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Calstrs' Ailman Reflects on Legacy | Steward Files for Bankruptcy | Castlelake's Carruthers Discusses Brookfield Deal
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Good day readers! Yesterday Steward Health Care System filed for chapter 11 bankruptcy protection, not entirely a surprise to anyone who has paid attention to the hospital operator over the past several years. However, the company’s size and scale and the complicated investment history behind it promise to resonate in many ways, including greater regulatory scrutiny of private-equity ownership of healthcare providers. Check out our special section in today’s newsletter for Steward-related coverage gathered from around the newsroom.
In today’s top stories, our own Chris Cumming spoke to Christopher Ailman, the outgoing chief investment officer for the California State Teachers’ Retirement System about his investment legacy at the pension system. Meanwhile, WSJ Pro’s Isaac Taylor caught up with Castlelake’s Evan Carruthers to discuss his firm’s decision to sell a majority stake in itself to Brookfield Asset Management.
Dive in for more details…
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Calstrs headquarters in Sacramento, Calif. Under Ailman, the pension’s allocation to private equity has risen to a 14% target from around 4% when he came on as chief investment officer in 2000. PHOTO: MAX WHITTAKER FOR THE WALL STREET JOURNAL
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Decades of investing in private equity have taught Christopher Ailman the limits of trying to outsmart the market. Ailman, the chief investment officer of the California State Teachers’ Retirement System, says investing in buyout funds is like “trying to hit a moving bull’s-eye, where you won’t know if you hit it until three years later.” WSJ Pro Private Equity’s Chris Cumming spoke to Ailman about his legacy at the pension manager as he prepares to retire from the CIO role later this year.
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Asset-based lender Castlelake is selling a majority stake in itself to publicly traded Brookfield Asset Management, making it the latest private credit specialist to align itself with a larger global asset manager. The Minneapolis-based firm has agreed to sell a majority stake in itself to Brookfield, which is investing around $1.5 billion, both to acquire the management company stake and in commitments to Castlelake funds, according to Castlelake Chief Executive and Managing Partner Evan Carruthers. WSJ Pro’s Isaac Taylor spoke to Carruthers about the transaction and the firm’s outlook for asset-backed lending.
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Steward Health Care Bankruptcy
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Rockledge Regional Medical Center, a Steward-operated hospital, in Rockledge, Fla.
PHOTO: TIM SHORTT/ FLORIDA TODAY/USA TODAY NETWORK
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Steward Health Care System, the largest U.S. physician-owned hospital operator, on Monday filed for chapter 11 protection, marking one of the biggest hospital bankruptcies in decades, Alexander Gladstone, Laura Cooper and Jonathan Weil report for The Wall Street Journal. Meanwhile, Melanie Evans and Andrew Scurria look at the far-reaching implications of the bankruptcy, which potentially puts hospitals in eight states at risk of running out of cash.
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Also, the Journal's Jonathan Weil looks at a complicated deal that Cerberus Capital Management negotiated in the spring of 2020 with Steward's landlord Medical Properties Trust, which helped shape much of what followed for Steward over the next four years. Cerberus owned the hospital operator from 2010 to 2020.
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Sen. Elizabeth Warren (D., Mass.,) criticized private equity’s role in the healthcare sector following Steward's bankruptcy filing. The company’s bankruptcy “is a direct consequence of Wall Street private-equity vultures looting our healthcare system,” said Warren, who has established herself as perhaps Congress’s most aggressive critic of the private-equity industry. Warren said she plans to introduce legislation to hold corporations accountable when they extract money from hospitals they own.
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$93.8 Billion
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The total capital raised by secondary funds in 2023, a 159% increase over 2022 volume, according to data provider Preqin.
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The existing Software Integrity Group management team is expected to lead the newly independent, privately held company after the transaction closes.
PHOTO: DAVID PAUL MORRIS/BLOOMBERG NEWS
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Synopsys is selling its Software Integrity Group business to Clearlake Capital Group and Francisco Partners in a transaction with a total value of up to $2.1 billion, Dow Jones Newswires’ Chris Wack reports. The transaction price includes up to $475 million in cash payable upon Francisco Partners and Clearlake achieving a specified rate of return in connection with one or more liquidity transactions.
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KKR-backed publisher Simon & Schuster is acquiring Dutch publishing house Veen Bosch & Keuning for an undisclosed amount, its first deal for a non-English book publisher as it pushes to expand internationally, Sabela Ojea reports for The Wall Street Journal. KKR acquired Simon & Schuster from Paramount in October for $1.62 billion.
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Canadian pension manager Canada Pension Plan Investment Board and infrastructure investment firm Global Infrastructure Partners have agreed to acquire publicly traded energy and power company ALLETE for $67 a share or around $6.2 billion, including debt. Duluth, Minn.-based ALLETE’s business units include utility companies Minnesota Power, an electric utility that serves 150,000 residents across 14 municipalities. Bethany Owen will remain as the company’s chief executive.
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KKR said it has entered into a joint venture with publicly traded Healthcare Realty Trust Incorporated to own and invest in medical outpatient buildings. Healthcare Realty Trust is seeding the portfolio with 12 properties, generating around $300 million in proceeds for the trust. KKR will make an equity contribution to the venture equal to 80% of the value of the seeded properties with Healthcare Royalty Trust retaining 20%. KKR also is committing up to $600 million to the joint venture to pursue additional acquisitions.
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Platinum Equity has closed its previously announced carve-out of the energy business of Kohler Co. to establish Kohler Energy with support from Kolher, which will retain a stake in the newly independent company. Kohler Energy offers a range of energy products for homes and businesses, including generators, powertrain technologies and other products.
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Self-driving car startup Wayve Technologies has raised more than $1 billion from investors to accelerate the development of artificial-intelligence-based products for automakers, Kosaku Narioka reports for The Wall Street Journal. The London-based firm said Tuesday that SoftBank Group led the $1.05 billion series C round, with new investor Nvidia and existing investor Microsoft also contributing to the fundraising.
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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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Apax Partners has agreed to sell Indian medical-device company Healthium Medtech to fellow private-equity investor KKR & Co., which is investing in the transaction out of KKR Asian Fund IV, which closed in 2021 with some $15 billion, according to a press release issued at the time. Apax initially backed the company back in 2018.
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Paul, Weiss, Rifkind, Wharton & Garrison is hiring a top deal lawyer from a rival shop as a race for talent among Wall Street’s elite law firms heats up. As Lauren Thomas reports for The Wall Street Journal, Jim Langston is leaving Cleary Gottlieb Steen & Hamilton to join Paul Weiss’s mergers-and-acquisitions practice, Paul Weiss officials said. Langston, 46, will work in Paul Weiss’s corporate department in New York. He will continue to focus on public and private deals, shareholder-activism defense and corporate governance.
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Bain Capital said in an emailed statement that it has hired Kevin Quirk as partner and global head of investor relations, assuming responsibilities from Michael Ward, who remains chief operating officer and chief financial officer at the firm. Quirk previously served as a founding managing partner of Casey Quirk, a consultant to the asset and wealth management industry that was acquired by Deloitte in 2016.
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Real assets investment firm Vision Ridge Partners said in an emailed statement that it has hired Ramzi Moubarak as a managing director and head of Europe. Moubarak joined Vision Ridge from Macquarie Capital’s infrastructure and energy capital team, where he was a managing director. He joins Vision Ridge’s London office, which opened in October of last year.
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Brera Holdings, a publicly traded holding company focused on investment in and ownership of soccer clubs, said it has hired Maria Xing as head of investments and corporate development. Xing previously served as an executive at 777 Partners, where she specialized in multi-club ownership of soccer teams.
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Midmarket private credit firm Colbeck Capital Management said it has hired Jared Talisman as a managing director and head of originations at the firm. Talisman most recently served as a managing director at Principal Alternative Credit, a unit of Principal Asset Management.
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