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Deals Take Coronavirus Hit | Insight Leads $70 Million Dremio Round | A Co-investment Shift
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Good day! On Friday, President Trump signed into law the $2 trillion stimulus bill designed to soften the blow caused by the coronavirus. Many private-equity portfolio companies stand to have a tougher time accessing that money. More on that later this week. Here in Massachusetts, I have been hunkering down with my husband and teenage daughter, trying to refresh my high school geometry skills as school closures here have been extended to May 4.
Private-equity deal activity, meanwhile, is slowing dramatically, although the impact has yet to fully materialize in quarterly deal data. As WSJ Pro’s Ted Bunker reports, U.S. private-equity deal volume is down by only around 12.5% in the first quarter, as a strong start to the year has likely mitigated what many say has been a steep drop in activity in recent weeks. The dollar volume of deals declined more significantly.
In other news, WSJ Pro Venture Capital’s Marc Vartabedian writes that Insight Partners has led a $70 million growth round for data analytics startup Dremio Corp. and Preeti Singh explains why limited partners willing to offer co-investment capital stand to benefit once the pandemic eases.
For more important, yet socially distant news, read on...
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A statue of George Washington, the New York Stock Exchange and a nearly empty Wall Street at 9 a.m. in New York on March 18, 2020. Deals involving private equity have declined 12.5% so far this year, Dealogic U.S. data show.
PHOTO: JUSTIN LANE/SHUTTERSTOCK
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Private-equity buyouts have slowed this year through Wednesday, though not as much as might have been expected amid the coronavirus-linked market upheaval of recent weeks, WSJ Pro’s Ted Bunker reports, citing Dealogic Inc. data. In the U.S., the number of PE deals declined 12.5% to 455 transactions so far this year, compared with 520 deals in the same period of last year, the data show. In terms of value, the slump has been sharper, falling 33% to roughly $68.82 billion compared with the same period of last year, when the value was about $103.1 billion.
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Dremio Corp., a startup that offers data analytics services to businesses, has raised $70 million to help companies make better use of their vast stores of data, Marc Vartabedian writes for WSJ Pro Venture Capital. The Series C funding round, which closed March 18, was led by Insight Partners with existing investors Lightspeed Venture Partners, Cisco Investments , Norwest Venture Partners and Redpoint Ventures participating in the deal. Insight Partners managing director Teddie Wardi is joining Dremio’s board.
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The Take: After Coronavirus, the Dynamics of Co-Investment Between General and Limited Partners to Shift
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Investors in private-equity funds have pumped billions of dollars directly into co-investments alongside private-equity firms in the past several years, at times even competing with each other for slots in the choicest deals.
But a few industry professionals, looking beyond the crucible of the coronavirus pandemic, say that limited partners willing to co-invest are likely to see more opportunities, as well as get more leverage over those deals, once that time comes. Read more in Singh's Take.
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79%
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The proportion of board members who said their organizations are not very well-prepared to deal with a crisis event, according to an Ernst & Young survey
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A Red Robin restaurant in Louisville, Ky., is shown here in 2016. PHOTO: LUKE SHARRETT/BLOOMBERG NEWS
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Vintage Capital Management can acquire as much as 20% of the shares of Red Robin Gourmet Burgers under an agreement announced Friday that averts a proxy battle between the restaurant chain and the private-equity firm, which currently holds 11.6% of the company’s stock. The deal also calls for Greenwood Village, Colo.-based Red Robin to name restaurant-industry executive Anthony Ackil to its board of directors, Colin Kellaher reports for Dow Jones Newswires.
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KKR & Co.’s planned acquisition of OverDrive has come under scrutiny by the U.K.’s Competition and Markets Authority, Selin Bucak reports for sister publication Private Equity News in London. The agency is looking for comments on the deal, citing its potential impact on competition, although no formal investigation has started. KKR said in December it had agreed to buy the business, which provides digital reading systems to schools and libraries, from Rakuten USA.
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New investors RA Capital Management in Boston and Janus Henderson Investors in London co-led a $110 million growth financing round for vaccine developer SutroVax Inc. The investors acquired preferred equity issued by the Foster City, Calif.-based company in a deal that included previous backers such as TPG Growth and Frazier Healthcare Partners. The new investors also received observer seats on the company’s board of directors.
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Some private-equity deals still get done despite the upheaval related to the coronavirus, as Luisa Beltran reports for sister publication Barron’s, citing a planned minority investment by Centana Growth Partners as an example. Ben Cukier, a Centana partner and co-founder, said the underwriting has been revised in the pre-coronavirus agreement to back a financial-technology company he didn’t name. The revisions reflect expectations that coronavirus repercussions—including a recession—will continue to be felt through the next year.
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Genstar Capital has joined with a group of insurance industry veterans to form Obsidian Insurance Holdings Inc., to provide “a conduit to reinsurance and alternative capital” for insurers that underwrite program business. The new company has been capitalized with $100 million and obtained an A- rating from A.M. Best Co.
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An item in Friday's newsletter about Orkila Capital backing Advance Publications Inc.'s acquisition of the Ironman Group events business from Wanda Sports Group Co. overstated Wanda's role in managing Ironman events under its new owners. It will operate only certain events in China, not all the group's events worldwide.
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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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Serent Capital has sold Pondera Solutions, a Sacramento, Calif.-based provider of cloud-based fraud detection software used in monitoring government programs, to Thomson Reuters Corp. The acquirer said it would bundle the technology into its government services products.
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L Squared Capital Partners has raised at least $397 million for its L Squared Capital Partners III LLC fund, according to a regulatory filing dated Friday. The Newport Beach, Calif.-based firm recorded its first commitment on March 20 and listed 34 investors so far for the vehicle, which has a $500 million fundraising target.
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Riverwood Capital has collected roughly $1.16 billion so far for its Riverwood Capital Partners Latam LP private-equity fund, including commitments to its Riverwood Capital Partners III funds and from the fund’s general partner, a regulatory filing shows. The Menlo Park, Calif.-based firm said its first commitment to the fund was received in August 2018 and so far 28 investors had pledged capital to the vehicle. The filing doesn’t indicate a target amount for the fundraising.
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First Reserve has raised at least $465 million so far from 11 investors in its latest private-equity fund, First Reserve Fund XIV LP, according to a regulatory filing by the Stamford, Conn.-based firm. It recorded its first commitment to the new fund about a year ago. First Reserve had raised more than $3.88 billion for its most recent predecessor vehicle by October 2014, another filing shows. At the end of 2018, the firm had about $9.08 billion in assets under management, its latest annual filing with the Securities and Exchange Commission shows.
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Canadian midmarket firm TorQuest Partners said it has closed its latest fund TorQuest Partners Fund V LP with $1.375 billion. The firm said in a press release it had set a $1.1 billion goal for external commitments to the fund.
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London hedge fund manager and philanthropist Nicolai Tangen has been named as the next chief executive of Norges Bank Investment Management, the group that oversees Norway’s almost $1 trillion in oil wealth, Bérengère Sim reports for sister publication Private Equity News in London. The Norwegian executive is currently chief executive and chief investment officer at AKO Capital, the hedge fund he established in 2005. He’ll move to Oslo and take over the sovereign fund job in September from Yngve Slyngstad, who said in October he would step down.
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Allianz Global Investors is liquidating two hedge funds after they took heavy losses in recent weeks on stock-options trades, Justin Baer reports for The Wall Street Journal. An Allianz Global Investors spokesman said the two funds, Structured Alpha 1000 and Structured Alpha 1000 Plus, had been net buyers of puts, or options giving the holder the right to sell an asset at a predetermined price in the future. The puts were designed to hedge against losses the funds might endure from other positions should the market decline.
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CM Bermuda Ltd., the majority owner of Sirius International Insurance Group Ltd. in Bermuda, has agreed with management of the multiline reinsurer to put the business up for sale. Barclays Capital Inc. is advising the Bermuda-based company on the sale process. Sirius has about $2.5 billion in total capital.
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Private-equity firms such as Apollo Global Management, BC Partners and Carlyle Group are looking to gain from what they view as an oversold leveraged-loan market in Europe, Reuters reported, citing market participants. Driven by the coronavirus pandemic and the slumping oil market, average prices of European leveraged debt in the secondary market have plummeted to under 80% of face value, lows not seen since 2009. But buybacks are rare in the European leveraged-loan markets, leading sponsors to approach banks for advice on how to go about doing it.
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