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EnCap Rolls Toward $1.5 Billion | Accel-KKR Banks $640 Million | O’Brien-Staley Rakes In $550 Million
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Good Thursday morning. Market watchers say stocks are headed for their worst pre-election week ever as declines accelerated Wednesday, led by the technology-heavy Nasdaq Composite. All three major U.S. indexes lost about 3.5% in the session as a resurgent coronavirus pandemic threatens to sink a still-fragile economic recovery, as Will Horner and Juliet Chung report for The Wall Street Journal. Some might say that the slump is just a sign that stock prices are coming back to earth after rising too much, too fast following the pandemic-driven crash in March. In private markets, though, tech companies are still widely viewed as attractive assets.
Investors in private-equity funds keep pouring on commitments as well. Today we have news of fundraising by three firms. Our Luis Garcia has details about a new clean-energy vehicle being marketed by EnCap Investments, while Laura Cooper sheds light on a new small-cap fund from Accel-KKR and Chris Cumming details a new loan-buying pool collected by O’Brien-Staley Partners.
Meanwhile, industry giant Blackstone Group said it raked in $15.1 billion in the just-ended quarter and Ares Management counted $12.7 billion in gross new capital during the period. We’ve gathered these stories and much more below, so please read on...
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Wind mills tower over crops near Wolcott, Ind. EnCap Investments has already bought into newly formed Triple Oak Power, a developer of onshore wind and other clean-energy projects. PHOTO: TANNEN MAURY / SHUTTERSTOCK
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EnCap Investments has raised $405 million thus far for its first fund focused on clean-energy infrastructure, deepening its efforts to expand beyond oil-and-gas investments, Luis Garcia reports for WSJ Pro Private Equity. The Houston firm set a $1.5 billion target for the fund and expects to be about a third of the way there within a month or so, people familiar with the matter said.
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Technology-focused investor Accel-KKR has closed on its first fund intended specifically to invest in smaller companies, Laura Cooper reports for WSJ Pro. After wrapping up fundraising for Accel-KKR Emerging Buyout Partners LP at its $640 million hard cap, the firm is armed with capital to invest in software and technology companies smaller than it would back through its flagship funds.
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O’Brien-Staley Partners has collected $550 million for its third fund to buy commercial loans, the Edina, Minn., firm said. The haul for OSP Value Fund III LP, together with its overflow fund, exceeded the initial $500 million fundraising goal, said Jerry O’Brien, the firm’s chief executive and chief investment officer. The firm’s second fund reached $600 million and the first brought in $490 million, he said.
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Midmarket companies are facing a highly uncertain outlook, with the world economy undergoing massive disruption as a result of the coronavirus pandemic, the potential of marked policy changes after the U.S. elections, and escalating trade and political disputes with China. Join WSJ Pro Private Equity for a free virtual event on The Path Forward for the Middle Market on Nov. 16 from 11 a.m. to noon Eastern Time. Register to participate here.
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943.24 points
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The loss in the Dow Jones Industrial Average Wednesday, the biggest one-day decline since early June, as investors shed risky assets amid a resurgent coronavirus pandemic
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A 5G wireless tower PHOTO: DANIEL BRENNER / BLOOMBERG NEWS
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GTCR has agreed to purchase wireless communications company Consumer Cellular Inc. in a deal that reportedly values the company at around $2 billion. The Portland, Ore.-based company resells mobile-phone services on a no-contract basis and markets the service to older consumers, including through major retail chains such as Target Corp. The company’s website indicates that it has 3.5 million customers.
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Equitable Holdings Inc. will transfer financial risk for $12 billion of retirement-income annuities to private equity-backed reinsurer Venerable Holdings Inc., as life insurers continue to reduce exposures on their books in a challenging environment for turning profits, Leslie Scism reports in The Wall Street Journal. The New York company has agreed for Venerable, which is owned by a group led by Apollo Global Management Inc., to reinsure a total of 114,000 variable-annuity policies sold between 2006 and 2008, a deal that will double the reinsurer’s assets. In addition to Apollo, Venerable investors include Voya Financial Inc., Crestview
Partners, Reverence Capital Partners and Athene Holdings Ltd. Equitable is negotiating to invest in the company as well.
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Wellington Management Co. and NewView Capital led a $340 million investment round in mobile gaming company Scopely Inc., joined by BlackRock Inc. and the Canada Pension Plan Investment Board, Isaac Taylor reports for WSJ Pro Venture Capital. The deal valued Scopely at about $3.3 billion. The California company creates interactive entertainment games for mobile devices using its proprietary technology platforms. Its game portfolio includes “Star Trek Fleet Command,” “Yahtzee With Buddies” and “Scrabble GO.”
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Tiger Global Management led a $350 million investment in digital media measurement company DoubleVerify, investing alongside others that included Fidelity Management & Research Co., and funds managed by BlackRock Inc. and Neuberger Berman Investment Advisers LLC. Providence Equity Partners remains the majority owner of the media analytics company in New York. Providence initially backed DoubleVerify in 2017.
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Ardian-backed Skyline Renewables has agreed to finance and manage the construction of a 250-megawatt solar energy plant in West Texas, taking over the Galloway I Solar Project from 8minute Solar Energy. The project is expected to begin producing power next year. Ardian joined with Transatlantic Power Holdings in 2018 to set up Skyline, which initially focused on wind-energy development. The Galloway deal represents the company’s first foray into solar power.
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The growth-investing arm of Providence Equity Partners has agreed to acquire a majority stake in cloud-based trust services provider Signaturit Solutions. The Barcelona-based company’s software as a service is used by customers to sign and send legal documents digitally. The company has more than 2,500 customers across over 40 countries, according to a news release.
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Arcline Investment Management has acquired a controlling interest in machine and tooling company Syneo from Rockwood Equity Partners. West Palm Beach, Fla.-based Syneo provides automated production systems to medical device makers and contract manufacturers serving the electronics industry. Rockwood led a management buyout of the company in February 2019.
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ION Crossover Partners and Viola Growth led a $120 million growth investment in digital market analysis company SimilarWeb Ltd. The money will be used to support product development as well as acquisitions by the Israel-based company, according to a news release.
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Rock Mountain Capital is backing California telecommunications company GeoLinks, taking a minority stake in the Camarillo-based business through its growth investment.
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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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Altamont Capital Partners has merged Colorado Boxed Beef with Palladium Equity Partners-backed Quirch Foods, retaining a stake in the company that will be run by Frank Grande, Quirch’s president and chief executive. Altamont initially backed Colorado Boxed Beef in 2017.
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Blackstone Group is gearing up to market its ninth secondary fund next year, according to the firm’s president and chief operating officer, Jonathan Gray. On a call after Blackstone’s third quarter earnings Wednesday, he said that secondary deals are a derivative of a broader "mega trend" toward alternative investing, adding that more than $100 billion of the $6 trillion held in alternative assets trades annually for a variety of reasons. “Obviously as an asset class grows, there are needs for liquidity; institutions changed strategies. They change CIOs. Yet this business just does not have many scale players,” he said. Blackstone’s secondary unit raised $11.1 billion for its eighth flagship secondary fund
in 2019 and collected another $1.9 billion for its seventh real estate secondary fund earlier this year.
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StepStone Group has collected $35 million so far for a debut fund geared to individual investors, through its StepStone Group LP subsidiary. The Conversus StepStone Private Markets fund will focus on secondary private-equity investments with the fund, though it may move into primary investments later, according to a news release. The evergreen fund is expected to hold monthly closings and quarterly tender offers to provide investors with liquidity options, and is open to small institutions and accredited individuals with a $50,000 minimum investment.
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Luxembourg-based firm Castik Capital has reached the final close of its second buyout fund at a hard cap of €1.25 billion ($1.47 billion), Elisângela Mendonça writes for sister publication Private Equity News. The fund, EPIC II, has a similar strategy to its predecessor, closed in 2016 at €1 billion. It aims to make up to seven investments in continental Europe of €200 million to €700 million and with around €100 million to €300 million of equity committed per deal.
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Baring Vostok's Michael Calvey appears at a court hearing earlier this month in Moscow. His arrest last year highlighted the risks of doing business in Russia. PHOTO: SERGEI KARPUKHIN / ZUMA PRESS
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Shareholders of Russia’s Vostochny Bank came to a multimillion-dollar settlement Wednesday to resolve a corporate dispute at the heart of a criminal case against Michael Calvey, a U.S. private-equity executive whose arrest last year on fraud charges shook foreign investors’ confidence in doing business in Russia. Mr. Calvey’s Moscow-based firm, Baring Vostok Capital Partners, and its partner in Vostochny Bank, owned by Russian businessman Artyom Avetisyan, agreed to withdraw their claims against each other in Russian and foreign courts, a move that could bode well for the Mr. Calvey’s court case, Thomas Grove reports for the Journal.
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Lower midmarket private-equity firm Sole Source Capital said it has hired Timothy Cavitt as vice president of operations to work with the firm’s portfolio company leadership teams. Mr. Cavitt previously served as chief operating officer for Voltea, a Dutch water technology company. His career also includes a stint with the Gores Group, where he worked with Sole Source Partner Dewey Turner, according to a press release.
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Law firms Ropes & Gray LLP and Latham & Watkins LLP each announced a swath of promotions to their partner ranks that included attorneys focusing on private-equity. Ropes & Gray said it promoted 16 attorneys to partner while Latham named 33 new partners, according to press releases announcing the promotions.
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Michael Arougheti, chief executive and president of Ares Management Corp. PHOTO: PATRICK T. FALLON / BLOOMBERG NEWS
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Ares Management’s assets under management rose 24% to $179.2 billion in the third quarter compared with $144.3 billion in the same period a year earlier, as the Los Angeles-based firm raised $12.7 billion in gross new capital during the quarter, according to an earnings presentation posted on its website. While fee-paying assets climbed to $112.7 billion, the firm said it has $52.5 billion in available capital to invest, up 55% from the year-ago quarter. Ares’s net income rose to $47.5 million, or 27 cents a share, in the just-ended quarter, from $33.3 million, or 23 cents a share, in the year-earlier period.
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The Investment Management Corp. of Ontario, which manages about 70.3 billion Canadian dollars (roughly $52.8 billion) in assets for public pension systems, has invested C$1 billion across three private-equity funds. The Toronto firm didn’t describe how much it invested in each fund, but identified the vehicles as Kohlberg & Co.’s Kohlberg Investors IX, Nordic Capital’s Nordic Capital X and Morgan Stanley Capital Partners’ North Haven Capital Partners VII. IMC said it expects 2020 to be “a strong vintage year” for private equity.
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Cyber-fraud-prevention startup NS8 Inc. filed for bankruptcy protection Tuesday after its former chief executive was arrested on fraud charges last month and an investor put up $10 million to finance a litigation campaign over the company’s sudden collapse, Andrew Scurria reports for WSJ Pro Bankruptcy. Las Vegas-based NS8 said it would use the chapter 11 process to stave off a cash crunch while launching lawsuits against founder and former Chief Executive Adam Rogas and others who collected money from the company before it went under. Company backers included Lightspeed Venture Partners and AXA Venture Partners.
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Blackstone posted slightly higher net earnings for the third quarter as its focus on technology-related investments helped its private-equity portfolio rise above already buoyant broader markets. Carlyle Group’s third-quarter earnings jumped as the value of investments in some of the firm’s U.S. and Asia buyout funds posted strong appreciation, but the amount of cash that could be distributed to shareholders fell.
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Americans would be allowed to wait longer to withdraw money from their retirement accounts and have an easier time finding old, forgotten accounts under a bipartisan proposal that contains a broad mix of measures to encourage retirement savings, Anne Tergesen and Richard Rubin report for the Journal. The offering from Rep. Richard Neal (D., Mass.), chairman of the House Ways and Means Committee, and Rep. Kevin Brady (R., Texas), the panel’s top Republican, builds on bipartisan retirement-policy changes enacted last year and is an example of an initiative that could advance even in a divided government next year. A Federal Reserve report in May said that fewer than half of Americans with retirement savings
felt their plans were on track, and about a quarter had no retirement savings at all.
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