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PE Eyes Coronavirus Risk | A Bregal Break Up | Blackstone's Health-Care Fund Sweeteners
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What a week! News of further spread of the novel coronavirus sent stocks on a downward trip into correction territory. And global stock indexes have followed suit. We have a roundup of how markets and businesses are reacting to the outbreak.
Unlike some of their public market peers, private-equity firms aren’t running scared, just yet. However, as Chris Cumming reports, some firms are starting to think about the potential legal risks associated with the spread of the virus.
Meanwhile, Will Louch has news that an affiliate of Bregal Investments is parting ways with its primary backer and Preeti Singh uncovers some sweeteners Blackstone Group is offering to early investors in its latest health-care fund.
Read on for more on these and other stories..
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While face masks have become ubiquitous in places like Bangkok, above, private-equity firms in the U.S. are beginning to see clauses in deal documents dealing with risks from the coronavirus as it spreads across the world. PHOTO: DIEGO AZUBEL/SHUTTERSTOCK
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As private-equity firms try to protect themselves from the many dangers of the coronavirus, some are starting with a simple one: legal risk, WSJ Pro’s Chris Cumming reports. Firms are adding clauses about the coronavirus into contracts with investors and merger-and-acquisition partners. These clauses aim to limit a private-equity firm’s liability if the virus upends a transaction or causes their funds to underperform.
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It’s private-equity’s version of a break up. Bregal Freshstream’s team is parting ways with the holding company for Europe’s Brenninkmeijer family, Will Louch writes for WSJ Pro Private Equity. The firm is spinning out of the network of firms that comprise Bregal Investments, a global private investment firm backed by Cofra Holding AG, a private company of the Brenninkmeijers that funded all of Bregal Freshstream’s debut fund.
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Blackstone Group offered sweeteners for investors committing early to its new life sciences fund, which the firm aims to make almost four-times larger than its predecessor, WSJ Pro’s Preeti Singh reports. Investors who committed to the Blackstone Life Sciences V LP fund before its first close stood to benefit from a three-month fee holiday and a discounted rate thereafter, according to Orange County, Calif., pension fund documents. Blackstone has targeted $4.58 billion for the new investment pool to back drug developers.
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The Latest on the Coronavirus Outbreak
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Stock indexes around the world on Friday followed U.S. markets into correction territory as fears about the coronavirus continued. A U.S. coronavirus outbreak would trigger temporary but widespread disruptions of daily life and business activity, posing a new risk to the nation's longest economic expansion on record. Investors have dramatically reassessed the chances that the Fed will lower interest rates as soon as next month.
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📞 On call with WSJ: Register here for a conference call today at noon EST with Wall Street Journal editors and reporters on how global markets are reacting to the latest virus news.
For more, visit WSJ's live coverage page, which is updated regularly. Or check out our primer on what you need to know about the virus itself.
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19.7%
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The percentage of women employed at alternative asset firms in 2019, according to a new report by data provider Preqin.
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Thyssenkrupp headquarters in Essen, Germany; the company said it would sell its elevator business for nearly $19 billion to a group that includes Advent International and Cinven Group, in one of Europe’s largest private-equity buyouts. PHOTO: LEON KUEGELER/REUTERS
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Advent International and Cinven Group won the bidding for Thyssenkrupp’s elevator division, with the German manufacturer agreeing late Thursday to sell the unit to the firms and the RAG Foundation for €17.2 billion ($18.89 billion), in one of Europe's largest private-equity deals in over a decade, Ruth Bender and Ben Dummett report for The Wall Street Journal. The price is based on the deal closing by June 30, the company said. Thyssenkrupp also said it would reinvest €1.25 billion of the proceeds into the
elevator division. Advent and Cinven beat out a competing offer from a group led by Blackstone and Carlyle Group.
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Growth investor NextWorld led an $18.7 million investment in Van Leeuwen Ice Cream LLC, a Brooklyn, N.Y.-based artisanal dessert maker that started in 2008 with an ice cream truck in New York and has spread to Los Angeles and retailers nationwide. The firm’s investment was made through its NextWorld Evergreen consumer-focused private-equity arm, according to a news release.
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Blackstone has invested in real-estate transaction software provider Dealpath Inc., which has also counted the firm’s real-estate arm as a client. Dealpath’s cloud-based system for managing real-estate deals has handled more than $5 trillion in transactions. The new investment follows a Series B funding round by less than a year, the San Francisco-based company said. Blackstone invested through its real-estate and innovation teams.
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Equistone Partners Europe has agreed to purchase heavy equipment rental company Accès Industrie from majority owner Parquest Capital. The company’s management team will hold a minority stake after the deal. Parquest led a take-private transaction for the French company in 2017. Last year, Accès Industrie had revenue of €91 million ($99.9 million).
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Summa Equity and Goldman Sachs Group Inc.’s merchant banking unit have recapitalized workplace health and safety software maker EcoOnline AS, with each taking a roughly one-third stake in the Norwegian company. Sellers included Viking Venture and Summa Equity Fund I. Summa Equity, which first invested in the company 2 1/2 years ago, made its latest investment through its Summa Equity Fund II.
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Sverica Capital Management has invested in communications software provider Cytracom LLC. The Allen, Texas-based company’s senior management team will remain in charge, led by co-founder Zane Conkle as chief executive.
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Lower midmarket-focused growth investor Brookstone Partners is backing Hudson Valley Restoration & Mitigation to pursue a regional roll-up strategy of similar businesses by the New Hampton, N.Y.-based company. The company helps insurers and their clients recover from disasters through clean up and construction services.
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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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Warburg Pincus has agreed to sell equipment-finance lender Ascentium Capital LLC to Regions Financial Corp., Colin Kellaher reports for Dow Jones Newswires. Kingwood, Texas-based Ascentium focuses on small businesses and held about $2 billion in loans and leases at the end of last year, while it originated $1.5 billion in 2019 business, Regions said. Warburg Pincus acquired Ascentium in late 2016.
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Private investment firm WaveDivision Capital has agreed to sell its controlling stake in Canadian broadband service provider Xplornet Communications Inc. to Stonepeak Infrastructure Partners, the Woodstock, New Brunswick-based company said. WaveDivision and its chairman, Steve Weed, will remain investors in Xplornet, Colin Kellaher reports for Dow Jones Newswires. The company said it would use proceeds of the deal to accelerate investments in its national hybrid fiber wireless and satellite broadband network for rural Canada.
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Private-equity firms could come under pressure to shun the Cayman Islands when they set up new investment pools, despite its past popularity, after the U.K. territory went on the European Union’s tax-haven “blacklist,” Selin Bucak reports for sister publication Private Equity News in London. Pension funds in Europe are already beginning to ask questions, and if the Cayman Islands is not removed from the list of noncooperative tax jurisdictions next October—when the EU will review its status—it could create a number of problems for buyout groups with funds domiciled in the islands. There were 26,000 exempted limited partnerships registered in the Caymans in 2018.
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A Supreme Court decision Wednesday in a case against Intel Corp. over 401(k) plan investments in higher fee alternative assets is likely to pave the way for more litigation over retirement plans, industry watchers say. The case involves investments made in hedge funds, private equity and commodities within target-date funds used in the plan, Anne Tergesen reports for The Wall Street Journal.
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A group of private-equity firms that includes L Catterton, TSG Consumer Partners and VMG Partners has partnered with a nonprofit organization, Women on Boards Project, that promotes greater gender diversity in business leadership. The firms will partner with the group along with an inaugural group of 20 private companies, including Mented Cosmetics and Urban Remedy, to work on increasing gender diversity and inclusion on company boards.
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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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