 2017, according to the firm’s website.
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Sun Capital Partners has rounded up at least $1.38 billion so far for Sun Capital Partners VIII LP and a related parallel vehicle, regulatory filings indicate. The amount raised puts the fund more than half way toward a $2.5 billion offering amount indicated in the filings. Sun Capital closed its previous flagship fund with $2.3 billion back in 2019, according to the firms’ website.
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Alternative energy specialist Power Sustainable said it has closed Vintage II of its Power Sustainable Energy Infrastructure Partnership with 600 million Canadian dollars, equivalent to about $441.8 million, with commitments led by founding partner Desjardins Group’s asset-management arm, Empower Annuity Insurance Co. and Après-demain SA. The firm said the first fund in the strategy collected about C$1 billion when it closed last year and is almost totally deployed. The strategy is to invest in companies and projects that contribute to decarbonization and social progress, among other goals.
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Investment manager Admiral Capital Group is renaming itself Vero Capital and said co-founder Dan Bassichis continues to lead the firm as managing partner while co-founder David Robinson, a former pro basketball star, will collaborate with the firm on nonprofit work and mentoring current and retired athletes on investing and philanthropy. Started in 2008, Vero continues to invest in real-estate and private-equity opportunities.
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Cresset Partners said it has hired Shari Young Lewis as a managing director in its private funds group focusing on private equity and co-investments. Ms. Lewis was most recently a partner in the private-equity practice at Aon Investments, focusing on buyout, growth equity, venture capital, private credit and infrastructure investments, according to a news release.
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Sixth Street Partners said it has named Dr. Amy Abernethy, president of clinical studies platforms at Alphabet Inc.’s healthcare unit Verily Life Sciences, Dr. Jay Shendure, a geneticist at the University of Washington, and Steve Jacobsen, a professor at the University of California, Los Angeles, to the firm’s scientific advisory board.
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The technology-heavy Nasdaq Composite began to sell off in November 2021. PHOTO: MICHAEL M. SANTIAGO / GETTY IMAGES
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Technology startups have plunged in value in private trades, mirroring the big markdowns of their publicly listed brethren over the past year, Julie Steinberg and Ben Dummett report for The Wall Street Journal, with secondary market discounts as deep as 80% off valuations from earlier investment rounds, according to people involved in trades. Secondary sales have become a key gauge of investor appetite for privately held startups. While such trading was almost nonexistent from March to July, market participants say some prospective buyers are tiptoeing back into the game, looking for bargains as they bet the selloff has bottomed.
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French bank BNP Paribas SA is eyeing a move into private credit, which could provide an alternative source of funding for major merger-and-acquisition deals as traditional bank lending has dried up, Paul Clarke reports for sister publication Financial News in London, citing people familiar with the matter. The bank would fit the lending strategy within its investment bank and would likely make it a hybrid operation alongside leveraged finance, the people said. But discussions are still at an early stage and a final decision has yet to be made.
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BlackRock Inc., the world’s largest asset manager, is assessing how the plumbing that underpins the cryptocurrency markets can be applied to its traditional money-management business—the latest sign that big-name fund groups are getting serious about digital assets, David Ricketts reports for sister publication Financial News in London. Stephen Cohen, the head of BlackRock’s business across Europe, the Middle East and Africa, said the firm is exploring the use of digital tokens representing shares or units in an investment fund that can be traded and recorded on distributed ledgers, which typically use blockchain technology.
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European private-equity firms have increased pay by nearly 30% for junior professionals since 2020, as the buy-side faces pressure to keep pace with rapid pay inflation for investment banking analysts, sister publication Financial News in London reports, citing consulting company Heidrick & Struggles International Inc. Investment professionals in Europe and Africa with up to two years’ experience in private equity were paid an average of €165,300 this year, equivalent to about $170,900, according to new Heidrick & Struggles analysis based on surveys of firm employees. That represents a 16% increase from the previous year and 28% compared with 2020. Private-equity firms typically
hire junior staff from investment banks, poaching the best and brightest analysts from deal-making teams after around two years.
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