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Oil-and-Gas Firms Make Their Case | Infrastructure Funds Boom | Private-Equity Firms Back Guesty
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Good day, Pro Private Equity readers! Falling oil prices and a new climate bill that promises to allocate billions of dollars to support the nation’s shift to cleaner energy may have some investors thinking twice about how much they want to allocate to investments in traditional oil-and-gas funds. However, as Luis Garcia reports this morning, managers of those funds have been making the case to investors that such a pullback would be ill advised. Meanwhile, Ben Dummett and Laura Cooper look at the record inflows into infrastructure funds and Maria Armental writes about a group of private investment firms backing booking software provider Guesty Inc. as more people start traveling again.
Finally, a big thank you to all of you who submitted nominations for our Women to Watch list. Now begins the really hard and humbling work of winnowing down the list!
Now, it’s on to the news of the day …
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The U.S. should continue supplying a big portion of the oil and gas it needs, avoiding a production shift to countries with looser environmental standards, energy-focused private-equity firms say.
PHOTO: ROBYN BECK/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Some private-equity firms that back oil-and-gas businesses are becoming increasingly vocal about the role the sector can play as the world shifts to cleaner energy—and they are using the current energy crisis to make their point, WSJ Pro Private Equity’s Luis Garcia writes. Energy-focused firms including NGP Energy Capital Management, Pickering Energy Partners and Quantum Energy Partners have been sending articles, reports and presentations to investors highlighting the importance of oil and natural gas during the transition to renewables. The effort comes as investors continue putting less money into fossil fuels.
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Investment firms that include KKR & Co. and Brookfield Asset Management are raising money to back infrastructure assets such as telecom towers and data centers at a record pace, Ben Dummett and Laura Cooper report for the Wall Street Journal. Infrastructure funds have raised about $130 billion this year, already outpacing the record of $125 billion set last year, according to Preqin, a data provider.
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Private-equity firms Apax Partners, MSD Partners and Sixth Street Partners led a $170 million investment in Guesty Inc., which provides software that helps businesses manage short-term rentals listed on multiple platforms such as Airbnb, Vrbo and Booking.com, Maria Armental reports for WSJ Pro Private Equity. MSD Partners, an investment firm backed by technology billionaire Michael Dell’s family office, and Sixth Street are new investors in the Tel Aviv-based software company. The transaction represents Sixth Street’s first investment from its midstage growth strategy, according to a representative for the San Francisco-based investment firm.
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$130 Billion
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The approximate amount of capital raised by infrastructure funds so far this year, according to data provider Preqin Ltd.
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Technolsylva Inc. produces technology and software that helps organizations predict and analyze wildfire risk. PHOTO: SDIS 33 via REUTERS
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TA Associates in Boston is backing wildfire-modeling company Technosylva Inc. with a growth investment, according to a news release from the La Jolla, Calif.-based software-as-a-service provider. Technosylva works with electric utilities, public-safety agencies, governments and academic institutions to provide risk assessment and mitigation services.
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Thoma Bravo is in early stages of discussions with U.K. cybersecurity company Darktrace PLC over a potential buyout, according to a regulatory filing in London. The company has more than 2,000 employees and serves over 7,400 clients worldwide. Darktrace shares closed Monday at 414.8 pence each, giving the business a market value of roughly £2.95 billion, equivalent to about $3.56 billion.
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The real assets unit of BlackRock Inc. has agreed to acquire Australian battery storage and renewable energy company Akaysha Energy, according to an emailed press release. BlackRock said in the release that it plans to commit more than 1 billion Australian dollars, the equivalent to $702.2 million, to support the build-out of more than 1 gigawatt of battery storage assets across nine projects in Australia’s national electricity market.
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Carlyle Group Inc.-backed drug-development operating company Launch Therapeutics is leading a commitment of as much as $170 million in publicly traded clinical-stage biopharmaceutical company Opthea Ltd. in Australia, joined by Carlyle’s life sciences specialist arm Abingworth, according to a news release. Carlyle and Abingworth plan to invest $120 million over three stages into the developer of treatments for retinal diseases and keep an option to invest another $50 million. The deal marks the first investment led by Launch Tx, as it is also known, since Carlyle announced its formation in April. Opthea’s American depository receipt shares rose as
much as 9.3% in New York on Monday.
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Venture-capital firm Andreessen Horowitz is investing in Flow, a real-estate startup led by former WeWork executive and co-founder Adam Neumann, Berber Jin reports for The Wall Street Journal. Marc Andreessen, co-founder of the venture firm known as a16z, said in a blog post that Flow would seek to address problems in the rental-housing market, which he described as the inability for renters to own equity in their homes and a lack of social bonding between neighbors.
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The fact that Thoma Bravo's due diligence of Australian aerial-mapping provider Nearmap Ltd. is at an advanced stage augurs well for the completion of a deal, Dow Jones’s Stuart Condie writes, citing Jefferies analyst John Campbell. Mr. Campbell said in a note that Jefferies had for some time flagged Nearmap as a takeover target, with patent infringement claims by rival EagleView Technologies Inc. an obstacle that could be overcome. He thinks U.S. private-equity firm Thoma Bravo is unlikely to terminate its proposal given the status of the talks and sees potential for other suitors to emerge. Nearmap shares touched a nine-month high of 2.03 Australian dollars per share on Monday before closing with a roughly 25% gain at A$1.885 in Sydney. Thoma’s offer values the company at A$1.055 billion, equivalent to about $751.7
million.
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Audax Private Equity said it has acquired air filtration products company Rensa Filtration. Founded in 2017, Rensa markets its products across a range of brands that include Rensa, Custom Filter, Viskon-Aire, Permatron, D Mark, and Air Filters Inc., according to a press release.
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Apollo Global Management Inc. and New Fortress Energy Inc. have renamed their $2 billion liquefied natural gas joint venture as Energos Infrastructure after closing the previously announced transaction, according to a news release. Energos owns 11 LNG vessels including ships equipped to provide LNG storage and regasification. Apollo has an 80% stake in the venture, which is led by Arthur Regan, an Apollo operating partner, as chief executive.
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Blue Owl Capital Inc.’s Owl Rock private-credit arm and Oaktree Capital Management, controlled by Brookfield Asset Management Inc., have agreed to lend $175 million to publicly traded ADC Therapeutics SA in Switzerland, according to a news release. The deal includes $120 million upfront, which will be used to settle convertible notes held by Deerfield Management Co. along with ADC equity. Owl Rock is also investing $6.25 million in ADC equity. ADC is developing cancer therapies.
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Percheron Capital has agreed to acquire a majority interest in residential climate-control and plumbing company McWilliams & Son in Texas, according to a news release.
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Incline Equity Partners has acquired Montgomery DME from fellow private-equity investor Monument MicroCap Partners, according to a press release issued by TM Capital, which advised the company on the deal. Montgomery DME provides durable medical equipment to the hospice care market.
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PSG Equity in Boston is backing software-as-a-service company Addigy Inc., a Miami-based maker of Apple Inc. device management software, with a growth investment, according to an e-mailed news release.
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Midmarket firm One Equity Partners has completed the acquisitions of media and marketing companies Gamut and CoxReps from Cox Media Group, according to a press release.
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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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Solace Capital Partners in Los Angeles has sold Patriot Environmental Services Inc. to strategic buyer Heritage-Crystal Clean Inc. for $156 million. Solace initially backed the Wilmington, Calif.-based provider of waste services in 2015.
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Sentinel Capital Partners has sold a majority interest in Altima Dental to a dental support organization backed by Peloton Capital Management, 123Dentist in Vancouver, British Columbia, according to a news release. KKR & Co. and a portfolio company, Heartland Dental, are also backing the new combination. Sentinel first backed Toronto-based Altima in 2016.
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J.F. Lehman & Co. has sold construction and municipal solid-waste management company Lone Star Disposal in Houston to Waste Connections Inc., according to a news release. Lehman acquired the business in 2019. R.W. Baird and Houlihan Lokey advised Lehman on the transaction.
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Cloud Equity Group, a lower midmarket private-equity firm focused on technology-enabled business services deals, has sold web hosting services provider ComfortHost to KnownHost, according to a press release. Cloud Equity initially acquired ComfortHost in 2016.
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Real-estate focused private investment firm Rice Park Capital Management has agreed to sell software-as-a-service provider Blue Water Financial Technologies Holding Co. to strategic buyer Voxtur Analytics Corp., according to a news release. Blue Water’s services include hedging and asset valuation. The deal will make Rice Park an investor in Voxtur.
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Butterfly Equity, a Los Angeles-based private-equity firm founded by former executives from KKR & Co. and Vista Equity Partners, closed its latest food-focused fund with about $1 billion in commitments, nearly doubling the amount of the earlier vehicle, the firm said. The fund was targeting $750 million with a $1 billion upper limit, WSJ Pro Private Equity previously reported.
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Portfolio Advisors is seeking $1 billion for PA Co-Investment Fund V LP, the firm’s newest co-investment fund, according to a regulatory filing. The new fund’s offering amount exceeds the $721 million that the Darien, Conn.-based firm raised for its previous co-investment fund back in late 2021.
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Apogem Capital, which was formed earlier this year through the combination of PA Capital, Madison Capital Funding and GoldPoint Partners, has raised $614 million for a new secondary fund, PA Secondary Fund VI LP, according to a press release.
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Energy and infrastructure-focused Tailwater Capital has brought on John Schaufele and Jill McMillan as managing directors, according to a news release. Mr. Schaufele is the firm’s head of investor relations and fundraising, while Ms. McMillan is head of communications and public affairs. She was previously with publicly traded EnLink Midstream LLC while he was previously chief financial officer and co-president of renewables investment business Freestone Holdco LLC, a Tailwater portfolio company, and CFO of a Tailwater-backed blank-check company, Freestone Acquisition Corp., which withdrew its plans for an initial public
offering in June.
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Growth investor PSG Equity in Boston has added Bogdan “Bo” Cenanovic as a managing director, with a focus on Canadian deals, according to a news release. The software and technology-enabled services specialist said Mr. Cenanovic joins from the Ontario Teachers’ Pension Plan, where he was head of technology, media and telecommunications, financial services and healthcare.
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Vestar Capital Partners in New York has made several promotions among its investment professionals, including Neil Merchant, Mark Dirzulaitis and Angela Yun to principal, and Alex Veronneau to vice president, according to a press release. Mr. Merchant joined the firm in 2018 and the others came aboard in 2019.
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SoftBank reported this month that the Vision Fund had erased $40 billion in previously announced gains in the 12 months through June 30. PHOTO: AKIO KON/BLOOMBERG NEWS
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Five years ago, Saudi Arabia and Abu Dhabi made an audacious bet on startups, plowing $60 billion into a fund run by investor SoftBank Group Corp. in a bid to diversify their economies and rush into the tech sector. It’s falling far short of expectations, as Rory Jones and Eliot Brown report for The Wall Street Journal. The recent tech rout has hit SoftBank’s Vision Fund and its biggest investors particularly hard, compounding problems from a string of earlier bad bets that channeled Saudi and Emirati money into a now-defunct robot pizza maker and an office-space leasing company.
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Under Chairwoman Lina Khan, the Federal Trade Commission is questioning mergers that likely would have gone unchallenged in years past—a change Ms. Khan says is needed to prevent companies from building up too much power and stifling competition, Dave Michaels and Ryan Tracy report for The Wall Street Journal. The FTC issued 42 letters of investigation over mergers or similar transactions during the 2021 fiscal year, almost double the number for 2020 and the highest in more than 10 years. Deal makers, antitrust attorneys and Republicans complain that in some cases the FTC is simply trying to slow down deals where there isn’t a credible threat to competition.
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Secondary market activity in the second half of this year is likely to trail last year’s record pace, even though transaction levels during the first six months of this year exceeded the levels of the same period last year, Lazard & Co. in London said in a news release. But the firm said it expects next year to set new records, citing rising demand from both fund limited partners and sponsors. Lazard said total deal value would likely fall 9% during the last six months of this year compared with the second half of 2021, with the full year’s aggregate falling to about $115 billion, citing uncertain macroeconomic conditions, from $126 billion in 2021. Lazard projected volume to reach
around $153 billion next year.
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Prices of secondhand stakes in private-equity funds held up during the second quarter even as publicly traded stocks fell during the second quarter, a survey from Paris-based Palico SAS, which provides a marketplace for secondary investors. Palico said that more than half the transactions it monitored priced at an average of about 5% above net asset value, while 40% of the deals went off at an average discount of roughly 9% to NAV. The fund slices that sold for a premium were mostly from larger firms such as Blackstone Inc., Carlyle Group Inc. and CVC Capital Partners, according to the e-mailed survey.
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Enterprise values of privately owned companies fell for the first time since early 2020 in this year’s second quarter, reflecting shrinking earnings multiples and slowing profit growth compared with previous quarters, according to investment advisory firm Lincoln International. The Lincoln Private Market Index dipped 0.5% in the second quarter compared with the first three months of the year, the first contraction in more than two years. But Lincoln cited the evident resilience of private companies, noting that its index of private-company multiples declined only slightly, to 10.8x from 11.1x, even as the S&P 500 index of large-capitalization company stocks dropped by more than 16% in
the same period.
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The Ontario Teachers' Pension Plan Board posted a 1.2% net return on its investments for this year’s first half while net assets grew to 242.5 billion Canadian dollars, or about $189.8 billion, from C$241.6 billion at the end of last year, according to a news release from the retirement system. For the 12 months ended June 30, the system had a total-fund net return of 8.3%. Over the past five and 10 years, the system’s net fund returns have been 7.9% and 9.0%, respectively. About 23% of the pension fund is invested in private equity, compared with 9% in public equities and 18% in bonds.
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Brookfield Asset Management Inc.’s Brookfield Business Partners arm is committing $50 million in debtor-in-possession financing and has agreed to “equitize” more than $750 million of company debt to help publicly traded Altera Infrastructure LP emerge from a chapter 11 bankruptcy restructuring, according to a news release. Aberdeen, Scotland-based Altera serves offshore oil-and-gas producers in the North Sea, off the coast of eastern Canada and Brazil. The chapter 11 case is pending in the U.S. Bankruptcy Court for the Southern District of Texas.
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Denham Capital Management's energy investment unit has been spun out of the company to form Trace Capital Management in Houston, complete with professional staff and $1.4 billion in investable and invested capital across two active funds, according to a news release. The new firm is led by Jordan Marye as managing partner. Boston-based Denham previously reported having about $7.51 billion in assets under management at the end of last year.
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