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Clearlake Lands Connecticut Cash | L.A. County Bulks Up for Co-Investing | SEC Panel Eyes Main Street
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Bigger doesn't necessarily mean better. The pace of private-equity fundraising sometimes raises concerns among investors, as Preeti Singh shows in her look at deliberations by Connecticut’s main public pension over investing in a new Clearlake Capital fund that's nearly twice as big as its predecessor. On the other hand, as Ms. Singh also shows in a look at the main Los Angeles County pension, increasing volume is definitely better when it comes to co-investment deal flow.
Market size underlies the debate over letting Mom & Pop investors into private-equity funds, a concept that went under the SEC's microscope in Washington this week. Chris Cumming has details. Finally, Laura Cooper worked the sidelines of the J.P. Morgan Healthcare Conference in San Francisco this week to gauge the views of some participants on what’s in store in 2020. Our first installment appears below, so please read on...
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Sanitation workers clean up a park in Los Angeles County. A pension for county employees is trying to expand its co-investment deal opportunities. SARAH REINGEWIRTZ/ZUMA PRESS
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Co-investing conundrum: A Los Angeles County pension fund aims to increase the number of deal opportunities for its internal co-investment program with help from outside managers as a way to expand its participation in the strategy, WSJ Pro's Preeti Singh reports. The Los Angeles County Employees Retirement Association, with about $60 billion in assets, has relied on the general partners of funds it invests in for co-investment deal opportunities, but in all of last year, the fund had access to just 19 potential deals and invested in only one—committing $20 million in a transaction involving a supplier of heating and air-conditioning systems.
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Be careful: Two giant private-equity firms have told regulators that ordinary investors could benefit from access to private markets, but that any rule changes would need to be thought through carefully, Chris Cumming reports. Speaking before the Securities and Exchange Commission’s new asset-management advisory committee on Tuesday, representatives of Blackstone and Apollo Global Management discussed the advantages and dangers of giving so-called individual investors access to the asset class.
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Nutmeg State buy-in: Clearlake Capital is steadily picking up commitments for its latest flagship fund, despite the proposed fund’s massive step up in size, Preeti Singh reports. The Connecticut Retirement Plans and Trust Funds has recently approved a $75 million commitment to Clearlake Capital Partners VI LP, which has an upper size limit that is nearly double the $3.6 billion that Santa Monica, Calif.-based Clearlake raised for the fund’s predecessor in 2018.
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Dispatch from the J.P. Morgan Conference
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Kip Kirkpatrick, Vistria Group. PHOTO: SHAWN LEE/SHAWN LEE STUDIOS
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WSJ Pro's Laura Cooper sat down with Kip Kirkpatrick, senior partner and co-chief executive of health-care focused private-equity firm Vistria Group.
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Q:
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How will the 2020 U.S. election affect the way you invest in health care?
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A:
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There is always a lot of noise around elections. But we work to stay focused on our investment strategy and are committed to it. We’re not going to deviate from our focus on longer term trends every time America goes to the ballot box. We’ve been successful using this philosophy and there’s no reason to change it now.
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Q:
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What health-care investment themes do you find most attractive in 2020 and why?
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A:
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We think the hospice space is interesting. We expect near-and-medium term growth in the space as the baby boom generation ages. But perhaps more importantly, high-quality end-of-life care is an essential component to our society’s health care and investing in it is consistent with our investment philosophy. There is nothing more important than providing quality health care to people when they are most vulnerable.
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Pretium makes jars for food and other types of plastic containers. PHOTO: FRANCISCO SECO/ASSOCIATED PRESS
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Genstar Capital has sold Pretium Packaging to fellow private-equity firm Clearlake Capital, according to a news release from Clearlake. Although terms of the deal weren't disclosed, sources with knowledge of the transaction said the company sold for at least $850 million. Genstar initially acquired Pretium from fellow private-equity firm Castle Harlan in 2014 for around $331 million, WSJ Pro reported at the time.
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Middle-market focused Gemspring Capital has acquired Skyline Displays LLC and its biggest independent dealer, TradeTec. The combined enterprise will continue to operate under the Skyline name. The Eagan, Minn.-based company provides displays and other exhibit features for trade shows and large corporate events and already owns 27 retail stores around the U.S.
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Los Angeles-based private investment firm Skyview Capital has acquired Fidelis Cybersecurity Inc., a software provider that helps corporations detect and respond to cybersecurity threats.
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MiddleGround Capital, a midmarket firm focused on industrials and specialty distribution companies, has acquired EDSCO Fasteners, which manufactures systems used to anchor power transmission poles and large steel structures. MiddleGround said the deal is the fifth investment out of its debut fund.
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May River Capital, a Chicago-based midmarket buyout firm, has acquired Cleveland-based lab testing company NSL Analytical Services.
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Comvest Partners has invested in appliance repair parts supplier Encompass Supply Chain Solutions Inc., based in Lawrenceville, Ga. The West Palm Beach, Fla.-based firm focuses on middle-market buyouts with investments of $35 million to $125 million.
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Three is not a crowd for real estate software provider MRI Software. The Ohio-based company said it received a substantial growth investment from private-equity firm Harvest Partners, which joins the company’s two existing institutional investors GI Partners and TA Associates.
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XPO Logistics Inc. has retained Goldman Sachs & Co. and J.P. Morgan Securities to advise its directors on selling parts of the transportation services company. But chairman and chief executive Bradley Jacobs said the Greenwich, Conn.-based company doesn’t intend to part with its North American partial truckload business.
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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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Carlyle-backed specialty-chemicals company Atotech Ltd. has registered for an initial public offering on the New York Stock Exchange and would trade under the symbol ATC. The documents made public Wednesday don’t include how much of its equity would be offered or at what price, Maria Armental reported for Dow Jones Newswires. Carlyle bought the U.K. business from French oil giant Total for $3.2 billion in 2017. Atotech had about $2.16 billion in debt as of Sept. 30, the documents show.
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Growth investors Stripes LLC and Ambrosia Investments have exited plant-based beverage maker Califia Farms through a $225 million financing round led by the Qatar Investment Authority. Other investors include investments from Singapore’s Temasek Holdings, Claridge Inc., Green Monday Ventures and another family office. Los Angeles-based Califia said the new investors obtained a minority interest in the maker of oat milk and plant-based foods founded by chief executive Greg Steltenpohl.
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KKR has completed raising capital with commitments of $2.2 billion for its KKR Next Generation Technology Growth Fund II, which is focused on growth equity investment opportunities in North America, Europe and Israel. The total is more than triple the amount brought in by its predecessor fund, which closed in December 2016. The new fund will typically write checks of more than $50 million for investments in enterprise software, security, internet, digital media, financial technology, data services and tech-enabled services. Examples of the strategy are KKR’s deals involving cybersecurity firm KnowBe4 last March and OneStream Software LLC a month earlier.
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Boston-based HarbourVest Partners said it has closed its newest U.S. flagship fund of funds at $2.61 billion. The final tally for HarbourVest Fund XI exceeded a $2 billion target, according to the firm. Investors that have disclosed commitments to the fund include Calvert County Employees Retirement Plan and several state pension systems in Vermont. HarbourVest said in a news release that it has already committed 65% of the fund, which is earmarked for North American buyouts, micro-buyouts, growth equity and
venture capital funds, as well as secondary and co-investment deals.
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Clovis Point Capital said it has raised $70 Million for Clovis Point II to back growth investments in enterprise software companies and technology-enabled businesses with between $3 million and $15 million in recurring revenue.
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Laurence Fink, chief executive of BlackRock, which reported quarterly results Wednesday. PHOTO: ALEX KRAUS/BLOOMBERG NEWS
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BlackRock saw its assets balloon last year, surpassing $7 trillion as the New York asset manager started by Blackstone alumnus Laurence Fink became the undisputed leader in exchange-traded funds, The Wall Street Journal’s Dawn Lim reported. The diversified firm also dabbles in what it calls alternatives, which make up just 2% of overall assets but provided 9% of overall base fees in last year’s fourth quarter. BlackRock ended last year with about $75.35 billion of illiquid alternatives, up 26% from
the end of 2018, and cited “record activity” in the sector during the quarter as base fees doubled to $96 million. On an earnings call, Mr. Fink said illiquid alternatives, which include real estate, delivered 30% of the firm’s $450 million in 2019 performance fees.
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Clayton Dubilier & Rice has hired Harsh Agarwal as a principal on its investing team in New York, focusing on software and technology-enabled services. Previously, he worked for EQT Partners and TPG Capital.
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KKR partner Henry McVey posted his widely followed views on the year ahead Wednesday, saying Europe and Asia offer considerable opportunities for private-equity investors because of flawed public markets on both continents, as well as Asia's enormous millennial generation with its rising affluence. The buyout firm’s head of global macro & asset allocation also pointed to a preference for hard assets with cash flow—infrastructure, real estate, subordinated real estate credit and credit platforms that originate hard-asset loans backed by collateral—as winning strategies in a low-growth environment.
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The Abu Dhabi Investment Authority is planning to sell a $2 billion slice of its private-equity portfolio and has tapped PJT Park Hill to intermediate the deal, according to Bloomberg News. Trade publication Secondaries Investors reported back in September that the sovereign wealth investor was considering such a sale.
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Earnings and revenue quarter-to-quarter growth rates for private U.S. middle-market companies eased for the first time since the months leading to the 2016 U.S. presidential election, CFO Journal’s Mark Maurer reported. The companies recorded median year-over-year earnings growth of 10% in the first two months of the fourth quarter, down from 13.2% in the prior quarter, Golub Capital, a lender to the companies, said in a report. Year-over-year revenue growth slowed to 8.3% from 9.6% in the third quarter, the report added.
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Send us your tips, suggestions and feedback. Write to:
Ted Bunker, Laura Cooper, Chris Cumming, Luis Garcia, William Louch, Preeti Singh, Chitra Vemuri.
Follow us on Twitter: @LCooperReports, @LHVGarcia, @LauraKreutzer, @william_louch.
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