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Private Credit Shines in Apollo, Ares and Blue Owl Earnings
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Happy Friday! As we reach the end of another week, earnings season is in full swing with three large listed managers reporting their first-quarter results yesterday: Apollo Global Management, Ares Management and Blue Owl Capital. If there was one unifying theme to the day, it was the optimism these firms’ leaders have toward private credit, both in investment opportunities and asset growth.
Also in today’s newsletter, our Wall Street Journal colleagues report that Apollo and Sony Pictures have submitted a $26 billion bid for entertainment company Paramount Global.
Read on for more details and have a great weekend!
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A sign greets visitors to Apollo Global Management’s Hong Kong office. Apollo’s leaders say the firm is setting up an asset-based lender to attract individual investors to the booming private-credit strategy. PHOTO: PAUL YEUNG/BLOOMBERG NEWS
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Apollo Global Management’s profit rose amid robust demand for its private-debt offerings, a segment in which the New York firm plans to expand its offerings, Chris Cumming reports for WSJ Pro Private Equity. Apollo reported inflows of $40 billion in the three months through March, with half of the money coming through its asset-management arm and half through Athene Holding, the insurance and annuity provider it owns. While the sum declined about 30% from $57 billion in last year’s first quarter, Apollo executives told analysts Thursday that demand appears strong, particularly through vehicles marketed to individual investors. These investors represent a fast-growing part of the market that Apollo,
like many other large private-fund managers, is working to tap.
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Private-credit specialist Ares Management sees opportunities to help buyout shops shore up the companies they back against higher interest rates while providing cash back to their funds' investors without having to sell the underlying assets, firm leaders said Thursday. As WSJ Pro’s Luis Garcia reports, the asset manager's financing-heavy investments jumped 52% to $18.6 billion this year through March from $12.2 billion in the year-earlier period, a presentation of the firm's first-quarter results shows. Ares deployed most of the capital through its direct-lending and alternative-credit strategies in the U.S. and Europe, the executives said.
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The co-head of alternative asset manager Blue Owl Capital said private-credit firms are in good shape to withstand a sharp rise in loan defaults, despite fears the young market has yet to be tested by a serious economic downturn, WSJ Pro’s Rod James writes. On the firm’s first-quarter earnings call, Co-Chief Executive Marc Lipschultz said the structures of private-credit deals make it easier for lenders and borrowers to work through repayment issues than is the case for banks, which typically syndicate the loans they issue to other investors.
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WSJ Pro is currently conducting our survey of secondary buyers for our 2024 Guide to the Secondary Market. WSJ conducts this annual survey of buyers to gauge deal activity in the private-equity secondary market. We are seeking information about secondary buyer portfolios and expectations for secondary market dealmaking in 2024. The deadline for completing the survey is Thursday May 9, 2024. Secondary investors can access the survey here.
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$35.1 Billion
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The amount of capital raised by 24 infrastructure funds during the first quarter of 2024, according to data provider Preqin.
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WSJ Pro Executive Edition
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Here is our weekly roundup of stories from across WSJ Pro that we think you'll find useful.
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The Paramount Studios in Los Angeles PHOTO: ERIC THAYER/BLOOMBERG NEWS
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Sony Group’s movie studio and Apollo Global Management are offering $26 billion in cash to buy storied Hollywood entertainment company Paramount Global, marking the second time Apollo has come in with a bid for the business controlled by National Amusements, Jessica Toonkel and Miriam Gottfried report for The Wall Street Journal. Apollo and Sony submitted the offer on Wednesday, according to people familiar with the situation. The bid represents a starting point for discussions and is nonbinding. Paramount has been in exclusive merger talks with feature film producer Skydance Media.
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European buyout firm PAI Partners is buying a majority stake in healthcare services provider Vamed's rehabilitation business from Fresenius at an enterprise value of €853 million, or about $913.9 million, Andrea Figueras reports for Dow Jones Newswires. PAI is purchasing a 67% interest in the rehab unit, which is Vamed’s largest operation and has around 9,500 employees staffing 67 facilities with 9,100 beds across Germany, Austria, Switzerland, the Czech Republic and the U.K. Fresenius said the profitable business generated revenue of about €1 billion last year.
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Iconiq Capital’s growth strategy led a $169 million investment in financial custodial services company Altruist, joined by Granite Capital Management and existing investors Adams Street Partners and Sound Ventures. The investment values the Culver City, Calif., business at about $1.5 billion.
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General Catalyst and 7wireVentures led a $126 million growth investment in healthcare company Transcarent, joined by new investors including Geodesic Capital. The deal valued the provider of healthcare access and payments technology at about $2.2 billion.
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Industrial Opportunities Partners and Goldman Sachs Asset Management are backing a $114 million investment to help recapitalize the balance sheet for Transcendia Holdings. The deal will make Industrial Opportunities Partners a majority owner of the company, which manufactures and customizes engineered films that are used in end markets that span healthcare, food and beverage, specialty industrial, as well as print and publishing. Goldman Sachs, the company’s existing backer, will retain a significant minority stake. The credit investment arm of General Atlantic is providing a new first lien credit facility for the deal, which will eliminate more than $200 million of
debt from the company’s balance sheet.
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Tailwind Capital is backing industrial intelligence technology company GrayMatter. At press time, it was not clear whether Hamilton Robinson Capital Partners, which had previously backed the Pittsburgh-based company in 2017, has retained a stake in the company.
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Growth-focused Knox Lane in San Francisco said it has acquired a majority interest in temporary staffing services provider All Star Healthcare Solutions. The Deerfield Beach, Fla., company provides doctors and other medical professionals to employers across the U.S.
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Technology-focused Accel-KKR in Menlo Park, Calif., said it has carved out the Accertify fraud-protection technology business of American Express. The Itasca, Ill.-based company works with online retailers and other clients to prevent retail and credit fraud.
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Delos Capital and Silverfern Group said they sold Pioneer Recycling Services to strategic buyer Waste Connections in Canada. The firms first said they had invested in the Tacoma, Wash.-based business in late 2021.
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Real estate-focused GTIS Partners in New York and homebuilder Hovnanian Enterprises are expanding a development partnership with the addition of $115 million in fresh capital to build 1,392 single-family homes in areas of New Jersey, Florida, Delaware and South Carolina. GTIS is contributing 70% of the new money.
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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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Permira in London said it is increasing its stake to a majority interest in cybersecurity company BioCatch, buying out Bain Capital and Maverick Ventures at an enterprise value of about $1.3 billion. The deal stands to generate a more than three-times gross multiple of invested capital for Bain, a person familiar with the deal told WSJ Pro’s Maria Armental. Existing backers Macquarie Capital and Sapphire Ventures are also increasing their investments in the company through the transaction. The Tel Aviv-based company uses artificial intelligence, behavioral biometric intelligence and other data-based methods to work with
banks and other financial institutions on detecting digital fraud and preventing financial crimes, according to a news release. Bain Capital in Boston first backed the company through its Tech Opportunities strategy about four years ago. Permira said it acquired a minority interest early last year and is making its new investment through its Permira Growth Opportunities II fund.
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Saw Mill Capital said it has completed the sale of commercial wall covering company Wolf-Gordon to fellow private-capital investor Charger Investment Partners. Saw Mill announced its investment in the New York-based Wolf-Gordon in 2016.
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Preclinical-stage biotechnology company Mariana Oncology, whose backers include RA Capital, Forbion and Deep Track Capital, is being acquired by Swiss pharmaceuticals giant Novartis for as much as $1.75 billion. The three backers were among eight participants in a $175 million growth investment in the Watertown, Mass.-based company last year. Novartis said it would pay $1 billion up front and up to $750 million more based on performance.
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Investment firm Atlas Holdings in Greenwich, Conn., said it has sold plastic food tray maker NPX One to buyout firm Breck Partners in Dallas. Atlas acquired the Reading, Pa.-based manufacturer in 2015.
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BTG Pactual Asset Management said it has raised more than $1 billion for its BTG Pactual Strategic Capital investment strategy. The capital raised includes more than $395 million in fund commitments and more than $600 million in capital for co-investments. The strategy focuses on asset-oriented businesses and has the flexibility to invest across the capital structure, from common equity through senior secured debt.
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Specialist investor Latticework Capital Management said it has collected $345 million for its LCM Healthcare Fund II, surpassing a $275 million target. Latticework makes control investments in smaller, founder-led healthcare businesses. The firm formed in 2015 and began raising the pool about two years ago, a securities filing shows.
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Specialist investor Rosemont Investment Group in Conshohocken, Pa., said it is backing family-office investment firm Northside Capital Management, acquiring a minority interest in the Hood River, Ore.-based firm. Northside had more than $5.2 billion in assets under management or advisement at the end of last year.
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