Happy Monday! We start the week with a $1.2 billion continuation fund that Antares Capital has raised with the backing of Ares Management, as WSJ Pro’s Rod James reports. Initially more common in buyout strategies, continuation funds are quickly spreading to the private-credit market.

Also, private-equity firms continue to struggle to sell assets and return capital to investors, with distributions trailing historical levels for the past three years, WSJ Pro’s Maria Armental reports, citing data from Bain & Co. Hugh MacArthur, the consulting firm’s global private-equity practice chairman, explains what's afoot.

Now onto the news ...

Ares Management backed a $1.2 billion continuation fund that Antares Capital raised to acquire the holdings from investors that chose to sell their share of more than 100 outstanding loans to businesses, WSJ Pro’s Rod James reports, citing a joint statement by the two credit specialists. Ares’s secondary funds put up a majority of the capital, while Antares also made a commitment to the continuation fund. The use of continuation funds in the private-credit market has spiked in the past 18 months as managers look for ways to help fund backers cash out their illiquid investments. There are at least three other credit continuation funds currently being raised that are likely to exceed $1 billion in size, according to one secondary buyer.

Midway through what was expected to be a recovery year, private equity’s dealmaking and fundraising remain in the dumps, WSJ Pro’s Maria Armental reports, based on an interview with Hugh MacArthur, global private-equity practice chairman at consulting firm Bain & Co., and its latest industry report. The amount of capital sent back to buyout fund investors as a percentage of net asset value, an industry measure, has for the past three years trailed historical levels that ranged around 20% to 30% from 2010 to 2020, marking the first time distributions have been that low for so long. The ratio fell to 11% last year, nearing the historic low of 8% in 2009.

WSJ Pro Private Equity is embarking on its latest Survey of Secondary Market Buyers, which we use as the basis for compiling our annual special report on the latest trends shaping the secondary market. Secondary buyers can complete the survey by June 20 through the following link.

Shamrock Capital Advisors has sold master recordings of works by pop icon Taylor Swift to the singer, who said the deal brings tears to her eyes at random moments, Anne Steele reports for the Journal  “All of the music I’ve ever made…now belongs…to me,” she said on her website. Shamrock bought the rights to recordings of her first six albums in 2020. Swift’s Eras Tour, which wrapped up in December after selling over 10 million tickets to 149 shows, generated revenue of about $2.2 billion, the Associated Press has reported, citing Pollstar data.

Summit Partners-backed independent film business Mubi has received a $100 million growth injection led by Sequoia Capital, according to a LinkedIn post by Mubi founder and Chief Executive Efe Cakarel.The deal valued the London-based streaming services provider at about $1 billion, the Financial Times reported, confirming an earlier report in show business publication Variety. Summit first backed Mubi in 2021.

Carlyle Group and SK Capital Partners expect to complete their take-private of Bluebird bio on Monday, after receiving tenders from shareholders with nearly 60% of the gene-therapy company’s stock. The firms offered $3 a share for the Somerville, Mass.-based company plus rights to as much as $6.84 a share in cash contingency payments.

HarbourView Equity Partners in Newark, N.J., has agreed to buy certain catalog assets from producer and singer-songwriter Rodney "Darkchild" Jerkins in a deal facilitated by music technology company Chapter Two in Sweden. Set up in 2021, HarbourView focuses on the sports, media and entertainment sectors. The firm has about $2.67 billion in regulatory assets under management.

Startup investor General Catalyst invested $1 billion in artificial intelligence-driven Grammarly, drawing the capital from the firm’s Customer Value Fund. The San Francisco-based company, which General Catalyst first backed in 2017, plans to use the fresh capital to further develop applications and for acquisitions.

Pollen Street Capital vehicle Lumon Acquisitions no longer plans to make a formal offer to buy London-listed currency trading company Argentex Group, Ian Walker reports for Dow Jones Newswires. The decision followed the pullout of another prospective bidding group formed by founder and former Chief Executive Harry Adams and Terry Clune on Thursday. The company said near the end of April that it had agreed to a roughly £3 million deal, equivalent to $4 million, with rival company IFX Payments that would give investors 2.49 pence a share in cash.

Clearlake Capital-backed Quest Software has received fresh capital in the form of $350 million in new term loans as part of a recapitalization. The Aliso Viejo, Calif.-based company’s existing lenders provided the new loans.

Azalea Capital in Greenville, S.C., is backing anti-cramping drinks maker Pickle Juice Co. with a growth investment. The Mesquite, Texas-based business sells its electrolyte-rich grain and vinegar blends in stores and online.

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

The Canada Pension Plan Investment Board is selling its 98% interest in Utica shale oil producer Encino Acquisition Partners to strategic buyer EOG Resources, which is acquiring the operation for $5.6 billion, Dean Seal reports for the Journal. CPP Investments formed Houston-based Encino Acquisition with Encino Energy in 2017. Encino brings with it about 675,000 acres in the Ohio Utica shale, bringing EOG's combined position in the Utica to a combined 1.1 million net acres. 

Permira in London scored nearly €1.5 billion, or almost $1.71 billion, in expected proceeds from the roughly $8 billion acquisition of data-management software firm Informatica by strategic buyer Salesforce, announced last week, a source familiar with the matter tells WSJ Pro’s Ted Bunker. The cash deal is expected to provide a return of about 2.6 times invested capital to Permira, the source indicated. Permira and the Canada Pension Plan Investment Board, which first backed the business in 2015, expect to split $4.7 billion in cash for their Informatica stakes from the $25-a-share deal. CPP Investments expects its net proceeds from the Salesforce acquisition to be $2.7 billion. Permira and CPP Investments own roughly a third and a quarter of the Redwood City, Calif., company’s listed shares.

Spark Capital-backed game maker Niantic has sold its games business to strategic buyer Scopely in a deal valued at about $3.5 billion. Titles transferred in the deal include Pokémon GO and Pikmin Bloom. Niantic retained its technology and based a new business, Niantic Spatial, on the assets to focus on geospatial artificial intelligence, maps and enabling devices. Spark has been a backer of the San Francisco company since at least 2017.

Private-equity firm MidEuropa in London is selling ophthalmology company Optegra to strategic buyer EssilorLuxottica to advance the latter’s medical technology strategy, Andrea Figueras reports for the Journal. Optegra operates a network of over 70 eye hospitals and diagnostic facilities across the U.K., Czech Republic, Poland, Slovakia and the Netherlands, under brands that include Lexum and Iris. MidEuropa acquired the business in 2023.

Multi-strategy investment firm Pantheon, majority owned by Affiliated Managers Group, has rounded up more than $537.8 million for its Pantheon Partners Participation fund, with commitments from 111 investors so far, a securities filing shows. The amount represents a roughly 14% increase over the $473 million reported for the fund about a year ago, when the firm listed 101 investors. Pantheon began raising capital for the vehicle in 2014, filings show. Filer Pantheon Ventures (US) group had about $75.29 billion in regulatory assets under management at the end of September, according to a separate filing.

China Galaxy Securities and GL Capital Management are setting up a private-equity fund to invest in healthcare device developers located within members of the Association of Southeast Asian Nations, according to Malaysian news service Bernama and Dow Jones Newswires. The fund agreement is one of several between the Chinese securities company and other organizations, including a commitment to develop a second PE fund targeting high-growth sectors in the ASEAN member states.

Hedge fund investor Steve Diggle, who cashed in on credit mispricing before the financial crisis and delivered some $3 billion to investors, tells Jules Rimmer with sister publication Marketwatch that he sees “a lot of the same complacency and mispricing of risk we witnessed before the global financial crisis began to bubble in 2007.” By comparison, this year, he added, “the bubble and the dangerous leverage is centered on private equity and private credit.”

Marc-André Blanchard is leaving Canadian pension manager Caisse de dépôt et placement du Québec to become chief of staff for Canada’s newly elected prime minister Mark Carney. Blanchard joined CDPQ in 2020 and most recently served as executive vice president and global head of CDPQ Global as well as global head of sustainability.

Ross Kari, the chairman of Goldman Sachs business development company Goldman Sachs Private Middle Market Credit II, plans to step down effective May 1 of next year, according to a regulatory filing. The BDC, formed in December 2018, listed assets of almost $2.11 billion at the end of March, down about 5.2% from the end of December, in a separate filing. Kari is also leaving his seat on the boards of several other private-credit entities created by the bank, filings show. Goldman Sachs Asset Management guides investments for the BDC, which typically lends $10 million to $75 million per deal to mainly private U.S. companies with adjusted pre-tax earnings of $5 million to $200 million.

Apollo Global Management and Fidelity Investments had their ownership rights to a formerly bankrupt oil driller restored by a federal appeals court on Friday in a ruling that stripped control of the company, now known as Mesquite Energy from a rival lender group, WSJ Pro’s Akiko Matsuda and Andrew Scurria report. The appeals court reversed a bankruptcy court ruling in 2023 that limited Apollo and Fidelity to a roughly 30% stake in the company, then called Sanchez Energy, and gave majority control to a group of unsecured creditors.

The default rate among middle-market borrowers in the U.S. likely will remain elevated for the rest of this year as interest rates stay at higher levels than many credit deals anticipated, Fitch Ratings said Friday in a report citing its privately monitored rating portfolio. The credit ratings provider defines midmarket companies as those with adjusted pretax earnings of around $100 million or less. Most of their borrowing consists of term loans from alternative lenders. Fitch said the default rate stood at 7.8% in this year’s first quarter, down slightly from 8.1% in the previous three-month period.

The Alaska Permanent Fund ended March with assets of roughly $80.8 billion and notched an investment return of 4.55% for the 12-month period ended March 31, outperforming its benchmark performance rate by 29 basis points, or nearly one half of 1 percentage point, but trailing a 5.5% return objective. The sovereign wealth fund’s trustees stuck with a prior goal of investing 18% of its assets in private equity for fiscal 2026.

The Polish Development Fund’s investment arm aims to deploy at least €150 million, or about $170 million, in venture funds of firms that back breakthrough and dual-use technologies through a fund-of-funds program called PFR Deep Tech. The PFR expects about half the capital to come from private and institutional partners.

Financing provider Farm Credit Canada in Regina, Saskatchewan, plans to invest 2 billion Canadian dollars, or $1.46 billion, by 2030 in the nation’s food and agriculture industries through an investment arm established last year. The organization aims to back agricultural technology innovators from its FCC Capital arm, which closed on nine deals last year with commitments totaling C$170 million.

Asset manager M&G in London is set to sell a 15% stake in its operations to Japanese insurer Dai-ichi Life as part of a deal to become the carrier’s preferred fund house in Europe, the Journal reports. Publicly traded M&G expects the arrangement to generate at least $6 billion in new business for its funds over the next five years.

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

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