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Pushback Mounts Against FinCEN Rules | Blackstone Sees a Resurgence | Pensions Cash Out
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Happy Patriots’ Day and TGIF! Okay, I admit I’m a traditionalist when it comes to celebrating America’s birth, even if Massachusetts moved the “official” observance of today’s significance in U.S. history to the third Monday in April decades ago. To me, commemorating the skirmishes at Lexington and Concord always comes on April 19.
In today’s news, our Chris Cumming writes on lobbyists for the private equity and hedge fund industries pushing back against proposed rules from the Treasury Department unit that focuses on fighting money laundering. The groups have objected to making fund sponsors follow investor vetting and reporting rules similar to those imposed on banks with respect to their depositors.
Chris also reports that Blackstone leaders see a rebound forming this year in the deal markets. The buyout industry is emerging from a two-year hibernation, the executives said during an earnings call Thursday morning.
Finally, our Journal colleagues report that corporate and public pension systems are expected to reap around $325 billion from selling publicly listed stocks this year. Much of the cash received by public pensions is headed for private equity and credit funds as these institutional investors seek higher long-term returns.
We have these and many more deals, exits and other news collected, summarized and linked for you below, so please read on...
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Treasury Secretary Janet Yellen, center, and Treasury Undersecretary for Terrorism and Financial Intelligence Brian Nelson, left, during a visit to the Financial Crimes Enforcement Network in Vienna, Va. The agency has proposed new private-funds rules to fight money-laundering.
PHOTO: SUSAN WALSH / ASSOCIATED PRESS
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Private-equity and hedge-fund managers are pushing back against a sweeping proposal that would force them to file suspicious-activity reports and run background checks on their investors, Chris Cumming reports for WSJ Pro Private Equity. In February, the Treasury Department said it would make investment advisers, including private-fund managers, follow anti-money-laundering rules like banks and broker-dealers do. The draft rule was the result of more than 20 years of pressure from Congress and financial-transparency
advocates who see private funds as a glaring hole in the nation’s fight against illicit money. But advocates for buyout firms and hedge funds say the rule change will demand a lot of them for little or no benefit. They’ve asked the Treasury’s Financial Crimes Enforcement Network to clarify or revise the proposal before making it final.
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Blackstone executives see signs of spring for private-equity’s deal environment, as a market rebound boosted the firm’s earnings in the first quarter, Chris Cumming writes for WSJ Pro Private Equity. Leaders of the New York asset manager told analysts Thursday that the slump in private-equity dealmaking that began two years ago is showing signs of receding. The firm deployed $24.5 billion in the just-ended quarter, more than twice the $10.8 billion it invested in the same period a year ago. Exits remained muted, however, with about $15 billion in realizations, or about 17% lower than the same period last year. But Blackstone executives said the markets are improving. The firm’s earnings potential is
“emerging from this period of hibernation,” said Chief Financial Officer Michael Chae.
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Large pension systems had a blockbuster run with public equities and now managers are cashing out, the Journal reports. Corporate pensions are shifting money into bonds. State and local retirement systems are swapping stocks for alternative investments. The California Public Employees’ Retirement System plans to move close to $25 billion from stocks into private equity and private debt.
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$325 Billion
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The estimated amount that pension plans and retirement systems expect to receive this year from selling publicly listed stock, with much of the proceeds slated for private-markets investment funds, the Journal reported, citing Goldman Sachs.
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A Nordstrom store in New York. PHOTO: BING GUAN / BLOOMBERG NEWS
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Members of the family that founded Nordstrom are considering a bid to take the retailer private, as department stores continue to struggle, Lauren Thomas reports for the Journal, citing people familiar with the matter. Erik Nordstrom and Pete Nordstrom—the company’s chief executive officer and president, respectively—recently told the board they are interested in exploring a deal, the people said. In 2017, Nordstrom directors rejected a family-backed take-private bid that included Leonard Green & Partners, saying the offer was too low.
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Music investment company Hipgnosis Songs Fund, which owns catalogs of works by artists such as Neil Young, Shakira and the Red Hot Chili Peppers, agreed to a $1.40 billion takeover by Apollo Global Management-backed Concord Chorus, Ian Walker reports for the Journal. The deal calls for investors in Blackstone-advised Hipgnosis to receive $1.16 in cash per share of the London-listed music-rights buyer, representing a 32% premium to its
70.50 pence closing price on Wednesday. Nashville, Tenn.-based Concord’s offer is supported by Apollo financing.
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Troubled fashion retailer Esprit said it is nearing a deal with an international private-equity group that it didn’t name, giving its Hong Kong-listed shares a boost after insolvency filings by company units in Belgium and Switzerland, Sherry Qin reports for the Journal. Esprit shares rose 24% to 0.26 Hong Kong dollars, or about 3 cents each, early Thursday, taking gains to 39% since the company said it was in talks with a potential investor last week. Esprit said it had signed a nonbinding agreement with the unnamed investor to potentially acquire a stake in the company and help restructure its European businesses.
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Founders Fund led a $150 million growth investment in in-house credit-card management software provider Ramp Business, alongside Khosla Ventures. The deal values the New York-based company at $7.65 billion, according to Ramp. Other participants included existing investors Thrive Capital and Sands Capital, as well as new backers Sequoia Capital and Greylock.
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Healthcare credit provider CR Group is backing medical technology company Sanara MedTech through a $55 million term loan, according to the company. Fort Worth, Texas-based Sanara received $15 million on closing and can draw the remaining $40 million before the end of June 2025.
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Battery Ventures-backed Proemion Holding is buying the TrendMiner business from Silver Lake’s Software AG, and a person familiar with the deal said the unit fetched €47 million for the seller, or roughly $50 million. The Belgium-based business provides industrial analytics programs to clients.
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Infrastructure-focused Stonepeak said it has acquired a group of warehouses in Chicago, located adjacent to intermodal rail terminals in one of the nation’s busiest transportation hubs. Stonepeak said it bought the properties totaling 1.7 million square feet from CenterPoint Properties.
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Investment firm Manhattan West Asset Management in Los Angeles said it is investing in adult social games business Volo Sports, backing the company through its private-equity strategy. Legally named Sport and Social, Baltimore-based Volo provides systems that can be used to organize activities such as volleyball and pickle ball games for adults and kids.
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Gauge Capital in Southlake, Texas, said it is recapitalizing third-party administrator Lucent Health, acquiring its interest in the business from investors led by NaviMed Capital. The Nashville, Tenn.-based company works with employers that self-insure health plans offered to employees.
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Somera Private Equity in Los Angeles said it has acquired the makers of Ty-Gard and Shock-Gard shipping products, joined by Entrepreneurial Equity Partners. The firms, also joined by minority investor PSP Capital Partners, have set the combined operation up in Dallas under the name Gardian Holdings.
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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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Richard Galanti was named CFO of Costco at age 28. Nearly 40 years later, he has stepped down after leaving his mark at the retail behemoth by trying to keep things simple.
The messaging from a pair of top monetary policy setters this week made it clear that the central banks of the U.S. and Europe are to part ways.
🎧 Listen to the chief information security officer at cloud-based financial services company Bill discuss what company leaders can do to improve how they oversee cybersecurity.
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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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French buyout firm Ardian said it sold some shares of business software company Planisware through an initial public offering, while retaining a roughly 5% interest in the company. Planisware’s IPO priced at €16 per share, giving the company a €1.1 billion value, equivalent to about $1.19 billion, and its shares surged more than 25% in their first day of Paris trading Thursday, Elena Vardon reports for Dow Jones Newswires. Paris-based Ardian said it first backed Planisware in 2003.
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Incline Equity Partners in Pittsburgh said it is acquiring an interest in healthcare consulting business VMG Health, with management and employees of the Dallas company retaining significant stakes. Northlane Capital Partners in Bethesda, Md., said it is selling its VMG stake to Incline, exiting an investment it initially made in 2020. VMG works with care providers, investors and others on compliance, strategy and other matters.
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Deutsche Telekom Capital Partners Management, which operates as DTCP, said it has wrapped up raising cash for Digital Infrastructure Vehicle II and associated pools with commitments of about €1.6 billion, equivalent to almost $1.71 billion. The Hamburg, Germany-based firm said the specialist fund is eight times the size of its predecessor.
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Resolve Growth Partners in Baltimore said it has collected about $66.1 million so far for its Resolve Growth Partners Fund II, after seeking as much as $175 million for the early-stage investment vehicle about a year ago. The firm backs companies with annual recurring revenue of $2 million to $10 million, according to its website
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One Rock Capital Partners said it has added Sudeep Shetty as an operating partner to work with the firm’s portfolio companies on digital transformation and technology initiatives. He was most recently with Britvic Soft Drinks as chief information and transformation officer.
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Midmarket private-equity firm Triton in London has dropped its focus on backing consumer companies after one of its biggest bets in the sector – on the emerging sport called padel – went awry, sister publication Private Equity News in London reports, citing a person familiar with the matter. The firm is redeploying members of its consumer team “where possible,” including co-heads Per Agebäck and Ruth Linz, the person said. The U.K. buyout shop has removed “consumer” as one of its four core target sectors on its website, which now lists business services, industrial technology and healthcare as areas of focus. “We are among the best investors in our core
sectors and have decided to focus more on them,” a firm representative said.
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A congressional investigation found that Wall Street used billions of dollars of American retirement savings and other investments to buy shares in index funds that included more than 60 blacklisted Chinese companies, Lingling Wei reports for the Journal. The probe, conducted by a bipartisan House committee empowered to devise strategies for the U.S. to counter China, focused on BlackRock, the world’s largest asset manager, and MSCI, a compiler of stock indexes. The investigation represented a broad review of how American financial institutions facilitated investment in Chinese companies accused by the U.S. government of bolstering China’s military and
violating human rights. But the firms responded by noting their actions were legal and that they have little control over investments through index funds.
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Investment bank Lazard said it is setting up a technology-focused partnership with venture investment firm Elaia Partners to make private-equity deals in Europe. Lazard Elaia Capital will be led by Xavier Lazarus, co-founder and managing partner of Elaia, with Lazard controlling 75% of its equity and Elaia holding 25%. Lazard also said it is acquiring a minority interest in Elaia through the transaction, and could eventually acquire the firm.
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Genetics testing company 23andMe aims to go private and is looking for potential financing partners, Rolfe Winkler reports for the Journal. The South San Francisco-based company went public in early 2021 through a combination with a blank check company backed by British entrepreneur Richard Branson at a value of about $3.5 billion, but its market value has dropped to nearly nothing.
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European buyout firm EQT AB reported a rise in assets under management in the first quarter, while investments and exit deals declined compared with the first quarter of last year, Elena Vardon reports for Dow Jones Newswires. Fee-generating assets under management rose about 11% to €132 billion, or about $140.89 billion at the end of March, while the firm’s total assets increased about 12% to €242 billion.
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