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Veritas Raises $400 Million Debut Credit Fund | Blackstone Closes $8 Billion Long-Term Fund
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Good morning. We’re a week away from Election Day in the U.S. and it’s been a campaign like none before it, with masked candidates and virtual pitches to voters across the country. Investors reading the tea leaves have pushed up the costs of hedging against a sudden drop in equities, S&P Market Intelligence reports, citing put options on the S&P 500 Index which have jumped as much as 50% in a month. Meanwhile, BlackRock Inc. says Treasury yields could rise under a united Democratic government post-election, and that the market is increasingly pricing in that scenario. If that prospect causes heart palpitations, consider what Jackson Hole Economics founders
Larry Hatheway and Alex Friedman say in Barron’s: Democrats have actually been good for markets and growth.
In today’s private-equity news, our Laura Cooper details a new credit fund from Veritas Capital, and I have a look at Blackstone’s second long-life private-equity fund, which raked in about $8 billion amid the coronavirus pandemic. All that and more await below, so please read on…
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New York-based Veritas Capital has already invested about 30% of a new credit fund, a person familiar with the matter said. PHOTO: RICHARD B. LEVINE / ZUMA PRESS
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Private-equity firm Veritas Capital closed its maiden credit fund last week, collecting $400 million to invest in companies at the intersection of technology and government, WSJ Pro Private Equity's Laura Cooper reports, citing people familiar with the matter. The New York firm started fundraising last year for its Veritas Capital Credit Opportunities Fund LP and already has invested in 17 companies through the strategy, according to one of the people. Those deals have allowed the firm to put 30% of the new fund to work.
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Blackstone Group Inc. has collected $8.2 billion for its long-hold private-equity fund, raising most of it during the initial surge of the coronavirus pandemic, Ted Bunker writes for WSJ Pro Private Equity. The New York firm said its Blackstone Core Equity Partners II LP fund closed to new investors at its hard cap and is roughly 70% bigger than its predecessor. Blackstone invests its core equity funds in more durable businesses that entail less risk and holds the investments for longer periods than its flagship Blackstone Capital Partners funds, which have collected much greater sums.
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Mid-market 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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73%
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The proportion of U.S. colleges and universities that have seen declines in occupancy of school-owned housing as the academic year began, with 65% saying enrollment had fallen and 23% saying the number of students on campus had dropped by more than half from last year, according to a survey by consulting firm NEPC in Boston
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Dunkin’ in late July said it would close around 800 U.S. locations that had low sales volumes. PHOTO: LEV RADIN / ZUMA PRESS
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Inspire Brands, backed by consumer-focused private-equity firm Roark Capital Group, has held early talks to take Dunkin’ Brands Group Inc. private, Dave Sebastian and Heather Haddon write for Dow Jones Newswires. Inspire's chains include Arby’s, Buffalo Wild Wings and Jimmy John’s. Dunkin’ Brands, the parent of Dunkin' and Baskin-Robbins, said Sunday that there was no certainty that any agreement would be reached.
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New Mountain Capital has agreed to acquire vitamin supplier Natrol LLC, the U.S. unit of Aurobindo Pharma Ltd., for about $550 million, P.R. Venkat reports for Dow Jones Newswires. New Mountain said it plans to combine the Los Angeles-based business with its portfolio company Jarrow Formulas Inc. The deal is expected to close by January.
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Carlyle Group Inc. has agreed to acquire mutual funds transaction network provider Calastone Ltd. from Octopus Ventures and Accel, investing alongside management of the London-based company. Accel initially backed the company in 2013, during a Series B fundraising, according to its website. The company processes investment transactions with more than £200 billion (equivalent to $260.33 billion) in value each month for more than 2,300 clients across 43 countries. Octopus said the deal provided it with an 18-fold return on its initial investment and a ninefold return overall, Elisângela Mendonça reports for sister publication Private Equity News in London.
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Pacific Equity Partners and Carlyle Group have sweetened their take-private bid for Australian pension fund manager Link Administration Holdings Ltd., raising their offer to 5.40 Australian dollars (or about $3.85) a share after the Sydney company rejected a A$5.20-a-share bid as inadequate, Stuart Condie reports for Dow Jones Newswires. The new bid includes a cash-and-scrip option that would let Link shareholders maintain exposure to the company's stake in digital property services unit PEXA, Link said. Link said last week it would consider spinning off its PEXA stake.
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AE Industrial Partners has acquired cybersecurity company PCI LLC, making the deal through its $1.36 billion AE Industrial Partners Fund II. The Columbia, Md.-based company specializes in government contracting and provides cloud engineering, network and technology infrastructure, operations and analytics services.
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Carlyle Group Inc. has acquired warehouses and other real estate assets focused on parcel delivery in urban areas of France and Germany. The firm acquired the 27 properties with 158,000 square meters of space in a sale-leaseback transaction through its €540 million ($637.9 million) Carlyle Europe Realty fund.
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Brookfield Asset Management Inc.’s publicly listed affiliate Brookfield Business Partners LP has agreed to acquire the remaining common stock of Genworth MI Canada Inc., which operates as Sagen MI Canada, that isn’t already controlled by Brookfield entities, for 43.50 Canadian dollars (about $33) a share. Brookfield already owns about 57% of the residential mortgage insurer's shares outstanding. The price represents a roughly 22% premium to the Toronto Stock Exchange closing price on Friday. Genworth’s board of directors is supporting the offer.
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Growth investor PeakEquity Partners led a $47 million series A investment round in mobile device forensics company Grayshift LLC, taking a minority stake in the provider of access and extraction services focused on locked and encrypted mobile devices. Including phones. The Atlanta-based company serves only government agencies in the U.S. and two dozen other countries.
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Media and entertainment specialist Atwater Capital has agreed to buy a minority interest in Freepik Co., joining EQT in backing the Malaga, Spain-based company. EQT acquired a majority stake in July. Freepik maintains a free-access database of visual resources.
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Lion Equity Partners has acquired bedsheet and bath towel distributor T-Y Group and Harbor Linen from retailer Bed Bath & Beyond Inc. Denver-based Lion equity intends to combine the carved out units with its Riegel linen portfolio company.
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U.K. development finance organization CDC Group has committed an additional $40 million to Liquid Telecommunications Holdings Ltd. as part of a $307 million investment round to finance expansion of the company’s African data center operations. CDC initially backed the company in 2018 with a $180 million 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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TPG-backed Asklepios BioPharmaceutical Inc., a gene therapy company, is being acquired by Bayer AG for $2 billion up front plus as much as $2 billion more once certain milestones are reached. TPG initially invested in the company last year and has more than doubled its investment so far—and that return could grow based on the possible milestone payments, WSJ Pro Private Equity’s Laura Cooper reports, citing a person familiar with the matter. Bayer is betting the deal will strengthen its drugmaking arm, The Wall Street Journal’s Ruth Bender reports from Berlin.
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Latin American specialist Aqua Capital has agreed to sell Fertiláqua, a plant-nutrition company in Brazil, to ICL Group Ltd. in Israel for about $120 million. The deal includes more than 100 different Fertiláqua products and opens the Brazilain market to ICL, a specialty minerals and chemicals company. Aqua Capital acquired the business in 2013.
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Warburg Pincus- and GTCR-backed Sotera Health Co. has registered for an initial public offering of shares, a regulatory filing shows. Warburg invested in the Broadview Heights, Ohio-based provider of sterilization, therapy and other medical services through its 11th flagship fund in 2015. GTCR in Chicago first backed the company in 2011.
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Egypt-focused Lorax Capital Partners has raised at least $142 million for its second private-equity fund, including $50 million each from the European Bank for Reconstruction and Development and the Egyptian American Enterprise Fund in New York. The firm in Cairo has about $200 million under management and has targeted $250 million as the fundraising goal for its second investment vehicle, which has held a first close. Other investors in the fund include International Finance Corp. and Proparco. On Monday, Lorax named Apex Group Ltd. as the fund’s administrator.
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Thoma Bravo has hired Oliver Thym as a partner to lead its credit investment business, which focuses on software and technology company debt. Mr. Thym joins from Goldman Sachs Group Inc., where he was a partner and head of the merchant banking division’s private credit group in the Americas. The Thoma Bravo strategy has committed $3.5 billion to investments across 48 issuers since the firm began the operation in 2017.
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Caisse de dépôt et placement du Québec has named Michel Lalande as vice president legal affairs and secretariat, to manage all of CDPQ's legal and regulatory activities. Mr. Lalande will join CDPQ in January. He was most recently chief legal officer of BCE Inc. and Bell Canada.
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Middle market-focused Calera Capital has named Kevin Miller as an operating partner to help the firm evaluate and operate health-care and business-services investments. He is currently chairman of pain-management company National Spine & Pain, and is a former executive chairman of Prospira Paincare and chief executive of dental services company Benevis.
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Ares Management Corp. has hired Raj Krishnan as a partner and chief investment officer of its Ares Insurance Solutions unit. Mr. Krishnan joins from F&G Annuities & Life, where he was an executive vice president and CIO overseeing a $28 billion investment portfolio. He will also develop an asset-allocation strategy for Ares’s Aspida Holdings, an insurance business that is acquiring F&G Reinsurance Ltd.
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A Rubio’s location in San Diego in July. The company recently withdrew from the Colorado and Florida markets, permanently closing restaurants there. PHOTO: RISHI DEKA / ZUMA PRESS
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Golub Capital- and Mill Road Capital-backed Rubio’s Restaurants Inc. is seeking bankruptcy court protection, citing restrictions imposed on its more than 150 stores because of the coronavirus pandemic, Becky Yerak reports for WSJ Pro Bankruptcy. Golub and Mill Road invested in the firm through a $91 million take-private transaction in 2010. The Carlsbad, Calif.-based company operates Mexican-style restaurants in California, Arizona and Nevada.
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Chinese financial-technology giant Ant Group Co. is set to raise at least $34.4 billion from the world’s biggest-ever initial public offering in a blockbuster deal that will bypass U.S. stock exchanges, Stella Yifan Xie and Jing Yang write for The Wall Street Journal, citing company filings. The mammoth IPO, which spans the Shanghai and Hong Kong stock exchanges, adds to an already frenetic year for China’s capital markets, which are enjoying a boom in share sales despite heightened U.S.-China tensions.
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U.S. insurance giant American International Group Inc. plans to sell or spin off its life insurance and retirement unit as the company continues to reshape its business under Brian Duperreault, the chief executive who took over amid a crisis in investor confidence in 2017, Leslie Scism reports for The Wall Street Journal. The company’s revitalized property and casualty arm has improved growth prospects while historically low interest rates dim the outlook for the life group’s performance.
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Investors in public equities and other securities are warming to the notion of a Democratic sweep of next week’s national elections, Jackson Hole Economics founders Larry Hatheway and Alex Friedman write in sister publication Barron’s. They cite an uptick in long-term real interest rates, which suggests an expectation of accelerating economic growth, as an indication of an anticipated injection of stimulus next year under a Democratic administration and Senate. The writers also point to gains in investment themes focused on small-capitalization value and growth over defensive issues and cyclical leaders including industrials, consumer discretionary and information technology stocks trouncing energy and
health care.
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KPS Capital Partners got a leg up over potential rivals in the bidding for bankrupt auto-parts maker Garrett Motion Inc., which plans to sell itself through a competitive bidding process, when a judge authorized Garrett to designate the KPS offer as the best proposal so far, Soma Biswas reports for WSJ Pro Bankruptcy. Judge Michael Wiles of the U.S. Bankruptcy Court in New York said Garrett could tap KPS as the lead bidder, or stalking horse, to set a minimum price for the company and also approved $84 million in breakup fees and expenses for the proposed deal. Most Garrett shareholders have opposed the KPS deal.
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Private-equity-backed insurance and employee-benefit agencies continued to dominate takeover deals in the North American market, boutique investment bank Optis Partners reports. The Chicago-based firm said the coronavirus pandemic dented the flow of deals but only scarcely, as the number of mergers and acquisitions involving brokers rebounded to 170 announced transactions in the third quarter and 466 for the first nine months of the year, down 7% from the same period in 2019. Agency holding companies backed by private equity accounted for about 70% of the deals.
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The Dow Jones Industrial Average dropped about 650 points Monday, or 2.3%, as coronavirus cases surged, adding to worries about the economic outlook after Congress and the White House failed to agree on a much-anticipated fiscal stimulus deal, Anna Hirtenstein and Paul Vigna report for The Wall Street Journal. The S&P 500 Index sank 1.9% and the Nasdaq Composite lost 1.6%. All three market barometers have fallen more than 5% from records set earlier this year.
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