Good morning. Today I lead off with a report on Torch Key Asset Management, a new firm started by alums of One Rock and Gores Group and backed by GCM Grosvenor.

Public pensions are trying to figure out their exposure to technology companies that might be hurt by the rise of artificial intellegence, Heather Gillers reports for the Journal.

And a trio of Journal reporters bring the inside story of the efforts of Blue Owl Capital leaders Doug Ostrover and Marc Lipschultz to shore up their tottering firm.

Now onto the news ...

Torch Key Asset Management, a new firm focused on complex deals in the midmarket, has opened with the backing of private-markets investment manager GCM Grosvenor, WSJ Pro's Chris Cumming reports. Los Angeles-based Torch Key will invest in the food and beverage and the industrial products and services sectors, said Kimberly Reed, a managing partner and co-founder. The firm opened its doors last month and is currently scouting its first deals and building out its office, she said. GCM Grosvenor, which is based in Chicago and manages about $91 billion, provided an anchor investment from its Elevate strategy, which funds new and emerging managers.

Public pensions’ foray into private markets left them with a big slice of America’s technology economy. Now they are attempting to assess what artificial intelligence might mean for those investments, Heather Gillers reports for the Journal. Equity of tech companies accounts for more than a quarter of North American buyout fund investments and half of venture capital funds. As concerns over AI disruption have sent tech stocks and bonds plunging, pension managers and others are combing through their holdings trying to figure out what are real threats and opportunities and what are overreactions.

Blue Owl Capital co-founders Doug Ostrover and Marc Lipschultz turned the New York firm into a powerhouse in the booming business of lending to private companies without the use of banks. They pounced on trends early, focused on software makers, backed artificial intelligence and set up funds tailored to retail investors, the Journal reports. Now cracks in the foundation of their success are raising questions about the once-sizzling industry’s future and transfixing Wall Street in a mix of schadenfreude and anxiety.

BlackRock's Global Infrastructure Partners and European buyout firm EQT AB are acquiring U.S. electric utility AES Corp. through a $15-a-share buyout valued at about $10.7 billion, Nicholas G. Miller reports for the Journal. The firms are joined in the deal, which is worth $33.4 billion, including debt, by the California Public Employees' Retirement System and the Qatar Investment Authority. The sale will provide Arlington, Va.-based AES with necessary capital that it previously lacked to expand its U.S. energy generation in 2027 and beyond. The deal represents a 13% discount to Friday's close at $17.28 in New York and the shares fell about 18% Monday.

Neuberger Berman and the Qatar Investment Authority are among participants in a $500 million growth deal backing photonic chip company Ayar Labs, Robbie Whelan reports for the Journal. The transaction valued the business at about $3.8 billion. Other investors in the deal included Insight Partners and Sequoia Capital. The San Jose, Calif., company is developing co-packaged optical circuits to connect semiconductors in rack-mounted servers using photons instead of electrons as a way to accelerate data transfers and reduce power consumption.

Leonard Green & Partners led investors in a roughly $850 million single-asset continuation fund set up by Ares Management to back safety and security systems maker Convergint Technologies. Leonard Green invested through its secondaries-focused Sage Fund. The alternatives arm of Goldman Sachs also participated. Ares first backed Convergint in early 2018.

Pacific Avenue Capital Partners is acquiring online marketplace Care.com from media conglomerate IAC for about $320 million, confirming an earlier report for the Journal by Alexandra Bruell. Billionaire Barry Diller’s IAC has been focusing on its core assets and has said it would look to sell other assets when it makes sense to. IAC bought Care, which connects caregivers and consumers, about six years ago for $500 million.

Warburg Pincus is investing up to $1 billion in egg producer and distributor Global Eggs in a deal that values the business at about $8 billion, investing through the Warburg Pincus Capital Solutions Founders Fund. Founded in 2018, the company has more than 45 million birds and is expected to produce over 15 billion eggs this year from operations in the U.S., South America and Europe. Global Eggs, a Luxembourg-based holding company, acquired Hillandale Farms last year in a deal valued at about $1.1 billion to expand in the U.S.

Stonepeak in New York is backing Australian retirement village developer and operator Aura Holdings. Stonepeak's support along with separate lending agreements provides the company with as much as A$1 billion, or $711.7 million, in available capital for its development pipeline.

Bain Capital’s Tech Opportunities strategy is backing the formation of healthcare technology company Interra Health through the merger of PSG Equity-backed DoseSpot in Boston and venture-backed Arrive Health in Denver. Interra Health will offer prescription data, pricing transparency and pharmacy information to healthcare providers and patients. PSG Equity will hold a minority stake in Interra.

Financial services investor J.C. Flowers & Co. in New York has committed up to $200 million to back the formation of investment adviser-focused Accelerated Wealth Partners, which aims to acquire advisory firms. Eric Amar leads the new business.

Buyout firm Mutares in Munich has acquired Eastern European ecommerce operations Mimovrste and Internet Mall, as well as supporting technology, from Allegro Group. The businesses operate mainly in Slovenia and Croatia and generate combined revenue of about €100 million, or $117 million.

Credit-focused Marathon Asset Management has closed a $615 million aircraft lease securitization, MAST 2026-1. The deal is backed by 27 Airbus and Boeing aircraft dedicated to 18 lessees spread around the world, with a portfolio weighted average age of 9.5 years.

Bain Capital in Boston is backing family-owned consumer products distributor Tingstad in Gothenburg, Sweden. Founded by the Jigberg family in 1959, the company distributes consumables to hotels, restaurants, grocers and other retailers. Bain Capital is acquiring a majority interest in the operation, which has more than 700 employees.

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

Lower midmarket investor Boyne Capital in Miami has sold water and wastewater pipeline-focused McKee Utility Contractors to strategic buyer Mastec at an enterprise value of $276 million. Boyne recapitalized the Prague, Okla.-based company in 2022.

Lone Star Funds has sold process equipment and technology provider SPX Flow to strategic buyer ITT for $4.775 billion in cash and ITT shares. The Dallas firm took SPX private in 2022 in a deal valued at $3.8 billion including debt.

Arlington Capital Partners in Bethesda, Md., has sold aerospace parts supplier Forged Solutions Group to peer firm J.F. Lehman & Co. Arlington Capital helped form the maker of precision forged components, used in defense and space products, in 2019. The company is based in England and now has over 850 employees and seven plants in the U.S. and the U.K.

American Industrial Partners is selling its Aluminium Dunkerque smelter to strategic buyer Aluminium Bahrain. The French plant can produce 300,000 metric tons of aluminum annually. AIP first invested in the operation about five years ago. Law firm Ropes & Gray is advising the seller. 

Searchlight Capital Partners in New York has exited insurance underwriting Euclid Transactional, selling it to strategic buyer CRC Group. Searchlight first backed the business in 2021.

Canyon Partners, a credit-focused asset manager in Dallas, has wrapped up collecting commitments for its fourth collateralized loan obligation equity fund, closing the vehicle on over $400 million and exceeding its $300 million target. The firm aims to invest from Canyon CLO Fund IV in majority equity stakes in Canyon's U.S. and European CLOs. As of late September, Canyon managed 26 active CLOs with total assets of about $11.4 billion

The Clessidra Group in Italy said its credit arm has held a first close for Clessidra Private Debt II with over €100 million, or about $117 million, putting the firm nearly halfway to its €225 million goal for the vehicle. The firm has a hard cap of €300 million for the fund, which it intends to invest in debt backing Italian midmarket businesses.

Sixth Street Partners in Dallas has appointed Richard Moore, a former British Secret Intelligence Service chief, as a senior strategist, based in London. In addition to running MI6, Moore has served as Britain's ambassador to Turkey and in posts in Southeast Asia.

Great Hill Partners in Boston has added Leland Lockhart as head of AI to help the firm further embed artificial intelligence capabilities across its portfolio. Lockhart joins from Vista Equity Partners, where he was executive director of AI and machine learning.

Littlejohn & Co. in Greenwich, Conn., has added Shant Mardirossian as a managing director and head of strategic initiatives. He joins from Kohlberg & Co., where he was a partner and chief operating officer

Emerald Lake Capital Management in Santa Monica, Calif., has promoted Stephen Burhenn and Joe DeJean to partner level. Burhenn joined the firm in 2024 while DeJean came aboard in 2019.

Global private-equity firms have asked employees in the Persian Gulf region to work from home amid a widening conflict in the region, Sebastian McCarthy reports for sister publication Private Equity News in London. Buyout shops said their employees based in cities such as Dubai, Abu Dhabi and Riyadh have temporarily shifted to remote working arrangements as retaliatory strikes from Iran triggered widespread disruption across the Middle East. Warburg Pincus, KKR & Co., Investcorp and Permira are among the investment giants advising staff to stay safe in the United Arab Emirates, Saudi Arabia and other Gulf locations. Asset managers including BlackRock and DWS have also advised staff across their Middle East offices to work from home as the conflict intensifies, sister title Financial News has reported.

Blackstone took extraordinary steps to cover quarterly redemption requests from investors in the giant asset manager's BCRED fund, a securities filing Monday shows. The firm pumped $250 million into the vehicle tailored to retail investors while firm employees invested $150 million as well. The fresh capital helped meet current requests totaling 7.9% of Blackstone Private Credit Fund's assets, above a 5% quarterly limit, according to the filing. The fund holds assets of about $82 billion and generated a total return of 8% last year, Blackstone said.

Price and the inability to agree on valuation still represent the biggest hurdles to closing deals, according to a survey of over 100 investment professionals conducted for Bain & Co. and StepStone Group. The December to January poll also showed that the use of continuation funds is becoming part of the everyday playbook, with a quarter of respondents to the GP Outlook survey saying they had recently set up or completed such a transaction

Alternative asset manager GCM Grosvenor in Chicago is joining with Portal Warehousing to acquire industrial properties that can be turned into small-scale warehouses and offered to lower midmarket businesses. The micro-bay strategy uses a membership model and includes short-term licenses, all-inclusive prices and logistics support.

Branford Castle Partners has received a significant commitment from Marubeni Corp. in Tokyo for the New York firm's latest flagship fund. Marubeni will also provide access to its global trading network for deal sourcing and other support.

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Maria Armental; Ted Bunker; Chris Cumming; Luis Garcia; Laura Kreutzer; Isaac Taylor; Chitra Vemuri.