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Warburg Scores a Telemedicine Exit | Crestview’s Big Water Bet | Carlyle Earnings | Jordan Partner Passes
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Good day and welcome to the Private Equity Pro newsletter. Just about everybody in private equity has a story to tell about a deal that got delayed, cancelled or just generally mixed up when the coronavirus hit this spring. But after a serious lull in deal making in the first half, there are hints that private equity could be slowly building back up to its old M&A pace, despite the pandemic that continues to rage in many parts of the U.S.
Today we have a few more data points suggesting a revival may be stirring. First, Warburg Pincus landed a big exit from its investment in SOC Telemed, which is being acquired by a blank-check company at a valuation of $720 million, or almost 23 times Warburg’s initial investment, as our Preeti Singh reports. Next, Luis Garcia reports that Crestview Partners is joining other investors in a $1 billion push into water infrastructure. As earnings season progresses, Dave Sebastian reports that a jump in compensation costs dragged down Carlyle's second-quarter profit. Finally, on a more somber note, Ted Bunker reports on the passing of Adam Max, a longtime Jordan Co. partner. Now on to today's news...
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Medical providers engage through an early telemedicine system in Oregon. PHOTO: ANDY TULLIS / ASSOCIATED PRESS
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Warburg Pincus is exiting its investment in acute-care telemedicine company SOC Telemed through a sale to a blank-check company backed by Shulman Ventures, WSJ Pro Private Equity’s Preeti Singh reports. Warburg initially invested $32 million in the company in 2014, and the sale values it at $720 million now, a news release says. It serves hospitals and provides telemedicine care for neurology, psychiatry and intensive-care patients.
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Crestview Partners is backing San Francisco-based Upwell Water LLC, WSJ Pro Private Equity’s Luis Garcia reports. The commitment adds to previous capital pledged by the company's management team and a nonprofit fund that invests in the water, food and energy-transition sectors. The combined capital will enable Upwell to deploy $1 billion in near-term water deals.
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Carlyle Group Inc.’s profit fell as its performance-related compensation costs climbed in the second quarter, Dave Sebastian reports for Dow Jones Newswires. The private-equity firm in Washington posted net income of $145.9 million, or 41 cents a share, compared with $154.1 million, or $1.23 a share, in the comparable quarter last year. Performance allocations and incentive fee-related compensation came in at $535.6 million in the quarter, up from $113.6 million a year earlier. Carlyle also booked a principal investment loss of $621 million related to the closing of its purchase of an additional stake in Fortitude Group Holdings LLC from insurer American International Group Inc.
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Adam Max, a longtime partner at Jordan Co. in New York, has died at age 62, WSJ Pro Private Equity's Ted Bunker reports. Mr. Max had been with the private-equity firm since 1986 and served on the investment committee, as well as in other roles. In addition, Mr. Max was involved in numerous charities, including serving as chair of the board of the Brooklyn Academy of Music since 2017.
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$1.2 Trillion
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The global value of M&A activity in the first half, down 41% from the same period last year, according to data provider Refinitiv.
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The insides of a fiber optic cable are displayed. PHOTO: JOHN HART / ASSOCIATED PRESS
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Morgan Stanley Infrastructure Partners has agreed to acquire a nearly 50% stake in Altice USA Inc.’s Lightpath fiber business at an implied enterprise value of $3.2 billion, or a multiple of 14.6 times the operation’s adjusted earnings in fiscal 2019. Altice expects to book $2.3 billion in gross proceeds from the deal, according to a news release. The publicly traded parent said it would retain a controlling interest in the business after the deal closes, expected in the fourth quarter.
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BC Partners is set to take Italian machinery maker IMA Industria Macchine Automatiche private in a deal valuing the company at about €2.9 billion ($3.42 billion), Selin Bucak reports for sister publication Private Equity News in London. The London-based private equity firm will take a 20% stake in Societa Finanziaria Macchine Automatiche (Sofima), which owns 51.6% of IMA, and then both will seek to acquire the rest of IMA’s shares at €68 per share through a mandatory tender offer, followed by delisting the shares from the Milan Stock Exchange. The deal represents a 13.4% premium over Tuesday’s closing price of €59.95 in Milan. IMA makes processing and packaging machinery
and expects to report first-half revenue of €636.4 million for this year.
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Madison Dearborn Partners has agreed to take private Canadian packaging manufacturer IPL Plastics Inc. in a deal that gives the company an enterprise value of about 981 million Canadian dollars ($738 million). The C$10 per share cash offer represents a 49% premium to the company’s closing stock price on Tuesday, according to a news release. Company shares held by Caisse de dépôt et placement du Québec, IPL’s biggest investor, will be rolled over into the private company, giving CDPQ a 24.9% stake. While supported by IPL management and directors, the transaction is subject to shareholder and other approvals.
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Multi-strategy asset manager Azimut Group has acquired a roughly 20% stake in private-credit fund manager Kennedy Lewis Investment Management LLC in New York. Azimut, based in Milan, Italy, made the deal through its U.S. subsidiary, Azimut Alternative Capital Partners LLC, marking the unit's inaugural transaction after it was set up in November 2019 to invest in alternative asset managers. Founded in 2017 by David Chene and Darren Richman, Kennedy Lewis has about $2.1 billion in assets under management and committed capital, Azimut said in a news release.
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Bain Capital’s life-sciences division was among the participants in a $257 million Series B funding round for Thrive Earlier Detection Corp., a company founded last year that offers a blood test for cancer detection it wants to incorporate into routine medical care. Other participants in the funding round were Casdin Capital and Section 32, which led the round, as well as Brown Advisory, Driehaus Capital Management, Intermountain Ventures and others.
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Permira has agreed to acquire a majority stake in English-language school operator EF Kids & Teens, which has 288 locations in China and 79 in Indonesia. Pemira is paying about $1.5 billion for a 60% interest in the business, currently part of Swiss company EF Education First AG, Reuters reported, citing two people familiar with the matter. The news agency said deal talks began in February but were derailed by the coronavirus pandemic, which led to a re-evaluation of the business as discussions resumed
more recently.
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Providence Equity Partners, joined by growth equity investor Verdane, has invested in German data protection provider Hornetsecurity Group, Selin Bucak reports for sister publication Private Equity News in London. Providence backed the company through its Strategic Growth arm. Hornetsecurity has about 200 employees serving more than 40,000 customers.
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One Equity Partners has agreed to invest in Infobip, a cloud communications company serving large enterprises. The Croatia-based business generated €602 million ($709.5 million) in revenue last year, according to a news release. The investment would mark Infobip’s first receipt of outside capital.
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CORE Industrial Partners, a Chicago firm that invests in lower midmarket manufacturing and industrial technologies, has formed a new platform called Incodema Holdings Inc. specializing in engineering intricate parts. The platform combines two of CORE’s recent acquisitions: Incodema Inc., a precision sheet metal engineering solutions provider, and Newchem Inc., a photo chemical etching manufacturer.
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Lower middle-market focused private-equity firm IMB Partners has invested in Ashburn Consulting LLC, a technology adviser that assists clients with information systems and secure network engineering. The Leesburg, Va.- based firm serves commercial and government organizations.
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BP Energy Partners made a $60 million start-up investment in Catalyst Power Holdings LLC, alongside the company’s management. Catalyst will use the money to buy electric and gas retail energy providers to fund the development of new retail supply options, the Dallas-based firm said.
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Eurazeo is leading a $42 million financing round extension in Thought Machine Group Ltd. that is expected to wrap up early next month, according to a news release. The financing, on top of $83 million raised in March, is expected to help the London-based software-as-a-service provider for banks and other financial services businesses expand into the Asia-Pacific banking market through a new office opening in Singapore. Along with Eurazeo Growth, other investors include British Business Bank PLC’s British Patient Capital and Swedish financial services firm SEB.
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Sun Life Canada has joined Caisse de dépôt et placement du Québec and a clutch of venture funds in backing telemedicine specialist Dialogue Technologies Inc., investing 32 million Canadian dollars ($24 million) in the Montreal-based company. Dialogue powers Sun Life’s Lumino Health Virtual Care system, which debuted in March. Venture firms that have invested in the company include Portag3 Ventures, White Star Capital, HV Holtzbrinck Ventures, First Ascent Ventures and Walter Ventures, according to a news release.
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TowerBrook Capital Partners, joined by institutional and private investors, have participated in a $100 million fundraising for a litigation finance firm initially sponsored by TowerBrook. Validity Finance LLC said the fresh capital has arrived as demand rises for litigant funding in the wake of the coronavirus pandemic. Validity said it has committed more than $125 million to various legal actions so far.
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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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Goldman Sachs Group Inc.’s merchant banking operation aims to have $7 billion available for its Broad Street Loan Partners IV private credit strategy, which makes first-lien senior secured loans to larger middle-market businesses with earnings before interest, taxes, depreciation and amortization of $50 million to $200 million, according to documents from Connecticut’s public pension investment overseers. The New York bank is targeting 10% net returns for leveraged investments made by the fund, the documents show. Goldman, which began marketing the fund last year, said it had collected roughly $1 billion for the vehicle in January, a regulatory filing shows.
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Timur Akazhanov has joined H.I.G. Capital as a managing director of the firm’s Advantage Fund. He is based in the firm’s New York office, where he focuses on investing in the business services and tech-enabled services sectors. Mr. Akazhanov was previously a managing director at Blackstone Group Inc.
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Indianapolis-based midmarket firm Hammond, Kennedy, Whitney & Co. has hired Lilly Green as vice president of deal generation. Ms. Green was previously at Welsh, Carson, Anderson & Stowe, where she was a business development manager for the technology group. At HKW she will source deals in business services, health and wellness and technology.
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TPG RE Finance Trust Inc. has appointed Matthew Coleman as president of the company. Coleman, a partner at TPG, continues in his role as chief operating officer of TPG Real Estate.
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ATL Partners, a firm that invests in aerospace, transport and logistics, has added Jerome Lorrain as an executive board member, the New York firm said. Mr. Lorrain was most recently chief executive officer of North America for CEVA Logistics, and has also served as CEO of Wallenborn Transports, a European transportation company based in Luxembourg.
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Beijing ByteDance Technology Co. investors said to include U.S. firms Sequoia and General Atlantic have proposed taking over a majority interest in the operator of the TikTok social media app, which has come under scrutiny for national security reasons in the U.S., Reuters reported Wednesday from Hong Kong. The privately held company has also received inquiries from other potential buyers, the news agency said, citing people familiar with the matter. The proposal from investors that include General Atlantic and Sequoia is said to value TikTok at about $50 billion, or roughly 50 times its projected $1 billion in revenue this year.
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Private-equity firms are lining up bids for Walmart Inc.’s U.K. grocery chain Asda, with Apollo Global Management Inc., Lone Star Funds and TDR Capital all weighing second-round offers for the business, according to Saitama Rakuten International analysts. The Tokyo firm said the three private-equity buyout shops submitted bids earlier this year only to see the process halted as the coronavirus pandemic blossomed. The giant U.S. retailer restarted the process a few weeks ago and is expected to fetch roughly $10 billion for the chain, the analysts said in a news release.
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Apollo Global Management’s second-quarter earnings rose as the value of its investments climbed with the broader market. The New York private-equity firm posted net income of $446.3 million, or $1.84 a share, compared with a profit of $164.8 million, or 75 cents, during the same period last year, it said Thursday. The results marked a significant recovery over the first quarter when Apollo and its peers posted sizable losses due to the coronavirus-related market plunge.
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J.C. Penney Co. expects to sell itself in coming months to a bidder that will keep the company’s stores operating under the current name, Andrew Scurria reports for WSJ Pro Bankruptcy, citing Joshua Sussberg, Penney’s lead bankruptcy lawyer. He said that the company received strong bids from potential buyers that want to keep it in business. One of the proposals came from top lenders including H/2 Capital Partners, Sixth Street Partners and Sculptor Capital Management, which have offered debt forgiveness as currency to buy company assets.
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Private-equity acquirers accounted for 17% of global merger and acquisition activity in the first half of this year, rising even as the value of M&A deals fell by a third, data provider Refinitiv reports. Buyout firms invested $54 billion in deals in the Asia-Pacific region, a 13% increase from the same period in 2019, Refinitiv said Wednesday.
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Lower middle-market buyout firm Gen Cap America Inc. in Nashville has sold Aero Systems Engineering Inc. to Calspan Technology Holding Corp., according to a news release. The St. Paul, Minn.-based company designs and builds jet engine test and airframe wind tunnel facilities for manufacturers, military and government organizations.
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