Welcome back! In scenes reminiscent of the subprime mortgage meltdown that triggered the 2008 financial crisis, some financial executives are calling into question the ratings that are supposed to help investors judge the riskiness of securitized private debt products, such as collateralized loan obligations, Isaac Taylor reports.  

In the second part of a credit double-header, Miriam Gottfried takes a closer look at the efforts of private lenders to get their hands on your 401(k). Giving individuals access to the same illiquid investments as institutions could boost returns, but critics say it exposes would-be investors to unnecessary risk.

Now onto the news ...

Ratings that grade private-credit products and are used by investors to categorize debt issued by lending firms are increasingly being called into question by industry decision makers, WSJ Pro’s Isaac Taylor writes. Credit firms that bundle packages of loans to back securities, like collateralized loan obligations, or CLOs, are often able to choose the ratings provider for such issues. Critics say this can lead to conflicts of interest, as the issuer pays fees to the ratings provider while the resulting grades can significantly affect the marketability of the rated securities. The system would be similar to students being able to choose which teacher grades their work, according to one private-credit executive with knowledge of the matter.

Private-credit providers, including firms best known for private equity, have emerged as major lenders to businesses and are competing head-on with traditional banks, while operating mostly outside the reach of regulators, Miriam Gottfried reports for the Journal. Tie-ups with insurance companies are helping private-credit firms bring in the huge pools of money needed to make this business work. Now, the industry is reaching even deeper into the pockets of everyday Americans to manage their money directly. But some financiers say the system largely developed since the financial crisis ended in 2009 hasn’t been tested by a similar calamity, potentially putting these investors at risk.

Family-owned Cox Enterprises is selling its biggest holding, broadband services provider Cox Communications, to strategic buyer Charter Communications in a $21.9 billion cash and stock deal, the Journal reports. CNBC said the deal values the cable and phone services provider at about $34.5 billion, including about $12.6 billion in Cox debt and other obligations. Cox Enterprises will hold about 23% of the combined company once the deal closes.

Buyout firm KKR & Co. has acquired a roughly 12% stake in Nasdaq-listed health-care supplies distributor Henry Schein, paying $250 million for about 3.3 million common shares for around $76.10 each. The New York firm also placed two representatives on the Melville, N.Y.-based company’s board of directors, Dan Daniel and Max Lin. KKR agreed to buy the shares in January, acting as a white knight as the business sought to fend off activist investor Ananym Capital Management. Schein’s stock was little changed Friday, closing at $72.05.

Bain Capital in Boston is assessing a possible offer to buy U.K.-based healthcare-software provider Craneware, Pierre Bertrand reports for Dow Jones Newswires. Disclosure of the potential bid sent the company’s shares up about 9.5% in London to trade around 2,245 pence per share. The company had a market capitalization of about £717.9 million, or $952.8 million, as of Thursday’s close. The firm has until June 13 to firm up its intentions or walk away.

General Atlantic is taking a minority stake in Wireless Logic in a deal that values the U.K. technology company at £3.5 billion, or around $4.64 billion. General Atlantic joins existing private-equity backer Montagu as an investor in the company, which offers technology that helps simplify and automate internet connectivity and management.

Strike Capital led a $200 million growth investment that includes equity and debt to back e-commerce company Stord in a transaction valuing the business at about $1.5 billion, according to a LinkedIn post by Sean Henry, the Atlanta-based company’s co-founder and chief executive. Strike led the $80 million equity portion of the deal, while Silicon Valley Bank and Orix Group provided the financing. Other participants include Baillie Gifford, Bond Capital and Lux Capital.

General Catalyst led a $55 million growth investment in mobile care provider Sprinter Health, with other participants including Accel and the Regents of the University of California. The company uses technology to facilitate in-person visits by care providers for hard-to-reach patients.

Multi-strategy investment manager KKR & Co. and its European real estate investing arm Inhabeo have agreed to fund the construction of student housing near the University of Warwick in England.

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

Technology-focused Thoma Bravo has sold down its stake in stock exchange operator Nasdaq through a sale to JPMorgan Chase & Co., Bloomberg News reported, citing people familiar with the matter. Thoma said last July that it planned to sell about half its nearly 15% stake in the U.S. stock exchange operator, or at least 41.6 million shares worth about $2.79 billion at the time. A securities filing in April showed the firm still owned about 42.8 million shares, or roughly 7.5% of Nasdaq’s stock. A May 7 transaction to sell about 17.3 million shares at $77.90 each generated about $1.35 billion. Bloomberg said the price for the remaining stake of nearly 25.5 million shares fetched $80.68 per share, or roughly $2.06 billion. Thoma acquired about 85.6 million Nasdaq shares, valued at $4.75 billion, when the firm sold financial risk management and regulatory reporting software provider Adenza Holding to the company for $10.5 billion, including $5.75 billion in cash, in 2023.

Partners Group-backed restaurant operator Green Tea Group went public in Hong Kong Friday, pricing its initial public offering of nearly 168.4 million shares at 7.19 Hong Kong dollars each to raise about HK$1.21 billion, or around $155.1 million. But the shares fell almost 13% to close at HK$6.29 each. The IPO left the Swiss private-equity firm with a roughly 16% stake in the business, which operates more than 490 locations across 140 cities in China. Partners first backed the company with a minority investment in 2017.

Brazilian private-equity firm 3G Capital has collected around $2.3 billion for 3G Fund VI, according to a regulatory filing. The firm, known for its acquisition of food and beverage businesses such as brewer Anheuser-Busch InBev, has diversified in recent years.  In early May, 3G took shoe maker Skechers private in a $9.4 billion deal.

Entrepreneur Mark Cuban, who sold a majority stake in the Dallas Mavericks for $3.5 billion in December 2023, is joining Steve Cannon, a former Atlanta Falcons chief executive, and veteran private-markets investor Rashaun Williams in recently established private-equity firm Harbinger Sports Partners. Williams founded the firm in March, joined by Cannon and now Cuban, to invest in undervalued sports assets, according to the firm’s website and LinkedIn pages. Harbinger aims to raise $750 million for its first fund, with Cuban acting as general partner.

Boston-based growth investor Silversmith Capital Partners added technology executive Lidiane Jones as a senior adviser, according to an emailed statement. A former Salesforce executive, Jones became the chief executive of messaging platform Slack and, most recently, of dating app Bumble.

Fortress Investment Group has named Charles Spetka to lead its newly established Mideast office in Dubai, reuniting the firm with its former employee. Spetka was once chief executive of CW Financial Services, a real estate business acquired by Fortress and spent nearly eight years at the $49 billion equity and credit manager.

Three major players in Silicon Valley are buying into the San Francisco 49ers franchise of the National Football League in a deal that values the team at around $8.5 billion, according to the Sportico and other sports-focused news sites. ESPN, citing a league source, said the buyers are Khosla Ventures founder Vinod Khosla, Bessemer Venture Partners partner Byron Deeter and William Griffith, a partner with Iconiq Capital. Khosla would acquire a 3.1% interest, while Deeter would get 2.1% and Griffith would own 1% if the deal goes through, according to the New York Times’ site The Athletic.

While the headline figures regarding U.S. investment pledges from corporations and countries this year topped $6 trillion last week, the reality of foreign direct investment into the U.S. isn’t so mega-sized, Eliot Brown reports for the Journal, citing economic analysts at Goldman Sachs. In all, they estimated that specific announced projects would add between $30 billion and $135 billion annually to U.S. gross domestic product for the next few years. The bulk of companies with big announcements have mostly repackaged existing plans. And countries promising giant investments haven’t identified anywhere close to the level of specifics to meet those numbers.

Financial services provider HSBC Holdings has restructured its investment banking business to prioritize private credit, Paul Clarke reports for sister publication Financial News in London. The U.K. lender has consolidated its investment banking and underwriting teams into a newly formed capital markets and advisory business, which will hone in on lending to borrowers in Asia and the Middle East. The reshaped unit comes after HSBC shuttered some M&A and equity capital markets functions in the U.K., U.S. and Europe and cut hundreds of dealmaking jobs.

Send us your tips, suggestions and feedback. Write to:

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

Follow us on Twitter:@wsjpe, @LHVGarcia, @LauraKreutzer