Oh, Man.

Advent International agreed to take Sapiens, an Israeli provider of insurance software, private. Currently, the company is traded on the Nasdaq.

The deal, expected to close in Q4 2025 or Q1 2026, is an all-cash transaction valued at approximately $2.5 billion, of which $1.2 billion will be funded through debt. Shareholders will receive $43.50 per share, representing a 64 percent premium over the company's undisturbed closing price of $26.52 on August 8, 2025. Following the acquisition, existing shareholder Formula Systems will retain a minority stake.

Learning The ABCCCs.

It’s not the firm’s first time in the insurance tech space. In 2017, for example, Advent bought CCC Intelligent Solutions, a SaaS platform serving the auto insurance ecosystem, from Leonard Green and TPG.

After that 2017 acquisition, Advent grew CCC’s scale and software capabilities, infusing over $500 million into research and development, which helped CCC expand beyond its core Estimating, Casualty, and CCC ONE suites into next-gen solutions like AI-driven photo analytics, Intelligent Reinspection, and Build Sheets for VIN-based parts tooling.

In early 2021, CCC merged with SPAC Dragoneer to go public as CCC Intelligent Solutions Holdings, retaining Advent as a significant investor (a 62.8 percent equity stake). Over the past four years, Advent has slowly offloaded that stake, currently holding just 5.7 percent of the company.

While the firm was set to IPO at a $7 billion market cap, its current market cap sits at just $6.29 billion.

R&D Ready?

Could an R&D-heavy strategy be replicable with Sapiens? Maybe — but it’s worth noting that Sapiens has a more diversified global customer base and larger scale, meaning integration may prove to be tricky.

An R&D-heavy strategy is feasible for Sapiens, but the spend will need to be more surgical than CCC’s broad platform build-out, likely focused on AI-enhanced underwriting/claims and API-driven integrations that can drive immediate cross-sell and upsell.

Advent International declined to comment.

PE portcos also saw some full and partial exits over the past two weeks, as well as some exits-to-be:

• Orchard Software, a U.S.-based provider of healthcare laboratory information systems backed by Francisco Partners, was acquired by CliniSys. Financial terms were not disclosed.

• One Equity Partners, Warburg Pincus, and Green Cement Investments sold Eco Material Technologies, a sustainable construction materials company, to CRH, the global building materials group, for $2.1 billion.

• EQT exited its remaining stake in Galderma Group, a skincare company it took public in 2024. The sale resulted in aggregate gross proceeds of CHF 2.1 billion ($2.6 billion), of which EQT received c. CHF 555 million. EQT initially invested in Galderma, then called Nestlé Skin Health, in 2019 when a consortium led by EQT and ADIA carved the company out from Nestlé for CHF 10.2 billion.

• Accel-KKR sold Smart Communications, a provider of customer communications management software for regulated industries, to Cinven for $1.8 billion. Accel-KKR acquired a controlling stake in Smart Communications in 2016 following its carve-out from Thunderhead.

• CD&R sold a 25 to 30 percent minority stake in Motor Fuel Group, a manufacturing solutions provider, to a group of institutional investors led by Apollo for £500 million ($677 million), or a £7 billion enterprise valuation. CD&R acquired MFG in 2021 in a transaction valued at £500 million and retains a controlling stake post-transaction.

• Frazier Healthcare Partners sold Elevate Patient Financial Solutions, a patient billing and revenue cycle services provider that the firm has held since 2019, to Audax Private Equity and Parthenon Capital Partners for an undisclosed amount.

• Crestview Partners exited Elo Touch Solutions, a U.S.-based touchscreen technology company, to Zebra Technologies in a $1.3 billion sale. Crestview acquired Elo in 2018 (terms undisclosed) and held a controlling stake.

• TPG sold Trustpoint, a provider of legal tech solutions, which the firm has held since 2023, to Francisco Partners. Financial details were not disclosed.

• Blackstone agreed to acquire Enverus, an energy analytics and SaaS platform, from Hellman & Friedman and Genstar Capital for between $6.1 billion and $6.4 billion.

• HeartFlow, a medtech firm backed by Bain Capital, went public on the Nasdaq with a valuation of $2.27 billion.

• Apollo acquired Trace3, a technology solutions and AI adoption services provider, from American Securities, which acquired the company in 2021 and will retain a minority stake. Financial terms were not disclosed.

• The Carlyle Group sold HSO, a Microsoft solutions integrator the firm has held since 2019, to Bain Capital for nearly $1 billion.

• Apollo acquired Kelvion, a global provider of heat exchange and cooling solutions, from Triton, which will retain a minority stake. The deal values the business at around €2 billion ($2.3 billion), including debt.

• EQT agreed to sell Nexon Asia Pacific, a mobile game publishing business, to Adamantem Capital. EQT initially acquired Nexon in 2019; financial terms of the sale were not disclosed.

Meanwhile, portco M&A was in full swing:

• Brookfield-backed Chorus Aviation agreed to acquire Elisen Associates Inc., an American aviation services firm. Financial terms were not disclosed.

• LeBronze Alloys, a UK-based manufacturer of copper alloy components backed by Astorg since 2024, acquired M-Lego, a metal fabrication specialist, from AUREA. Financial terms were not disclosed.

• Permira’s Versaterm, a defense tech company, acquired DroneSense, an American drone operations platform, for an unknown sum.

• Syspro, an enterprise resource planning software company owned by Advent International, acquired DataScope, a warehouse management software company, for an undisclosed amount.

• Healthcare optimization software provider Machinify bought Performant Healthcare, a healthcare revenue cycle management tech company, for $670 million. Machinify is owned by New Mountain Capital.

• Vista Equity-backed Cloud Software Group bought Arctera, a SaaS-based digital transformation company, for an unknown sum.

• Astorg’s Normec Group, a European compliance and certification services provider, acquired three U.S. companies to expand into North America: MS Bio, MJ Reider, and NorthEast BioLab. Normec has now completed over 85 acquisitions, bringing its total enterprise value to €2 billion. Terms of the deals were not disclosed.

• TA Associates-backed Rocscience, a structural and geotechnical engineering software company, acquired Rockfield, a UK-based provider of structural modeling solutions, for an undisclosed amount.

• AVS Bio, an Arlington Capital Partners-backed protein production company, bought ImmunoPrecise Antibodies Europe from ImmunoPrecise Antibodies Ltd, a Canadian biotech firm, for $12 million.

• Apleona, a real estate management firm backed by Bain Capital, acquired Corrigenda, a software solutions provider. Terms were not disclosed.

• Altus Fire and Life Safety, a provider of fire protection and life safety solutions backed by Apax Partners, acquired Star Fire Protection for an unknown amount.

• Westland Insurance, a Canadian insurance brokerage firm backed by OTPP, bought Paul Ayotte Insurance Brokers, expanding its presence in Ontario. Financial terms were not disclosed.

And there were some key people moves:

• At Shamrock Capital, Michael LaSalle and Andrew Howard were promoted to co-president and partner, while Stephen Royer moved from president and partner to chairman and partner.

• Maggie Anderson joined JLL Partners as an operating partner, bringing over 25 years of healthcare experience with her, including senior roles at DaVita and Lifeline Vascular Care.

New KX.

TA Associates is buying a majority interest in FD Technologies plc, the London-listed parent company of analytics platform KX. Post-deal, existing shareholders will retain a meaningful minority interest.

At £24.50 per share, the deal values FD Technologies at approximately £570 million ($760 million). The figure represents a 27 percent premium to FD Technologies’ unaffected closing share price of £19.28 on May 6, 2025, and a 51 percent premium to the 12‑month average price of £16.24 per share.

The deal follows FD Technologies’ recent decision to sell its consulting unit, First Derivatives, for £205 million in order to streamline into a pure‑play enterprise software business, with KX as its crown jewel.

TA-da!

It’s not TA’s first foray into enterprise software.

In March 2017, TA Associates acquired ITRS Group — a real-time monitoring and analytics software provider — from The Carlyle Group for an undisclosed amount.

By 2021, TA sold a majority stake in ITRS (retaining a minority position) to Montagu Private Equity for $700 million. The firm still maintains a stake today.

Between 2017 and 2021, TA Associates grew ITRS from 170 global clients to 3,000+. The firm also expanded ITRS’s industry footprint across telecom, healthcare, and trading infrastructure.

How’d they accomplish it?

• Product expansion via acquisition: The firm grew its suite of offerings by buying competitor SaaS firms, such as its 2020 purchase of Dutch analytics platform Uptrends.

• Market expansion: TA helped diversify ITRS’s revenue base beyond its traditional capital markets clients into hedge funds, trading venues, telecom, and healthcare verticals.

Copy-paste.

TA will likely aim to apply the ITRS playbook to KX, particularly by pushing into new verticals and augmenting the product suite via investment in AI. But the situation is more complex here. FD Technologies retains a stake in KX, potentially limiting TA’s operational control.

Beyond that, challenging macro conditions such as high interest rates and increasingly cautious enterprise tech spending may hinder TA’s stewardship.

TA Associates did not respond to request for comment.

PE portcos also saw some full and partial exits last week, as well as some exits-to-be:

• Waystar announced plans to buy Iodine Software, an AI‑driven clinical intelligence provider for healthcare payment automation, from Advent International for $1.25 billion. Advent acquired a major stake in Iodine in 2021 (valuing it at over $1 billion), and will retain equity in the new entity under an 18‑month lock‑up; this represents a full 100 percent sale.

• Goldman Sachs Alternatives agreed to acquire Liquid Environmental Solutions, a U.S. provider of non‑hazardous liquid waste management services, from Audax, which has owned LES since late 2017; financial terms for the sale were not disclosed.

• NIQ Global Intelligence, majority-owned by Advent International (since the 2021 acquisition at $3 billion) and minority-owned by KKR, raised $1.05 billion in its U.S. IPO at $21 per share, valuing the business at $6.1 billion to $6.35 billion. Advent retained 52 percent and KKR 10 percent ownership post-IPO, marking a partial liquidity event.

• Bridgepoint and Partners Group sold their respective majority and minority stakes in Vermaat, a Dutch hospitality provider, at an enterprise valuation of €1.5 billion ($1.76 billion) to Compass Group.

Meanwhile, portco M&A was in full swing:

• Apollo-backed HarbourView Equity Partners, an alternative asset manager focused on media and entertainment IP, acquired a stake in the master recording and publishing income streams from Kelly Clarkson for an unknown sum.

• WCAS’s GovCIO, a government IT and digital services contractor, bought SoldierPoint Digital Health, a provider of military-focused health tech tools, for an undisclosed amount.

• EC Waste, the largest vertically integrated solid waste services company in Puerto Rico and a portfolio company of UK-based PE firm 3i Group, acquired ARB Waste Services, a local solid waste collection company, marking its third acquisition since 3i bought it in 2021. Financial terms were not disclosed.

• Onecom, a UK-based business telecom and connectivity provider backed by Ares and LDC (a PE firm affiliated with Lloyds Bank, invested since 2019), acquired Gradwell Communications, which specializes in cloud-based voice solutions for small businesses. The deal comes after Onecom was restructured at the beginning of this year and is the company’s thirteenth acquisition since 2020. Financial terms were not disclosed.

• IQ-EQ, an investor services firm backed by Astorg (which acquired a majority stake in the firm in 2016 and rolled it into a continuation vehicle in 2022), bought Gordian Capital, an APAC-based fund administration provider, for an unknown amount.

And there were some key people moves:

• Urgent care operator Xpress Wellness, backed by PE firm Goldman Sachs, appointed Joe Alegre as chief financial officer. Alegre was most recently the CFO of another private equity-backed healthcare company, the Sheridan Capital-backed Oral Surgery Partners. Brown, meanwhile

• Roark Capital’s Subway named Jonathan Fitzpatrick, the ex-Burger King COO, as its next CEO.

401-KO.

If the federal government allows retirement accounts to invest in private equity products, it would be nothing short of disastrous for retirees. But the decision couldn’t be better timed for the industry, which has seen all-time low fundraising figures for the third year in a row.

I’ll keep my critiques brief: they don’t stray far from the various opinions that are already out there. The funds are illiquid, with too-high fees demanded for managing assets with souped-up valuations. The returns for the industry are often concentrated in top-performing funds, meaning unlucky allocations could lead to huge losses for vulnerable people.

The CalPERS Case.

Those who argue that government regulation can mitigate risk by, say, providing a formal allocation limit need to look no farther than the nation’s largest pension fund, CalPERS, to see why this is a bad idea.

CalPERS’s private equity allocation has long been controversial. In the past, the pension fund faced probes into its private equity allocation because experts noticed that there was opacity on fees (to such an extent that a probe in 2015 found that a 20-year return for its PE portfolio dropped from a 19.3 percent return to a 12.3 percent return when inclusive of fees to managers).

Now, the pension fund is facing a probe into its PE portfolio for lagging behind comparable pension funds’ PE returns. Its underperformance is likely due to the fact that CalPERS didn’t invest in the top-quartile PE funds that actually make a high return. Additionally, experts believe PE’s high fees are eating into CalPERS’s distributions.

Despite this, CalPERS has signaled that it wants to double down on PE investments due to its portfolio garnering an 11.3 percent return over the past 12 months.

It’s an impressive figure, but a figure achieved by increasing co-investment vehicles (which are fee-free) and revising the managers worked with: meaning the issues of high fees and GP performance disparity still stand.

Alternatives to Alts.

I would be remiss not to mention that, over the past ten years, private equity as a whole has outperformed other asset classes. A recent report from the lobbying firm The American Investment Council (AIC), formerly the Private Equity Growth Capital Council (PEGCC), found that PE investments delivered a 13.5 percent median annualized return in 2024. Sounds great!

But that’s over a 10-year period — meaning a big chunk of cash came in when interest rates were low and business was booming. I would argue that historical returns aren’t as important here as PE advocates make them out to be. Rather, the dramatic shifts we’re seeing in private equity right now are indicative of how the industry will perform in the years to come.

According to a McKinsey report, for the year 2024, PE returns were just 3.8 percent, underperforming public markets for the third year in a row. Distributions have also been lagging — 2024 was the first year that LPs saw net inflows of cash from their PE investments via distributions since 2015, likely due to depressed fundraising numbers.

And it's worth noting that a substantial amount of distributions aren’t coming from successful exits, which have yet to rebound from historic lows, but creative measures like NAV loan-funded distributions, continuation vehicles, and LP-led secondaries transactions.

Is this an issue that PE funds can just “wait out” until interest rates drop? Some may be able to — but not all. The exit drought will likely continue for a number of assets that can’t find a buyer, such as renewable energy assets that have lost government subsidies, mega assets with limited amounts of buyers, and underperforming assets with inflated valuations that refuse to come back to earth. The last point will be an incredibly sticky one, with government agencies in the UK, Australia, and France probing into PE valuation practices to try and eliminate the systemic risk it poses.

Even the largest, most sophisticated public funds can struggle to execute a private equity strategy well. During a time of volatility, when the wheat will be separated from the chaff, why are we pulling people’s vital nest eggs into this?

I understand that retirement accounts are struggling to hit their targeted seven percent annual return — but incorporating private equity is likely not the way to get there.

PE portcos also saw some full and partial exits over the past two weeks, as well as some exits-to-be:

• Eurazeo entered into discussions to sell its entire stake in CPK Group, a conglomerate of European confectionery brands created in 2017 via a carve-out from Mondelez and Lutti, to Ferrara Candy Company. Expected proceeds are about €240  million ($280 million).

• PAI Partners and Abu Dhabi Investment Authority completed the acquisition of a majority stake in Alvest, a French airport equipment provider, from Ardian, which acquired the firm in 2018. Financial terms were not disclosed. Ardian will retain a minority stake.

• Warburg Pincus sold a majority stake in A-LIGN, a cybersecurity and compliance solutions provider, to Hg for an unknown sum.

• CVC offloaded a minority stake in Etraveli Group, an online travel company it has held since 2017, to KKR at a €2.7  billion valuation.

• The Carlyle Group agreed to sell fintech company Calastone, a fund transaction network, to SS&C Technologies. Carlyle acquired Calastone in 2020; terms of the exit were not disclosed.

• Bain Capital sold Keystone Agency Partners, an insurance brokerage platform, to Warburg Pincus. Bain established the platform in 2020. Financial terms were not disclosed.

• Turning Rock Partners exited South Reach Networks, a telecom infrastructure provider the firm has backed since 2019, to Blue Owl. Financial terms were not disclosed.

• EQT sold WASH, a provider of commercial laundry services the firm has owned since 2015, to Northleaf Capital and AVALT for an unknown amount.

• Advent International sold Donte Group, a Spanish dental chain, to Ontario Teachers' Pension Plan for $1.2 billion.

Meanwhile, portco M&A was in full swing:

• PSP-backed StormTrap, a UK-based stormwater management system provider, acquired Faircloth Skimmer, a manufacturer of drain dewatering devices, for an undisclosed sum.

• OTPP-backed Westland Insurance acquired Forefront Insurance, a California-based personal lines and specialty insurance broker. Financial terms were not disclosed.

• Blackstone’s Chamberlain Group, a manufacturer of automated garage-door openers, purchased Arrow Tru-Line, a garage door component manufacturer, from MiddleGround Capital for an unknown amount.

• Arlington Capital’s TEAM Technologies, a medical device contract manufacturer, acquired Duke Empirical Inc., a specialist in FDA-regulated device production, for an unknown sum.

• Alliance Technical Group, an engineering and calibration services firm owned by Morgan Stanley Capital, bought competitor ESC Spectrum. No financial details were released.

• Advantive, a manufacturing execution systems solutions provider owned by TA Associates, acquired PINpoint, a software provider in the same sector. Financial terms were undisclosed.

• AE Industrial’s CASE, a construction equipment dealer consolidator, bought Ragnarok, a SaaS provider of equipment telematics and analytics, for an undisclosed amount.

• LS Power, via its portfolio company Clearlight Energy, agreed to buy bp (British Petroleum)’s U.S. onshore wind business. Financial terms were not disclosed, but the deal is expected to close in 2026.

• Rocscience, an engineering software specialist owned by TA Associates, acquired peer 2SI for an unknown sum.

• PAI Partners-backed Compleat Food Group, a European foodservice distributor, acquired Freshpak, a UK catering supplier, for an unknown amount.

• Dessert Holdings, a dessert manufacturer owned by Bain, bought Willamette Valley Pie Co., an artisan bakery in Oregon. Financial terms were not disclosed.

• Hyve Group, an international organizer of exhibitions and conferences backed by Searchlight Capital Partners and Providence Equity, acquired Behavioral Health Tech, a B2B events company in the healthcare tech space. Financial terms of the transaction were not disclosed.

And there were some key people moves:

• Welsh, Carson, Anderson & Stowe (WCAS) named Brian Kane as a senior advisor in healthcare services. Kane is the former CEO of Aetna and former CFO of Humana.

• Advent International appointed Frank Roe, the former CEO of software company SmartBear, as an operating partner.

• AE Industrial Partners brought on Oscar Torres as an operating partner. Torres joins after a 20-plus year career at Kellstrom Aerospace, a former AE Industrial portco which the firm exited to VSE Corporation in December 2024.

• Lloyd Howell, former advisor to the Carlyle Group, resigned over a perceived conflict of interest between his duties at the asset manager and his duties as the executive director of the NFL Players Association. This is because Carlyle is one of the few private equity firms that has been approved to buy minority interests in NFL teams.

A spectacle.

What a nail-biter: Spectris’ board unanimously recommended Advent International’s £3.8  billion ($5.22 billion) bid (or about £4.4  billion enterprise value including debt) to take it private last week, only to turn around and accept KKR’s £4.7  billion bid a short while later. While Advent still technically has room to come back with a higher offer, it is unlikely.

At the end of the day, money won — despite Advent's storied history in the industrial sector.

Getting industrious.

Advent has been investing in industrials since the 1990s, using a unique combination of carve-out/reorganization and roll-up strategy. Here are the firm’s investments in manufacturing since 2020:

Was its strategy not a fit? No. For Spectris, its prime carve-out targets would be its Malvern Panalytical, HBK, and Kistler brands, as each has meaningful standalone brand equity and customer bases. Divestitures aren’t new for Spectris, either, as the company has been actively reshaping itself, selling off Omega Engineering and ESG Group in recent years.

When it comes to add-ons, Spectris is ripe for a roll-up strategy. With 14 patents to its name and a broad suite of products, add-ons in sensors or automation tech would make sense for the firm.

The edge.

Perhaps, in addition to the larger ticket price, Spectris was wooed by KKR’s numerous recent investments in the sector. KKR has invested in eight classic manufacturing assets since 2020 (compared with Advent’s five investments): Chase Corp, CIRCOR, CMC Packaging Automation, CoolIT Systems, Fortifi, Industrial Physics, Novaria Group, and Potter Global Technologies.

Advent International did not respond to request for comment.

We were on hiatus last week (we hope our American followers had a great long weekend!) — thank you for your patience. Here are some full and partial exits from the past two weeks for PE portcos, as well as some exits-to-be:

• EQT sold its ownership in Eton, the Swedish luxury menswear brand, to a consortium of long-term investors, for an unknown amount, exiting an asset it initially acquired in 2020.

• EQT announced plans to exit Pioneer Corporation, a Japanese automotive electronics firm it acquired in 2018 via its purchase of Baring Private Equity Asia for about $900  million. The 100 percent stake EQT held in the company is being sold to CarUX for $1.1  billion in cash. The deal is expected to close in Q4 2025.

• EQT sold its entire majority stake in Recover, a Scandinavian property remediation specialist it acquired in 2020, to industrial investor Pangea AS. Terms were not disclosed.

• Woodside Energy sold a 40 percent stake in its Louisiana LNG project (formerly Driftwood) to Stonepeak for $5.7  billion. Woodside retains a 60 percent stake in the project.

• Apollo, which acquired Maftec Group via a carve-out from Mitsubishi Chemical in 2022, agreed to sell their interest in this Japanese heat-insulating solutions provider to Advantage Partners for an undisclosed sum.

• Bridgepoint exited MotoGP owner Dorna Sports (sold to Liberty Media for €4.2  billion, or $4.9 billion) and insurance broker Kereis (sold to Advent International for €2 billion), returning approximately €2 billion to LPs.

• Bain-backed Evident sold its inspection technologies division to Wabtec for $1.8  billion.

• Suma Capital exited its 30 percent minority stake in TradeInn, a Spanish e-commerce platform for sporting goods, to Apollo for an undisclosed amount. Suma Capital has held the asset since 2015 .

• Odyssey Investment Partners sold Applied Technical Services, a testing and inspection firm, to global testing and certification company SGS for $1.3 billion. Odyssey first picked up the asset in 2020.

• New Mountain Capital sold Zep Inc., a cleaning and maintenance solutions provider, to Truelink Capital for an undisclosed sum. New Mountain took Zep private in 2015 for $20.05 per share, or about a $692 million enterprise valuation.

• Intermediate Capital Group sold Kee Safety, a UK-based fall protection systems provider, to Inflexion and 65 Equity for £1.3  billion. ICG originally backed Kee in 2021.

Meanwhile, portco M&A was in full swing over the same period:

• GTCR‑backed Foundation Source, a provider of philanthropic tech and advisory, acquired PFS, a foundation management firm, for an unknown sum.

• Clearlake Capital-backed PrimeSource Brands, a supplier of building products, bought Fortress Railing Products, a Texas-based manufacturer of residential and commercial railing systems backed by Tower Arch Capital (via its portco The Fortress Company, which it has held since 2017). Terms of the transaction were not disclosed.

• SYSPRO, a software provider for the manufacturing and distribution industries backed by Advent International, acquired RiteSoft, a provider of mobile warehouse scheduling software. Financial details were not disclosed.

• Oaktree Capital acquired FilmRise, a New York-based film and TV distribution platform, and merged it with Shout! Studios to create Radial Entertainment, a new distribution and IP platform. Financial details were not disclosed.

• Bridgepoint-backed LumApps, a French employee experience platform the firm has held since 2023, announced plans to merge with Beekeeper, a Zurich-based communications and workflow software provider for frontline workers. Financial terms were not disclosed.

• Namirial and Signaturit, two European e-signature and digital ID solution providers, announced plans to merge, though financial details of the deal remain unknown. Namirial has been backed by Ambienta SGR since 2020; Signaturit is owned by PSG Equity and Providence Strategic Growth.

Hitting its Peak.

KKR agreed to buy Zenith Energy, an Australian independent power producer specializing in energy solutions for Australian mining sites, for A$1.7  billion ($1.1  billion) from a consortium of investors including Pacific Equity Partners, OPTrust, and Foresight Group.

The deal, expected to close by the end of the year, follows Zenith’s A$1.9 billion refinancing deal which has increased the size of its existing bank debt facilities, providing the company with more than A$1 billion of growth capital from several lenders.

The only other example of KKR investing in Australian energy generation is a deal done alongside Ontario Teachers’ and PSP Investments in 2021 to take Spark Infrastructure private for A$5.2 billion.

Courting Spark.

Since the take-private in 2021, KKR (alongside OTPP and PSP) has grown Spark Infrastructure by focusing on expansion into renewable energy generation assets. This is likely to be replicated at Zenith, given that 40 percent of the company’s current installed capacity comes from renewable energy and the firm has reiterated its dedication to the energy transition.

Things are different now, though, for renewable energy assets in Australia when compared with the 2021 landscape — and it is likely to be in KKR’s favor. There is new policy certainty from the labor government, with Prime Minister Albanese championing the Capacity Investment Scheme which provides a long-term revenue safety net that decreases financial risk for investors in renewable energy.

There are headwinds, however. Zenith represents KKR’s first foray into the outright ownership of a utility-scale energy generation platform. Former investments in Avantus, Virescent Infrastructure, First Gen, Serentica Renewables, and — of course — Spark Infrastructure all included co-investors.

KKR did not respond to request for comment.

PE portcos also saw some full and partial exits last week, as well as some exits-to-be:

• Brookfield Infrastructure Partners agreed to buy Hotwire Communications, an all-fiber ISP operating in nine U.S. states, from Blackstone for approximately $7  billion, including debt. Blackstone acquired Hotwire in 2021 for about $1  billion.

• Clearview Capital exited Results Partners, a Pacific Northwest-based vineyard management and development services provider, to Atlas Vineyard Management. Clearview acquired Results Partners in 2016 through its Wilson/OVS platform and nearly doubled its size before the sale, though financial terms of the deal were not disclosed.

• 3i sold MPM Products, a global pet food business, to Partners Group for an undisclosed sum. 3i claims the sale has generated gross proceeds of £400 million ($543 million).

• EQT-backed Enity Holding, a specialist Nordic mortgage provider, began trading on Nasdaq Stockholm, constituting a partial exit for the private equity firm. The offering, which was priced at SEK 57 ($5.96) per share, was oversubscribed more than ten times, closing at SEK 71.88, implying a market capitalization of SEK 3.6 billion. EQT sold shares totaling approximately SEK 1.7 billion, resulting in aggregate gross proceeds of SEK 1.2 billion.

• Audax sold Thermogenics, a North American industrial boiler service provider Audax has held since 2022, to Morgan Stanley Capital Partners for an undisclosed sum.

• The Ontario Teachers’ Pension Plan sold its stakes in Bristol airport (55 percent), Birmingham airport (26.5 percent), and London City airport (25 percent) to Macquarie Infrastructure, exiting assets it has held since 2001, 2007, and 2016, respectively. Financial details weren’t disclosed, but OTPP previously valued its European airport portfolio at over £10  billion.

• Sleeping Bear Capital sold Edge Autonomy, a provider of autonomous aircraft technology the firm has held a minority position in since 2022, to Redwire Corporation, a publicly traded aerospace and defense company, for $1.14 billion.

• Unilever agreed to acquire Dr.  Squatch, a natural men's personal care brand that has been backed by Summit  Partners since 2021, marking a full exit; terms were not disclosed, though Summit had previously valued the brand at around $2  billion.

Meanwhile, portco M&A was in full swing:

• Apax Partners-backed Zellis Group, an HR/payroll provider based in Ireland and the UK which Apax bought in 2024, bought Hastee, a London-based earned-wage-access and financial wellbeing platform. Deal terms were not disclosed.

• OMERS Private Equity-backed Integris, a US-managed IT services firm, acquired TechMD, a cybersecurity and managed services provider backed by ClearLight Partners, for an undisclosed amount.

• Hg-backed CUBE, a UK-based RegTech specialist, bought Acin, a London-based AI operational risk management provider founded in 2018, for an unknown sum.

• H.I.G. Capital portfolio company GetixHealth, a Houston-based healthcare revenue-cycle-management provider the firm has owned since 2023, acquired Americollect, a patient engagement solutions firm. Financial terms were not disclosed.

• Brookfield Asset Management- and Canada Growth Fund-backed Entropy Inc. agreed to acquire 50 percent stakes in the Belle Plaine & Rolling Hills carbon-storage hubs for C$20  million ($14.6 million) plus C$15  million in contingents. Brookfield/CGF funded Entropy in 2022 and this is its first asset purchase.

PE portcos also saw some full and partial exits last week, as well as some exits-to-be:

• KKR exited a minority stake in its investment in Pinnacle Towers, a Canadian telecom tower platform, to BCI. Financial terms were not disclosed.

• Honeywell acquired Sundyne — a Colorado-based designer of pumps and gas compressors — from Warburg Pincus for $2.16 billion in cash, reflecting approximately 14.5x multiple on its 2024 EBITDA. Warburg Pincus bought Sundyne from BC Partners and Carlyle in 2020.

• Madison Dearborn Partners purchased a significant minority stake in NextGen Healthcare from Thoma Bravo, who took NextGen private in 2023. The exact percentage of the stake sold, and financial terms of the deal, were not disclosed.

• Bowmark Capital sold IWSR, a beverage alcohol data and insights provider the firm has owned since 2021, to WGSN, a trend forecasting firm backed by Apax Partners. Financial terms weren’t disclosed.

• EnCap sold PowerTransitions, a provider of utility‑scale battery energy storage solutions, to Partners Group for over $450  million.

Meanwhile, portco M&A was in full swing:

• KKR's Fortifi Food Processing Solutions acquired Area 52, an automated crustacean-processing equipment maker. Financial terms weren’t disclosed.

• Another KKR portco, west coast sports club operator Bay Club, bought 425 Fitness, a Seattle-area fitness club chain, for an unknown sum.

• Ahlsell, owned by CVC Capital Partners since its 2019 €1.8  billion ($2 billion) takeover, agreed to acquire the Nordic businesses of personal protection equipment maker Skydda. Financial terms for the deal were not disclosed, though a close is expected this quarter.

• ePassi, backed by TA Associates and Warburg Pincus, acquired Zest, a UK-based SaaS provider for employee benefits management founded in 2004, for an unknown sum.

• Capitol Imaging Services, a Clearview Capital portco since 2020, bought nine outpatient imaging centers operated by Outpatient Imaging LLC in Georgia, USA. Deal terms were not disclosed.

And there were some key people moves:

• Kate Thomas joined CVC Capital as a partner and head of North American distribution. Previously, she served as a managing director at Sixth Street.

• Permira hired Jason Wreath, formerly head of data and AI at Amazon Web Services, as a senior advisor for the firm’s healthcare team, a newly created role.

• Seth Farbman, founding CMO of Spotify and former Gap exec, joined Advent International to guide marketing operations across its portfolio.

I noticed something new during this year’s NY Tech Week…

NY Tech Week has been led by venture capital firms, specifically a16z, since its inception in 2023. While those firms maintained their dominance in 2025, I also saw a shocking amount of non-venture alternative asset managers taking up leadership roles during the festivities, too.

Events like Global Alts NY, co-hosted by the Managed Funds Association and iConnections, drew crowds. Similarly, ALTSNY, organized by MarketsGroup in partnership with CFA Society NY and CAIA, convened asset managers focused on private markets, hedge funds, and structured finance.

The prominence of these non-VC-led events showcases a new financial narrative taking tech by storm: venture capital is no longer enough to see the build-out of artificial intelligence. As AI moves from experimental applications to critical infrastructure — powering sectors like healthcare, finance, logistics, and defense — it demands a more complex capital stack.

Training large models, building and operating data centers, and ensuring compliance in regulated industries all require long-term, often non-dilutive capital. Traditional VC can’t always provide that. Enter infrastructure and real estate capital to tackle hyper-scale data centers, buyout funds to fund enterprise implementation, and, of course, large banks to finance the ordeals.

The emergence of alts-led, late-stage, and infrastructure-focused investment opportunities offers much-needed diversification in the tech investment landscape. In Q1 2025, AI accounted for nearly 60 percent of venture investment, highlighting how crowded the early-stage market has become.

NY Tech Week 2025 made one thing clear: the future of AI won’t be funded by venture alone. Multiple facets of the capital stack are finding seats at the table The next chapter of innovation will be built on a layered capital stack — one that blends VC ambition with the scale, flexibility, and staying power of alternative finance.

Rubber to the road.

Gemspring Capital, a private equity firm based in Westport, Connecticut, bought Goodyear Chemical, a producer of synthetic rubber and performance chemicals for approximately $650 million. The assets included in the transaction are Goodyear Chemical's facilities in Houston and Beaumont, Texas, and a research office in Akron, Ohio — not included, though, are Goodyear’s facilities in Niagara Falls, New York, and Bayport, Texas, along with rights to the products produced there.

The sale is part of Goodyear's "Goodyear Forward" transformation plan, aiming to streamline operations and reduce leverage, and is expected to close in late 2025, subject to regulatory approval and other customary closing conditions.

Back to the lab.

This isn’t Gemspring’s first chemical play — the firm invested in Shrieve Chemical Company in December 2019 for an undisclosed amount. The firm still holds the asset today, having closed a single-asset continuation vehicle for the business in October 2024.

Gemspring has made numerous changes at Shrieve post-acquisition, including:

• Expanding product slate and product management capabilities.

• Enhancing salesforce and increased geographic and end-market diversity.

• Completing six strategic add-on acquisitions (including Chem One, Gilbert & Jones, and TLC Ingredients).

The growth strategies Gemspring employed at Shrieve Chemical — expanding products, salesforce, markets, and add-ons — could plausibly be transferred to Goodyear Chemical. However, Goodyear Chemical's scale and product complexity could add layers of challenge. Goodyear’s chemical business generated approximately $504 million in revenue in 2024, about 3 percent of the company's total $18.9 billion revenue, with a product portfolio spanning synthetic rubber and performance chemicals, critical (and highly specialized) components in tire manufacturing, and other industrial applications.

And most glaringly, replicating international expansion and M&A growth strategies is notoriously difficult right now with global trade tensions mounting and interest rates resting at an all-time high.

Gemspring did not respond to request for comment.

PE portcos also saw some full and partial exits last week, as well as some exits-to-be:

• Morgan Stanley Infrastructure Partners sold Seven Seas Water Group, a provider of water and wastewater treatment solutions operating over 220 plants across the U.S., Caribbean, and Latin America, to EQT at a valuation of over $1 billion, including debt. Morgan Stanley Infrastructure Partners acquired Seven Seas in 2017 for $500 million.

• Sagard MidCap entered into exclusive negotiations to sell Nutrisens, a French clinical nutrition specialist the firm has owned since 2018, to Cinven. Financial details were not disclosed.

• Tikehau Capital announced the acquisition of EYSA, a Spanish provider of smart mobility solutions for urban and interurban areas, from HIG Capital. Financial terms were not disclosed. H.I.G. acquired EYSA in early 2022.

• CVC agreed to sell its 60 percent stake in Genetic Group, an Italian pharmaceutical manufacturer the firm has held a stake in since 2020, to a buyer consortium. The deal values Genetic at approximately €680 million ($770 million).

• LKCM Headwater sold a portion of its stake in RollKall, a provider of off-duty management software for public safety agencies, to Vista Equity Partners. Financial terms were not disclosed.

Meanwhile, portco M&A was in full swing:

• Resonetics, a medical device contract manufacturer owned by The Carlyle Group and GTCR, acquired the nitinol gun drilling operations and related assets of Medical Component Specialists for an unknown sum. The two PE shops acquired significant interests in the company in 2021, valuing it at approximately $2.25 billion.

• Kenan Advantage Group (KAG) Canada, North America's largest tank-truck carrier, bought Fisher Transport, a Nova Scotia-based milk hauler, for an undisclosed amount. KAG has been a portfolio company of OMERS Private Equity since 2015.

• Astorg’s IQ-EQ, a global investor services firm, acquired South Watch, a U.S.-based boutique fund administration services provider owned by Everlane Equity Partners. Financial terms were not disclosed.

• Thoma Bravo-backed Nearmap, a provider of property intelligence solutions, agreed to acquire itel, an insurance technology company, from GTCR. The deal is valued at over $1.3 billion, including debt. GTCR acquired itel in 2021.

• Bain Capital launched HScale, a new hyperscale data center platform, alongside its existing portfolio company AQ Compute. HScale aims to deliver nearly 7 GW of data center capacity across EMEA and APAC markets.

• BetaNXT, a wealth management technology firm backed by Clearlake Capital and Motive Partners, bought Delta Data, an investment fund solutions provider. Financial terms were not disclosed.

And there were some key people moves:

• Investcorp Corsair Infrastructure Partners appointed Stephen K. Benjamin as an operating partner for local communities, a newly created role to bolster public-private partnerships and deepen engagement with local governments. Benjamin most recently served as director of the White House Office of Public Engagement under President Biden and was previously the Mayor of Columbia, South Carolina.

Captive customers.

Blackstone Infrastructure has agreed to acquire TXNM Energy, a regulated utility located in New Mexico and Texas, for $11.5 billion, or $61.25 per share. The deal represents a 15 percent premium over the stock’s last closing price and is expected to close in the second half of 2026.

This isn’t Blackstone’s first investment in a regulated utility. The firm bought minority stakes in FirstEnergy and NIPSCO in 2021 and 2024, respectively. However, this is the first instance where Blackstone has bought a regulated utility outright and taken it private.

Blackstone declined to comment for this piece, so it is unclear if the value creation tactics utilized at FirstEnergy and NIPCO will be mirrored with TXNM. However, a source with knowledge of the deal claimed that the firm’s capital will be utilized to realize TXNM’s pre-determined goals, such as a $546 million resiliency plan to be implemented by 2027.

“Think about the nature of this infrastructure platform. It's a perpetual capital fund vehicle, meaning that, unlike some of the other investors that have to sell in five, seven, or 10 years, this fund is looking to find industry-leading companies to invest behind for the very long term,” the source said.

Conflicting interests.

Blackstone is no stranger to the energy landscape of the American southwest. The company already owns QTS Realty Trust, a data center operator with locations in TXNM’s domain, including a 70MW Fort Worth campus and a 147MW facility located in the Dallas area, with plans to expand.

Some consumer advocates see this as a conflict of interest. If Blackstone owns both the region’s main supplier of energy alongside a massive customer, it results in preferential pricing for QTS facilities, with ratepayers paying the difference. There are also questions as to whether or not QTS facilities would be prioritized when it comes to grid upgrades and planning.

"I will 100 percent be involved at FERC on this,” said Tyson Slocum, the director of the energy program at Public Citizen, a consumer rights advocacy group. “We'll be making noise about this. I am positive that folks in New Mexico will be too.”

It’s not the first time Public Citizen has taken Blackstone to bat over perceived conflicts of interest stemming from the firm’s data center holdings. Since February, the watchdog has filed two challenges with FERC against Blackstone’s bid to buy Potomac Energy Center, a natural gas-fired power plant located in Virginia, a data center hot spot where Blackstone owns numerous facilities.

“Just like Enron intentionally disrupted the market to create a crisis back in 2000 and 2001, if you control a massive power plant that you just spent a billion dollars on, and you control a couple thousand megawatts of data centers in the same market, you can do all sorts of coordinated shenanigans to create disruption in the energy market, either on the supply or demand side, or both, to engineer market price fluctuations,” Slocum explained.

In theory, after regulatory bodies approve of Blackstone’s acquisition, they retain the right to audit TXNM’s financial statements to ensure that there is no preferential treatment for QTS facilities.

"When you take a public utility private, you absolutely lose a ton of financial transparency into the holding company's operations, and that should be of concern,” Slocum pushed back. “Part of the strategy is you take the company private. And all of a sudden, a bunch of the financial operations at the holding company level become obscured to state regulators. Conceivably, state regulators can try to request information, but it becomes a process and a process that many state regulators don't have the time or resources to pursue.”

Sector-wide.

While Blackstone may be the poster child for this perceived conflict of interest, it's not the only private equity firm caught up in it:

• Brookfield owns Pipeline Infrastructure Ltd., a natural gas transportation and distribution utility in India, where it also has a joint venture with Digital Realty to build out data center developments.

• GIP, alongside CPP Investments, has placed a $5 billion bid to own Allete, a Minnesota-based regulated utility. GIP also co-owns (with KKR) CyrusOne, a global data center operator with facilities in Minneapolis, Minnesota (and plans to build a 343-acre data center park outside the city in the near future).

• Five Point Energy announced last week its intentions to buy PowerBridge, a data center operator in the Permian Basin. Five Point already owns WaterBridge, a water infrastructure company, and Northwind Midstream, a natural gas utility, in the same area.

This list doesn’t include private equity companies that own utility-scale generation facilities alongside data center companies, of which there are many.

PE portcos also saw some full and partial exits last week, as well as some exits-to-be:

• Partners Group IPO'ed Green Tea Group, a Chinese fast-casual dining chain, on the Hong Kong Stock Exchange. The offering included 168,364,000 shares at HK$7.19 each ($0.92), raising approximately HK$1.21 billion. Despite the IPO being oversubscribed 317 times, the stock opened at its offer price and declined by 12.5 percent on the first trading day, closing at HK$6.29.

• Lotus Infrastructure sold seven natural gas generation facilities totaling 2.6GW to Vistra for $1.9 billion.

• Montagu sold a minority stake in Wireless Logic to General Atlantic, valuing the British IoT connectivity provider at £3.5 billion ($4.7 billion).

• Verdane, PSG, and TA Associates exited their investments in Hornetsecurity through a sale to Proofpoint, a cybersecurity firm owned by Thoma Bravo. The transaction valued Hornetsecurity at $1.8 billion.

• Triton sold FläktGroup, a global HVAC solutions provider, to Samsung Electronics for €1.5 billion ($1.6 billion).

• Apollo agreed to acquire PowerGrid Services from The Sterling Group. Financial terms were not disclosed.

• LS Power announced a $12 billion deal to sell 18 natural gas-fired facilities totaling 13 GW and a virtual power plant platform to NRG. The transaction includes $6.4 billion in cash, $2.8 billion in stock, and the assumption of $3.2 billion in net debt and is expected to close in Q1 2026.

Meanwhile, portco M&A was in full swing:

• Apollo-owned Evri, formerly Hermes UK, merged with DHL eCommerce UK to form a major UK parcel delivery operator. Financial terms were not disclosed.

• Westland Insurance, backed by Ontario Teachers' Pension Plan, acquired Sagium Health Strategies Inc. through its newly launched benefits division, Westland Benefits. Financial terms were not disclosed.

And there were some key people moves:

• Astorg announced a leadership overhaul. Co-founder and CEO Thierry Timsit was appointed executive chairman, with Benjamin Cordonnier, previously partner and head of portfolio performance, replacing him as chief executive. Cordonnier and Judith Charpentier, partner and co-head of flagship and head of healthcare, will jointly serve as co-managing partners, overseeing the firm's daily operations. Additionally, Thibault Veber was appointed COO, succeeding Guillaume de Malliard.

• Advent International appointed Stephan Scholl as an operating partner. Scholl most recently served as CEO of IT service manager Alight Solutions and president of enterprise software company Infor.

A little bit Skechy.

3G sealed the deal last week to take Skechers — the world’s third largest footwear company — for $9.4 billion, or an 8x EBIDTA multiple on the company’s projected 2025 earnings.

Of that sum, $2.9 billion will be 3G’s equity contribution, while an additional $6.5 billion in debt financing led by JP Morgan (comprising $4 billion in secured loans and $2.5 billion in unsecured notes). At 69 percent debt, the deal’s debt-to-equity ratio far exceeds the industry average for take-privates in Q4 2024, which was 53 percent according to Pitchbook.

Some may argue that Skechers has the capacity to take this debt on, with a strong balance sheet of over $1.1 billion of cash-on-hand and minimal debt obligations and $455 million in outstanding short- and long-term borrowings as of year-end 2024.

Shareholders of Skechers will have two options: to trade their shares in for cash, at $63 per share (a 30 percent premium to Skechers’ 30-day average share price prior to the announcement), or to receive $57 per share as well as a minority equity stake in the new private company.

The deal is expected to close in Q3 of this year.

Go the distance.

The investment is new for 3G in many ways. First and foremost, 3G’s portfolio has typically involved food and beverage consumer brands, such as its legendary stewardship of Burger King. This is 3G’s first foray into apparel.

Skechers is also dissimilar from past assets in the sense that it is a stable, growing company. Rather than rescuing a struggling brand à la Burger King, here 3G is betting on Skechers’ $9 billion in annual revenue and global reach in over 180 countries.

Additionally, 3G’s typical operational strategy of quick and major cost cutting won’t be applied — rather, Forbes reports that the firm is shifting to a “decades-long” operational strategy for Skechers. This is bolstered by the fact that the company’s Chairman and CEO Robert Greenberg will remain in his leadership position.

Stepping out on the runway.

The only other non-food asset 3G has invested in is Hunter Douglas, a Dutch seller of window coverings the firm acquired in December 2021 for $7.1 billion.

Interestingly, 3G’s strategy here was to streamline supply chains and procurement strategies — something that Skechers seems ripe for, with 40 percent of its manufacturing being located in China and an additional 40 percent residing in Vietnam, two countries at the center of President Trump’s trade war. Skechers has also faced scrutiny for allegedly using Uyghur slave labor in its Chinese factories.

However, 3G reportedly has no plans to move supply chains or manufacturing processes in response to the administration’s trade war.

3G did not respond to request for comment.

PE portcos also saw some full and partial exits last week, as well as some exits-to-be:

• Blackstone partially exited Liftoff, a mobile app marketing platform the firm has owned since 2020, merging with peer app and existing portfolio company Vungle in 2021. Blackstone sold a minority stake in Liftoff to General Atlantic, valuing the company at $4.3 billion.

• CDPQ sold its remaining 30 percent stake in Water Technologies and Solutions (WT&S) to Veolia, a French multinational utility company, for $1.75 billion. CDPQ initially acquired its 30 percent stake in WT&S (then GE Water) in 2017 via a joint venture with Suez, which owned the remaining 70 percent and was acquired by Veolia in 2022.

• TA Associates sold a majority stake in Solabia, a biotech ingredients manufacturer, to Astorg for an unknown sum. TA, which first acquired the company in 2018, will retain a minority stake.

• Thoma Bravo offloaded a minority stake in Qlik, a data integration and analytics company, to the Abu Dhabi Investment Authority (ADIA). Financial terms were not disclosed. Thoma Bravo acquired Qlik in 2016, when it took the company private for $3 billion.

Meanwhile, portco M&A was in full swing:

• FutureLife Group, a European fertility and genetics services provider backed by CVC Capital Partners and Hartenberg Holding, bought a stake in Bahçeci Group, an operator of fertility clinics across Turkey, Kosovo, Bulgaria, and Bosnia & Herzegovina. Financial details were not disclosed.

• Searchlight- and Providence Equity-backed Hyve Group, a B2B events organizer, acquired Manifest, a prominent supply chain and logistics event held in Las Vegas, for an unknown sum.

• PSP Investments and Bell Canada formed Network FiberCo, a joint venture aimed at accelerating fiber infrastructure development in underserved U.S. markets. PSP Investments will own a 51 percent stake and has committed a potential investment of up to $1.5 billion.

• Tyto Athene, Arlington Capital’s federal systems integrator portco, bought stackArmor Inc., a provider of cloud compliance and cybersecurity solutions for government customers. Financial details were not disclosed.

• CDPQ-backed Savaria Corporation, a builder of home elevators, stairlifts, and other accessibility products, acquired one of its long-time dealers, Western Elevator. Financial terms are unknown. What is known, however, is that the company generated approximately $7.5 million in revenue in 2024 and will operate as a division under Savaria.

Dream come true.

CVC has closed a deal to buy out Dream Games’ venture investors and become the Istanbul-based mobile gaming company’s sole sponsor. The deal, which includes $2.5 billion in investment from CVC, values the six-year-old platform at $5 billion.

The $2.5 billion in capital comprises a mix of equity from CVC as well as debt financing from Blackstone. The deal will see the exit of early VC backers such as Balderton, Makers Fund, Index Ventures, and IVP, while the company’s five co-founders — Soner Aydemir, Ikbal Namli, Hakan Saglam, Eren Sengul, and Serdar Yilmaz, all former Peak Games executives — will retain majority ownership.

The transaction is expected to close in Q3 of this year.

Final boss.

Most of CVC’s history in the video gaming sector — which now spans six deals — has been in sports betting. Dream Games stands out as the firm’s largest online gaming deal to date. Here are the others:

• Jagex (2024): CVC, alongside Haveli Investments, agreed to acquire the UK-based developer of the MMORPG RuneScape for approximately £910 million ($1.2 billion).

• Gaming1 (2021): CVC partnered with the Belgian gaming and sports betting operator to support its growth in regulated online gaming markets. Financial terms were not disclosed, though the company did seek €300 million ($341 million) in debt the following year to finance the transaction.

• Tipico (2016): CVC acquired a majority stake in the German sports betting company for €1.34 billion.

• Sisal (2016): CVC bought the Italian gaming operator for €1 billion.

• Sky Betting & Gaming (2015): CVC acquired a 71 percent stake from Sky plc in the company’s UK-based online gambling arm for £600 million, valuing the business at £800 million. Sky retained a 20 percent stake and a board seat.

The only two assets to have been exited are Sky Betting & Gaming (in 2018 for £3.4 billion) and Sisal (in 2022 for €1.9 billion). For both companies, CVC’s growth strategy included geographic expansions, with Sky Betting entering German and Italian markets and Sisal entering Turkish and Moroccan markets.

Making the bed.

At Dream Games, though, this may not prove to be a winning strategy. Its flagship game, Royal Match, surpassed Candy Crush Saga in 2022 to become the world’s top-grossing mobile game — an accolade achieved through an aggressive marketing campaign that featured global stars like LeBron James and Shakira.

CVC, for its part, has hinted that its growth plans for the company lie outside of the flagship title, though the first has declined to comment for this article. Nick Clarry, managing partner and head of CVC’s sports, media, and entertainment team, stated in a press release: “Dream Games has created some of the world’s most beloved and commercially successful IP - including King Robert, King Richard & The Dark King. We are very pleased to have the opportunity to work with this world-class management team, and help them realize their ambitious vision in the Royal Universe."

PE portcos also saw some full and partial exits last week, as well as some exits-to-be:

• Investcorp exited RESA Power, an electric grid service provider, selling it to middle market firm Kohlberg. Investcorp first acquired the asset in 2021. Financial terms of the deal were not disclosed.

• CVC sold its stake in Omada, an identity security software provider, to existing investor GRO and new investor Kirk Capital for an unknown sum.

• News broke that BDT & MSD Partners is in talks with Bain Capital to sell a partial stake in Acrisure, a Michigan-based insurance broker, for $2 billion.

• Thoma Bravo agreed to sell a stake in healthcare tech firm NextGen Healthcare to Madison Dearborn for an unknown amount.

Meanwhile, portco M&A was in full swing:

• Rover, a petsitting platform Blackstone took private for $2.3 billion last year, bought European competitor Gudog for an unknown sum.

• Apax-backed Altus Fire and Life Safety, a fire protection services company, acquired Albany-based Firetek Sprinkler Systems for an undisclosed sum.

• BlackRock’s Influence Media Partners acquired the name, image, and likeness of DJ Khaled. The partnership also includes an agreement to produce original content across film and television. Financial terms were not disclosed, but sources allege the deal is a “low nine-figure” (~$100 million) partnership.

• Blue Owl-backed STACK Infrastructure sold its European colocated data center business to Apollo Global Management for an unknown sum.

And there were some key people moves:

• Xpress Wellness, an urgent care chain backed by Goldman Sachs, brought on David Pyle as its next chief executive, replacing Grant Asay, who retired in November 2024. Pyle’s previous experience includes senior leadership roles at Gastro Care Partners, Solis Mammography, and Adeptus Health,

• Mindr, a substance safety provider backed by L Catterton, appointed independent consultant Jonathan Beamer as its new chief marketing officer.

Head in the clouds.

Thoma Bravo is buying a portfolio of digital aviation solutions from Boeing in an all-cash deal valued at $10.55 billion, financed with $6 billion in equity and $4 billion in a private loan from Apollo Global Management.

Here are the companies being bought:

• Jeppesen: a provider of aviation navigation services such as digital flight planning and navigation charts, with a wide customer base spanning commercial airlines, business aviation, and military operators. The company makes up the bulk of the deal, with an estimated enterprise value of $8 billion.

• ForeFlight: a provider of web-based flight planning applications for general aviation pilots and commercial operators.

• AerData: a provider of software solutions for aircraft lease management, engine fleet planning, and records management.

• OzRunways: an Australian company offering pilots digitized ways to manage flight data, checklists, weather, navigation, and performance calculations.

The transaction is expected to close by the end of 2025.

Ready for takeoff.

This isn’t Thoma Bravo’s first foray into aviation services. In 2020, the firm acquired Exostar — a company specializing in secure business collaboration platforms for highly regulated industries, including aerospace and defense — for $100 million. Thoma Bravo held the asset until 2023 when it sold it to Arlington Capital Partners for an unknown sum. Arlington typically makes investments between $50 and $500 million.

Thoma Bravo’s main value creation tactic was geographic expansion and organic growth. While under the firm’s ownership, Exostar’s customer base grew from 135,000 organizations to 200,000, while the number of countries it operated in increased from 150 to 175.

Up in the air.

It may be more difficult, however, to implement geographic expansion strategies and stimulate organic growth at the four companies bought from Boeing.

First, the macroeconomic environment has wildly shifted for the aviation sector in just the past few months. Tariffs are hitting the industry hard and recession fears have pushed down demand for nonessential travel. As such, several major airlines cut their guidance last month.

Thoma Bravo did not provide a timely response to request for comment.

PE portcos also saw some full and partial exits last week, as well as some exits-to-be:

• GTCR diluted its stake in Ultimus Fund Solutions, an independent fund administrator, in order to welcome Stone Point Capital as a co-investor. The deal values the company at $2 billion.

• Another partial exit — Bpifrance invested in Groupe Septeo, a French software company valued at over €3 billion ($3.4 billion). Existing investors included Hg, Téthys Invest, and GIC.

Meanwhile, portco M&A was in full swing:

• CVC-backed Ahlsell, a Nordic regional distributor of installation products, bought electronics distributor Rexel’s Finland operations. The business generated €254 million in sales last year, but the sale price was not disclosed.

• New Mountain’s Azuria Water Solutions, a water infrastructure services provider, acquired TSW Utility Solutions, AM-Liner East, and C.K. Masonry for an undisclosed amount. All three firms are regional American infrastructure service providers.

• Argon & Co, a management consultant backed by Bridgepoint and Ardian, expanded into Germany by merging with Advyce & Company; financial terms were not disclosed.

• H.I.G. Capital merged Converge Technology Solutions with Mainline Information Systems, two IT solutions providers, to form Pellera Technologies, with combined 2024 revenues of about $4 billion; transaction terms were not disclosed.

• Bain’s Frontline Road Safety acquired PLP Company, a regional competitor in the pavement marking installation space, for an unknown amount.

• FoodScience, a pet food company backed by Morgan Stanley Capital Partners, acquired Natural Dog Company for an undisclosed sum.

And there were some key people moves:

• Blackstone-backed Jersey Mike’s appointed Charlie Morrison, formerly the chief executive of Wingstop, as CEO, succeeding founder Peter Cancro. Cancro served in the role for over 50 years.

Blink and you might have missed it — Fitch Ratings came out with a shocking report this week, revising its 2025 outlook for the global leveraged finance market from ‘neutral’ to ‘deteriorating’. The key culprits? A weaker economy, trade war uncertainty, and tighter capital markets.

In summary:

• The issuance of leveraged loans and high-yield bonds is falling.

• Risk premiums are rising, making borrowing more expensive.

• Default rates are forecasted to rise to about 5.5 to 6 percent for US leveraged loans in 2025 (2.5 to 3 percent in Europe).

• Private credit will benefit from stress in syndicated markets but will likely tighten standards against cyclical or underperforming businesses.

What does this mean for operators?

1. Debt-financed buyouts (especially large, highly leveraged ones) will become rarer and pricier. Smaller deals and deals with less leverage will likely dominate.

2. Higher default rates increase risks for portfolio company failures and distressed exits (or, if you’re an optimist, bargain deals for buyers).

3. Add-on acquisitions will remain popular due to capital constraints.

4. Holding periods will continue to get longer (even though they’re at their longest).

Dealing derivatives.

KKR agreed to acquire OSTTRA, a facilitator of post-trade infrastructure for the global forex, rates, credit, and equity markets, from CME Group and S&P Global. The deal values OSTTRA at $3.1 billion. The transaction is expected to close in the second half of 2025.

KKR has sourced a $1.7 billion loan from Barclays and Citigroup to fund the takeover, according to reporting from Bloomberg.

Pre-post-trade.

While the acquisition marks KKR’s first foray into post-trade services, the firm is no stranger to fintech. Earlier this year, the firm launched a sale process of its 20-plus percent minority stake in Maya (formerly Voyager Innovations) via Goldman Sachs, valuing the Filipino digital bank at over $2 billion. KKR initially invested in the company in October 2018, sinking $175 million into a minority share alongside Tencent, a Chinese multinational technology company.

In the seven years of stewardship, funds from KKR and other investors were instrumental in implementing new technological products. In 2022, for example, the company launched Maya Bank, a digital banking platform with embedded savings, credit, and investment services.

In the new.

With OSTTRA, KKR is again seeking to invest in technology and product development. "With KKR’s support, we will further accelerate our strategic initiatives to enhance our market-leading post-trade solutions, drive innovation, and expand our global footprint,” Guy Rowcliffe and John Stewart, co-CEOs of OSTTRA, stated in a press release.

Stewart and Rowcliffe are expected to stay on to lead OSTTRA post-acquisition. In addition, KKR plans to launch an employee ownership program for the more than 1,500 individuals employed by the company.

KKR did not respond to request for comment.

PE portcos also saw some full and partial exits last week, as well as some exits-to-be:

• Sterling Group sold Artisan Design Group, a design, distribution, and installation services provider it has held since 2021, to Lowe’s for $1.33 billion.

• Belgian insurer Ageas agreed to acquire esure, a British car and home insurer, from Bain Capital for £1.3 billion ($1.7 billion). Bain Capital originally acquired esure in 2018 for £1.2 billion.

• TPG sold a majority stake in Crunch Fitness, a New York City-based gym franchise it has held since 2019, to Leonard Green & Partners for an unknown sum.

• GTCR agreed to sell its 55 percent stake in Worldpay, a payment processing company, to Global Payments for $24.25 billion. Co-investor Fidelity National Information Services also plans to sell its stake; the transactions are expected to close in early 2026. GTCR acquired its stake in Worldpay in 2023 at a $18.5 billion valuation.

• Trivest sold Epika Fleet Services, a provider of truck fleet maintenance which the firm has held since 2018, to Ares Management for an undisclosed amount.

Meanwhile, portco M&A was in full swing:

• Achilles, a provider of supply chain risk and performance management services Bridgepoint bought for £24 million in 2021, acquired InfoControl, a Latin American contractor manager, for an undisclosed sum.

• OMERS-backed Teranet, an electronic land registration and property information company, bought compliance solutions firm Goveyance for an unknown sum.

• M Group Services, a British infrastructure services platform backed by CVC, entered into exclusive negotiations to acquire Telent, a UK- and Ireland-based critical infrastructure technology company, for £270 million.

• Mubadala-backed M42, a tech-enabled Emrati healthcare company, announced an investment in and partnership with Juvenescence, a biotech company focused on age-related diseases. The collaboration will seek to develop AI-enabled lifespan-advancing therapeutics. Financial terms of the deal were not disclosed.

Overly Assured?

Bain Capital is buying US healthcare software company HealthEdge from Blackstone, valuing the company at about $2.6bn including debt. Blackstone has held the asset, which provides modernization software for healthcare insurers, since 2020. Minority shareholders such as Coatue Management will also offload their stakes.

It’s a hefty EBITDA multiple, at 30x HealthEdge’s $86 million in earnings before interest, tax, depreciation, and amortization last year. Blackstone has doubled its money on its investment — a win for the firm, which has been struggling to sell the asset since 2022 for more than the $700 million price it had paid in 2020.

So, why the high price tag? And why now?

AI excitement.

Bain partners Devin O’Reilly and Paul Moskowitz hope that HealthEdge “can be a driving force for GenAI enablement at health plans.”

In addition to riding the AI boom, Bain plans to buy HealthProof and merge it with HealthEdge, according to reporting from Axios. Financial details of said transaction are not yet public.

A long-time partner of HealthEdge, HealthProof is a UST-owned health insurance tech provider which generates $100 million of EBITDA. The company acquired Advantasure, a government health program-focused technology firm, in 2022.

HealthEdge has already undergone M&A, with the company acquiring Wellframe, a digital health management platform, and Altruista Health, a care management and population health management solutions provider, while under Blackstone’s management.

Feel the Bain.

This won’t be Bain’s first foray into healthcare tech. Alongside Parthenon Capital, the firm acquired Zelis, a healthcare payments administrator, in 2019 and immediately merged with its peer RedCard Systems to create a new company with $5.7 billion. The company was reportedly worth about $17 billion in September of last year. Alongside the merger, Bain replaced portco leadership with internal partners as a part of the value creation process, installing Amanda Eisel as the company’s CEO and Brian Gladden as its CFO, respectively.

Bain Capital did not respond to request for comment.

PE portcos also saw some full and partial exits last week, as well as some exits-to-be:

• Ontario Teachers' Pension Plan finalized the sale of its remaining stake in New Gold's New Afton Mine to New Gold Inc. for $300 million. OTPP had already sold back its stake to New Gold Inc., reducing it from 46 percent to 19.9 percent last year for $255 million.

• Corsair Capital completed its divestiture from eurochange, a travel money retailer, to The Western Union Company. It had previously partially divested from the company in October 2022. Financial details were not disclosed.

• EQT announced the sale of Karo Healthcare, a European consumer healthcare company, to KKR at a €2 billion ($2.3 billion) valuation, or 5x the company’s €200 million EBITDA. EQT acquired Karo in 2019 and has been exploring an exit since mid-2024.

• SK Capital Partners sold Florachem Corporation, a Florida-based food manufacturer it acquired in April 2022, to Tradebe Life Sciences. Financial terms were not disclosed.

• Sandbrook Capital and PSP Investments agreed to sell their majority stake in Havfram, a Norwegian offshore wind company, to DEME Group, a Belgian engineering firm for an undisclosed sum. Sandbrook initially acquired a majority stake in the company in November 2022 for $250 million, investing another $250 million (alongside PSP) the following month.

• EQT and TA Associates offloaded stakes in IFS, a Swedish enterprise software company, to Hg and other investors, including the Abu Dhabi Investment Authority and the Canada Pension Plan Investment Board, for €3 billion ($3.3 billion). The deal values IFS at over €15 billion and marks Hg becoming a co-controlling shareholder alongside EQT, with TA Associates retaining a minority stake alongside ADIA and CPP.

Meanwhile, portco M&A was in full swing:

• GTCR-backed Senske acquired Huron Pest Control for an unknown amount. Following the acquisition, Huron Pest Control will operate under Mosquito Buzz, Senske’s Canadian brand specializing in mosquito and tick control services.

• CDPQ-backed Verene Energia bought the Brazilian transmission platform Equatorial Transmissão at a valuation of C$1.26 billion ($910 million).

• Bain-backed Frontline Road Safety acquired Soundcore Capital Partners' Infrastripe, a fellow provider of line striping and pavement marking services, for an unknown sum.

And there were some key people moves:

• CD&R appointed Michael Harrington as risk director, a new position designed to oversee risk management strategies at both the portfolio and enterprise levels. Harrington most recently served as the vice president of risk management at Lockheed Martin and previously held positions at Eli Lilly and Citadel.

• Martyn Curragh joined Warburg Pincus as a senior advisor to the firm's technology and services business. Previously, Curragh served as CFO and head of portfolio strategy at PwC.

  

  See you next week!

Fall in line.

Last week, Brookfield Infrastructure Partners agreed to acquire Colonial Enterprises, the operator of the largest fuel pipeline (5,500 miles) in the United States.

The $9 billion deal will see Brookfield buy out existing shareholders for a 100 percent stake: KKR (23.4 percent), CDPQ (16.5 percent), IFM Investors (15.8 percent), Koch Inc. (28.1 percent), and Shell’s midstream operating unit (16.125 percent).

The deal is expected to close in Q4 2025 and will be financed with debt led by Morgan Stanley and Mizuho Bank.

This isn't the first pipeline Brookfield has operated — the asset manager currently owns dozens of pipelines across five continents.

Miles-long history.

Just as Brookfield took on its Colonial pipeline stake, it divested from another large American pipeline operator: Natural Gas Pipelines of America. Its stewardship of the asset gives important context as to how Brookfield operates pipelines in the USA.

On February 15, 2008, Kinder Morgan sold an 80 percent stake in NGPL to Myria Holdings — an investor consortium formed by Brookfield, SteelRiver Infrastructure Partners, PSP Investment Board, and PGGM — for approximately $5.9 billion.

In 2015, Brookfield bought out its Myria partners, paying $106 million to increase its ownership stake from about 27 percent to 50 percent. Kinder Morgan paid $136 million, increasing its ownership from 20 percent to 50 percent, implying a $3.4 billion enterprise value including debt.

In 2021, Kinder Morgan and Brookfield sold a 25 percent stake in NGPL to ArcLight Capital Partners for $830 million, valuing the company at $5.2 billion and bringing Brookfield’s equity stake to 37.5 percent. In 2023, Brookfield offloaded another 12.5 percent to ArcLight.

Finally, Brookfield sold its remaining 25 percent stake to ArcLight last month. The sale generated total proceeds of over $1.7 billion, yielding an 18 percent internal rate of return and a 3x multiple of capital on the investment since the recapitalization in 2015.

Fueling up.

Brookfield’s main method of value creation for NGPL PipeCo was via liquidation of assets. When Brookfield bought its initial stake in 2009, NGPL PipeCo owned 37,000 miles of pipeline infrastructure. By 2015, it had 9,200 miles. And by the time of last month’s divestment, it had only 9,100.

This may prove to be difficult to replicate with Colonial Enterprises. Midstream dealmaking hit a decade low in 2024 despite a global recovery in M&A more broadly.

The incoming Trump administration, though, could change this. The President has voiced support for projects such as the Keystone XL oil pipeline and the Constitution gas pipeline, for example.

A return of a friendlier federal regulatory regime may boost investors’ confidence — something industry experts have already caught onto, leading to more optimistic oil and gas M&A forecasts for 2025 and 2026.

Brookfield did not respond to request for comment.

PE portcos also saw some full and partial exits last week, as well as some exits-to-be:

• News broke that AlixPartners, a global consulting firm backed by CDPQ, PSP Investment Board, and Investcorp, is preparing to offload a minority stake and has enlisted Goldman Sachs to lead the process. The firm is valued at approximately $8 billion. PSP is expected to sell its stake, though it is unclear whether CDPQ or Investcorp will also participate.

• Francisco Partners agreed to sell a significant stake in healthcare software provider Office Ally to New Mountain Capital, valuing the company at $1.8 billion. The partial exit resulted from an auction process and has generated a 9x return for Francisco Partners.

• Permira sold its stake in cloud-based HR solutions provider Personal & Informatik AG to Hg for £53 million ($66 million), valuing the company at €5.5 billion ($6 billion). Hg initially invested in the company in 2013, when its enterprise value was approximately €400 million and in 2019 was valued at €2 billion.

• MidEuropa sold Regina Maria Group, a private healthcare network, to Mehiläinen, Finland's largest private healthcare provider which is backed by CVC. Financial terms were not disclosed. The is pending anti-trust clearance and is expected to close later this year.

• Cinven-backed SYNLAB sold its Spanish clinical diagnostics operations to Eurofins for an unknown sum.

• GI Partners completed the sale of Dr. Fortress, a data center service provider, to a consortium comprising FifteenFortySeven Critical Systems Realty and Harrison Street. Financial terms were not disclosed.

• Hg sold its stake in smartTrade — a provider of multi-asset trading solutions — to TA Associates for an unknown sum.

• Oaktree sold SAF Aerogroup, a French emergency aviation firm, to Infracapital and Vesper Infrastructure at an enterprise value of €300 million.

Meanwhile, portco M&A was in full swing:

• KKR-backed Playon, a youth and high school sports content platform, acquired MaxPreps, a high school sports media platform, from Paramount for an unknown sum.

• EisnerAmper, a global accounting, tax, and business advisory firm owned by TowerBrook, merged with accounting and consulting firm Prague & Company. Financial terms were not disclosed.

• KKR- and TPG-backed A-Gas, a supplier of refrigerants, halon, and other gases used in refrigeration and fire protection industries, bought Refrigerant Services, a Canadian company specializing in the recovery and reclamation of refrigerants. Financial terms were not disclosed.

Doubling down.

I’ve been covering the data center space since early 2022 before ChatGPT launched and the AI revolution began.

Since July 2023, I’ve been reporting that private investors are going to take large losses on these assets. I’ve noted that, despite the potential demand from AI, data centers’ multiples are too high to compensate for the risks incurred by investors: namely, obsolescence risk and climate risk.

When the mega deals came rolling in — Blackstone and AirTrunk, Macquarie and Applied Digital, Brookfield/OTPP and Compass — I did consider changing my tune. Were investors seeing something I wasn’t?

I don’t think so.

Bursting your bubble.

Here are just a few headlines that have solidified my belief that there is a private markets data center bubble ripe for popping:

• “China built hundreds of AI data centers to catch the AI boom. Now many stand unused.” by Caiwei Chen (MIT Technology Review): in 2023, following the AI boom sparked by ChatGPT, China experienced a rapid surge in the construction of AI-focused data centers, heavily funded by both government and private investors. Today, up to 80 percent of those new builds are unused due to shifting demand from AI training to real-time AI inference, making many centers obsolete.

• “AI excitement didn’t save CoreWeave IPO’s from a lukewarm reception” by Jacob Robbins (Pitchbook News): CoreWeave IPO’ed at $39 per share and closed its first day of trading at $40. The company initially planned to price shares between $47 and $55 (for a $33 billion valuation) but ultimately raised $1.5 billion, selling fewer shares than expected due to concerns about its growing losses, large debt load, and dependency on Microsoft (which accounted for 62 percent of its revenue). CoreWeave’s market cap is $23 billion, similar to its valuation from a secondary transaction in November 2024.

• “Microsoft Pulls Back on Data Centers From Chicago to Jakarta” by Brody Ford, Dawn Lim, Olivia Solon, and Faris Mokhtar (Bloomberg): Microsoft has scaled back its global data center expansion plans, halting or delaying projects in regions including the US, UK, Australia, and Indonesia. Analysts suggest the pullback may be due to oversupply in data centers relative to demand. This news comes after reports that Microsoft planned to withdraw from around 2GW of data center projects across the US and Europe.

• “Alibaba’s Tsai Warns of ‘Bubble’ in AI Data Center Buildout” by Luz Ding (Bloomberg): “I start to see the beginning of some kind of bubble,” Tsai said at the HSBC Global Investment Summit in Hong Kong. “I start to get worried when people are building data centers on spec. There are a number of people coming up, funds coming out, to raise billions or millions of capital.”

When this bubble pops, the fallout won’t be insignificant. Collectively, private equity has spent an estimated $170 billion on over 450 data center companies since 2022, which is 80 to 90 percent of the total value of deals in this sector for that time period. Blackstone anticipates $2 trillion will be spent on data centers globally by the end of 2029.

I, for one, think the market correction will come much sooner.

More like Dun deal.

Last week, Dun & Bradstreet entered into a definitive agreement to be taken private by Clearlake Capital Group in a deal valued at $7.7 billion, including debt, or just $4.1 billion including equity. Under the terms, shareholders of the public B2B data and analytics company will receive $9.15 in cash per share.

The deal will be financed with $2.3 billion in equity and $5.75 billion in debt — a slightly higher debt percentage (about 60 percent) for a take private than the Q4 2024 average (53 percent), according to Pitchbook.

The debt financing will initially be fulfilled via a bridge loan and then be be replaced by longer-term financing such as junk bonds or leveraged loans. Morgan Stanley will be the leading lender in a consortium that includes Ares and HSBC.

The transaction was unanimously approved by Dun & Bradstreet's board and is expected to close in Q3 2025.

Mixed feelings.

Despite the unanimous approval, not all stakeholders were thrilled with the deal. The sale price of $9.15 per share is only a modest increase from its pre-announcement stock price of $8.73 and is significantly below the company’s 2020 IPO price of $22 per share.

Analysts are hopeful that the 30-day “go-shop” period included in the deal will attract slightly higher offers. Since 2019, Dun & Bradstreet’s operational growth has not been reflected in its stock price, which has steadily declined since its IPO.

A numbers game.

B2B data company deals have been making headlines lately — look no farther than BlackRock’s $3.2 billion Preqin acquisition as proof that business intelligence is getting more valuable.

For Clearlake, Dun & Bradstreet won’t represent the firm’s first foray into business-to-business data companies. In October 2015, the PE firm bought Syncsort Incorporated, a provider of data integration and transformation software.

During its ownership, Clearlake invested in M&A, first adding on Precisely (Trillium Software) in late 2016 and then merging Synscort with another software portfolio company, Vision Solutions, in August 2017. The combined entity was sold to Centerbridge Partners for $1.26 billion, with Clearlake retaining a minority ownership stake.

Clearlake Capital did not respond to request for comment.

PE portcos also saw some full and partial exits last week, as well as some exits-to-be:

• PAI Partners offloaded a portion of its stake in European Camping Group to the Abu Dhabi Investment Authority. Specific financial terms of the transaction were not publicly disclosed.

• Apollo-backed OLB Group, a German regional lender, withdrew its plans for an initial public offering and has instead agreed to a sale to Crédit Mutuel for €1.8 billion ($1.9 billion), or a 3.5x return for Apollo.

• Roper Technologies acquired Insight Partners-backed CentralReach, a software provider for applied behavior analysis therapy, for $1.65 billion.

• Blackstone bought a minority stake in airport operator AGS from AviAlliance, owned by PSP Investments. Blackstone paid £235 million ($303.6 million) for a 22 percent stake, with PSP’s AviAlliance retaining the remaining 78 percent.

• Bain Capital agreed to acquire Namirial, a provider of digital transaction management solutions, from Ambient, at a €1.1 billion ($1.2 billion) valuation.

Meanwhile, portco M&A was in full swing:

• McGraw Hill, a global education company owned by Platinum Equity, acquired Essaypop, an educational writing software, for an unknown sum. The acquisition is the company’s fourth since Platinum Equity acquired it in 2021.

• PSG-backed eCommerce software firm Yottaa bought SpeedSense, a provider of website optimization solutions, for an undisclosed amount.

• IQGeo, owned by KKR, entered into exclusive negotiations to acquire AI software developer Deepomatic. Financial terms were not disclosed.

• SER Group, a document management vendor owned by TA Associates and The Carlyle Group, acquired AFI Solutions, a provider of document automation solutions, for an undisclosed amount.

• Partners Group’s SureWerx, a provider of safety tools and equipment, acquired Reliance Fall Protection, a fall protection safety product engineering firm, for an unknown amount.

And there were some key people moves:

• Kingswood Capital Management appointed Merche del Valle as its chief talent officer for both the firm and all of its portfolio companies. She previously served as managing director, chief talent officer, and chief HR officer at Grain Management.

• The Halifax Group hired Howard Miller as an operating executive. Miller’s most recently served as the chief executive of Envision Pharma Group.

RIP, IRA.

Nobody wants to admit that the worst will likely come to pass — but I have no money in the game, so allow me to be the first to do so. The Inflation Reduction Act is as good as dead.

Most investors have relied on the fact that red states benefit more from the IRA to assert that the Republican Party has no interest in gutting the clean energy tax credit bill. But the erratic nature of this administration makes this less of a convincing argument and more of a kind of wishful thinking.

In fact, Heatmap reported that former GOP Hill staff believe that even the most bipartisan parts of the IRA could be cut during the imminent budget reconciliation process in order to make room for Trump’s proposed tax cuts.

This will have major implications for infrastructure portfolio companies’ valuations, as some tax credits reduce assets’ tax burdens by upwards of 30 percent. This, combined with a regulatory climate that is hostile towards sustainable investing, will make the already tough exit environment even more brutal for renewable energy investors.

Amongst the Giants.

Sixth Street Partners has acquired a 10 percent stake in the San Francisco Giants, valuing the major league baseball team at $3.8 billion.

The Giants claim the capital will be used to enhance its home field, Oracle Park, to improve training facilities, and to support nearby real estate development, including the development of a nearby mixed-used neighborhood called Mission Rock.

Spurned.

This isn’t Sixth Partners’ first foray into sports teams. Other investments for the firm include Bay FC, the San Antonio Spurs, Real Madrid, and FC Barcelona.

The longest-standing investment of the bunch is the San Antonio Spurs, an NBA team in which Sixth Street Partners acquired a minority stake in 2021, valuing the franchise at $1.8 billion.

Since the deal was struck, the Spurs have become much more profitable. Between the 2021/22 season and the 2023/24 season, the team’s revenue increased from $306 million to $363 million, while its operating income jumped from $99 million to $118 million.

Meanwhile, the team started spending more on players, leading to one of its best seasons in decades in 2023/24 due to the drafting of Victor Wembanyama. In fact, the Spurs’ star player may become the first NBA player to make over $1 billion just off of NBA salary alone.

All that glitters.

Higher revenue and income coupled with higher spending has meant that money has had to come from somewhere, though — and that is fans’ pockets. For the 2024-25 season, fans complained that season ticket prices increased between 16 and 25 percent.

The team’s revenue per fan was $54 in February 2021, before Sixth Street Partners bought its stake. As of October 2024, that figure amounts to $70 per fan.

Sixth Street declined to comment for this piece.

PE portcos also saw some full and partial exits last week, as well as some exits-to-be:

• PartnerOne acquired NetWitness, a cybersecurity company, from Clearlake Capital-backed RSA Security for an unknown sum.

• Avenue Capital Group’s Middle River sold 1.9 GW of natural gas power plants to Partners Group for $2.2 billion.

• Wabtec Corporation bought Dellner Couplers, a company specializing in railway coupling technology, from EQT. No financial terms were disclosed.

• Cinven completed a €3.5 billion ($3.78 billion) exit from insurance company Viridium to a consortium of investors including Allianz, BlackRock, and T&D Holdings.

• CDPQ sold Qima, a compliance solutions provider, to TA Associates for an unknown amount.

Meanwhile, portco M&A was in full swing:

• Astorg-backed Steliau, an electronic solutions specialist, bought German peer UX Gruppe for an undisclosed sum.

• Clario — a clinical trial technology company formed via a merger of ERT and Bioclinica in 2021 and owned by Astorg, Nordic Capital, Novo Holdings, and Cinven — acquired imaging provider NeuroRx. Financial details of the transaction were not disclosed.

• Guess? Inc. received a going-private proposal from Ares-backed WHP Global. The company is offering $13 per share, or a $751.5 million valuation — nearly a $100 million premium.

• EQT’s Scale Microgrids bought a 9.6-megawatt combined heat and power fuel cell project from HyAxiom, Connecticut’s largest fuel cell manufacturer. Financial details were not disclosed.

• Berkshire-backed Forcura and Vistria-backed Medalogix merged to create a platform for post-acute care technology. Financial details were not disclosed. Berkshire Partners will be the majority owner of the new entity, while Vistria will be the largest minority shareholder.

• Perforce, a DevOps performance software owned by Clearlake Capital and Francisco Partners, acquired Snowtrack, a software provider for application designers, for an unknown sum.

• Ares-backed Interstate Waste Services expanded its waste management market presence via an acquisition of Pinto Service, a northern New Jersey-based waste management company in northern New Jersey. No specific financial details were provided.

• Arlington Capital’s defense analytics platform, Systems Planning & Analysis (SPA), acquired Intrepid, a missile engineering company. No financial details were disclosed.

Two necessary letters.

Private equity’s push to get the IRS to drop the “DA” from “EBITDA” when calculating tax obligations is an obvious cash grab. The assertion that PE-backed firms need a government bailout to service their debt while their sponsors sit on a record $500 billion in dry powder is laughable.

The most impactful way for the government to reduce PE-backed companies’ debt burdens would be to require higher minimum equity ratios for leveraged buyouts. Additionally, while we shouldn’t completely get rid of the concept of limited liability for GPs — moderate risk-taking should be incentivized in the industry — there should be more legal damages incurred by private equity firms that load portcos up with blatantly unserviceable debt.

But private equity will never lobby for the latter.

Reducing the cost of debt for portfolio companies is important, yes. But increasing the government’s deficit is not the answer.

Not-so-small cells

EQT’s Active Core Infrastructure fund is set to carve out Crown Castle’s small cells solutions business at a valuation of approximately $4.25 billion. The deal is made in tandem with that of its portfolio company, Zayo (co-owned with Digital Bridge) to carve out Crown Castle’s fiber business, also at a $4.25 billion valuation.

Fiber has been a risky bet in infrastructure lately — investment in the sector wasn’t popular until the pandemic when it was dubbed the “fourth utility”. For that reason, Zayo sits in EQT’s flagship infrastructure fund (the fourth vintage), which has a moderate risk-return profile for the asset class.

Interestingly, EQT is making the small cells investment out of its Active Core Infrastructure fund, which is meant for lowest-risk infrastructure investments. Think: toll roads, airports. Typical infrastructure stuff.

But investment in small cells is very much a burgeoning area of the private infrastructure asset class. While EQT highlights the “strong foundation of long-term contracts” associated with the deal (a hallmark of a core infrastructure asset) but doesn’t specify how long or what percentage of revenue is contracted. A common complaint in digital infrastructure is that contracts in general are getting shorter.

Going again

But EQT has put burgeoning assets in its core fund before — in 2023, it invested in Radius, a digital infrastructure property manager. That investment also touched traditionally non-core assets such as data centers and, yes, small cells.

Human capital has been EQT’s main management strategy here, replacing Radius’ CEO, executive chairman, and CFO over the past two years. The firm still holds the asset.

By definition, human capital will have to be an element of the strategy with Crown Castle’s small cells, too. Given that this deal is a carve-out, core services and roles will need to be filled at the new standalone company.

Whether or not EQT intends to do more, though, is unclear. EQT declined to comment for this piece.

PE portcos also saw some full and partial exits last week, as well as some exits-to-be:

• Ardian sold its 35 percent stake in LBC Tank Terminals, a hazardous liquid storage company, to Mitsui O.S.K. Lines for $1.7 billion.

• PAI Partners entered into exclusive negotiations to sell its majority stake in Amplitude Surgical, France — a developer of surgical technologies for lower limb orthopedics — to Zydus, a global life sciences company. Zydus would pay €6.25 per share, an 80.6 percent premium over March 10th’s closing price, meaning the entire deal would amount to €256.8 million ($280.5 million) for the outstanding 85.6 percent stake.

• Levine Leichtman Capital Partners sold Encore Fire Protection, a Rhode Island-based provider of fire protection services the GP has owned since 2021, to Permira for $1.8 billion. LLCP increased Encore Fire’s EBITDA by 9x during its stewardship via 55 add-on acquisitions.

• CPP Investments offloaded 7.51 percent of its stake in 407 ETR, a toll road in Ontario, to PSP Investments for C$2.39 billion ($1.67 billion).

• Piraeus Bank agreed to acquire 100 percent of Ethniki Insurance, a Greek composite insurer, from CVC for €600 million in cash.

• News broke that Advent International is considering the sale of Ultra Precision Control Systems (Ultra PCS), a UK-based provider of military engineering solutions, for $1 billion. Advent acquired the asset through its $5.2 billion acquisition of Cobham in 2020. No formal sale process has been initiated.

Meanwhile, portco M&A was in full swing:

• HIG-backed Rainham Industrial Services bought TEi, a bankrupt British construction services provider, for an unknown sum.

• Westland Insurance, owned by Ontario Teachers Pension Plan, acquired Saskatchewan-based insurance firm Loewen Agencies. Financial terms were not disclosed.

• Clario — a clinical trial technology company formed via a merger of ERT and Bioclinica in 2021 and owned by Astorg, Nordic Capital, Novo Holdings, and Cinven — entered into a definitive agreement to acquire WCG's electronic clinical outcomes assessments (eCOA) business for an undisclosed amount.

• Hub International, an insurance brokerage and financial services firm owned by Hellman & Friedman, Leonard Green & Partners, and Altas Partners, acquired the Drayton Valley Insurance Agency in Alberta for an unknown sum.

• Permira-backed PharmaCord and Odyssey-backed Mercalis merged to create a large biopharmaceutical solutions provider, majority-owned by Permira. Financial terms, and the merged entity’s new name, were not disclosed.

• New Mountain Capital’s PerkinElmer, an analytical services and solutions provider for the healthcare sector that the GP acquired via carve-out in 2022 — bought Project Farma, a biomanufacturing consultancy. Financial terms were not disclosed.

• Francisco Partners-backed Quorum Software, an energy software company, acquired ZDScada, a provider of supervisory control and data acquisition systems for the oil and gas industry, for an unknown sum.

• Perch Energy, a community solar servicer backed by Nuveen and Arborview Capital, and the community solar subsidiary of Arcadia, a utility data and energy solutions platform owned by Magnetar, Macquarie, JP Morgan Asset Management, and BoxGroup, merged. Financial terms were not disclosed, but Arcadia will be the majority owner of the new venture.

• Hellman & Friedman’s Enverus, another energy data company, acquired Pearl Street Technologies, a developer of software solutions provider for grids. Financial terms were not disclosed.

Unwanted and unpopular

Perhaps some of you caught last week’s deep-dive on how Article 8 and 9 funds under the European Union’s Sustainable Finance Disclosure Regulation would likely be the first private funds on the target list for litigation from anti-DEI crusaders.

What has already happened in public markets is bad. I’ve never spoken to a financier, left or right, who has been in favor of the backlash DEI and ESG are getting from red state regulators. (If you are one, reach out… I’m curious). Most seem to agree that it is a derailment of fiduciary duty to not be able to consider risks for your portfolio — risks like climate change, workforce diversity, and biodiversity loss — because they’re politically unsavory.

No path to victory

How the anti-ESG crowd will tackle private markets is hard to predict due to the illiquidity of the asset class. In my opinion, there is no way for the right to make meaningful anti-ESG progress in private markets as they did with public markets.

What’s an LP to do? Force a GP to sell assets before they’re ready? Sell their stakes on the secondaries market for a steep discount? Either way, there’s no way to back out of an ESG-conscious fund without a serious breach of fiduciary duty, making the entire argument that ESG forgoes returns (a claim researchers have not yet reached a consensus on) defunct.

Will anti-ESG rhetoric be a nuisance for managers? Absolutely. Will it impact returns? If enough portfolio companies are heckled, then yes.

But will it rework the private markets system entirely? I don’t think so. ESG-focused GPs will continue to fundraise. LPs who can commit, will commit. They’ll continue to make socially-conscious investments.

But not without a headache.

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Checkout.

By now, we all know the low-down. Sycamore Partners, a consumer-focused private equity firm that has mainly been active in the fashion retail space, has agreed to take the Walgreens Boots Alliance private in a deal valued at approximately $23.7 billion, including debt.

Shareholders will receive $11.45 in cash per share, an 8% premium over the company's March 6th closing price, and could potentially receive another $3 per share if certain assets are successfully divested.

The deal is expected to close in Q4 of this year.

The tradeoff.

Brian Tanquilut, managing director of healthcare services equity research at Jeffries and one of 19 analysts who cover the Walgreens Boots Alliance stock, says that while he views the take-private as “the right move” for Walgreens and its shareholders, he still has reservations.

“[The acquisition] was still a little bit of a surprise for [my peers and I] because it's not an easy asset to turn around. It has some structural and fundamental challenges,” he said. “I think Sycamore is undertaking a fairly tough turnaround here.”

One way for Sycamore to run a quick financial turnaround, Tanquilut predicts, is through downsizing.

“[Sycamore Partners] will probably close more stores, figure out how to get out of leases, and then that way you're eliminating some of the underperformance in that retail pharmacy side of the business. So once you do that, in theory, you can shore up earnings and cash flow, and maybe that helps turn this thing around over time,” he explained.

With store closures will likely come layoffs, of course.

Sell out.

Tanquilut also predicts that the Sycamore deal will force Walgreens to sell many of its assets, but this may be done more so to fund the debts associated with the take-private.

“It's about disposing assets that are embedded in the company that are undervalued,” he said. “Obviously there's a bunch of debt [involved in the take private], so that would help from that perspective.”

Tanquilut predicted the following assets could face sale under Sycamore’s stewardship:

Cencora: a publicly traded global drug distributor that Walgreens maintains a six percent stake in.

Village MD (including its City MD and Summit Health subsidiaries): a poor-performing health conglomerate Walgreens has owned since 2020 and has been trying to sell since early this year.

Shields Health: a specialty pharmacy business Walgreens acquired in 2021 and is also trying to sell.

CareCentrix: an in-home care solutions provider Walgreens bought a 55 percent stake in for $330 million in 2022.

Tanquilut believes that the deal with Sycamore affords Walgreens more time to find a suitable buyer for these assets, rather than having to sell them in a “fire sale situation” right now.

Sickle-more.

Sycamore is no stranger to asset stripping. It’s a tactic they’ve employed at many portcos, including Staples, Hot Topic, Torrid, and The Limited, to varying degrees of financial success. One controversial example of this was the firm’s acquisition of Jones Group, which it acquired in 2014 for $1.2 billion.

After loading up the company with debt, Sycamore sold off several of its brands — including Jones New York, Stuart Weitzman, Kurt Geiger, and Easy Spirit — making large profits. Jones Group then became Nine West Holdings, its lone surviving brand, which struggled as Sycamore closed nearly all Nine West stores and shut down the Anne Klein e-commerce site. Sycamore Partners wrote down the investment, much to the chagrin of the portco’s bondholders.

One thing Sycamore Partners has no experience with, however, is purveying controlled substances. Most of its acquisitions in the past have been in fashion retail, with a few restaurant-based acquisitions.

Tanquilut doesn’t think this will be an issue, given that the most difficult part of owning and operating a pharmacy is the supply chain — something that Walgreens has handled through its special partnership with Cencora, the very same global drug distributor that Walgreens may sell its stake in.

Despite this, Tanquilut doesn’t think Walgreens’ overall partnership with Cencora is at risk, stating that “the partnership will hold whether or not [Walgreens] owns the stock”.

Sycamore Partners did not respond to request for comment.

PE portcos also saw some full and partial exits last week, as well as some exits-to-be:

• BC Partners agreed to sell its majority stake in the security firm GardaWorld to a consortium including current GardaWorld founder and CEO Stephan Cretier, HPS Investment Partners, Oak Hill Advisors, One Investment Management, and other company executives for C$13.5 billion ($9.34 billion). BC Partners originally acquired GardaWorld in 2009 — becoming the controlling shareholder in 2014 — and will retain a minority interest in the asset post-transaction.

• Sterling Group finalized the sale of Frontline Road Safety, a pavement marking service provider it has held since 2016, to Bain Capital for an undisclosed amount.

• After years of restructuring the asset, KKR reached an agreement to sell its controlling stake in the Japanese supermarket chain Seiyu to Japanese retailer Trial Holdings. The deal values Seiyu at approximately ¥170 billion ($1.15 billion). KKR acquired a majority stake in the asset in 2008 via a partnership with Walmart, securing full control in 2018.

• The Financial Times acquired Invisso, a live events company, from private equity firm Epiris via its portfolio company Delinian (formerly Euromoney, which it acquired in 2022) for an unknown sum.

• Francisco Partners agreed to acquire energy software solutions provider Quorum Software from Thoma Bravo. Financial terms were not disclosed. Thoma Bravo has owned Quorum since 2018.

• Warburg Pincus sold Sundyne, a heat pump and gas compressor manufacturer, to Honeywell for $2.2 billion in cash, representing a 14.5x EBITDA. WP bought the asset from BC Partners and the Carlyle Group for an undisclosed amount in 2020.

• Clearlake Capital bought ModMed, a healthcare SaaS company, from Warburg Pincus for an undisclosed amount. WP acquired ModMed in 2017 and unsuccessfully tried to sell it in 2022.

• Equistone sold TIMETOACT Group, a German IT services provider, to H.I.G. Capital for an unknown sum. Equistone initially acquired the asset in 2021.

Meanwhile, portco M&A was in full swing:

• Thoma Bravo-backed USU, an IT services solutions provider, acquired management software provider SaaSmetrix for an undisclosed amount.

• Another Thoma Bravo portco, Flexera, bought Spot (a FinOps portfolio owned by NetApp) for an unknown sum.

• Adevinta, owned by Blackstone and Permira, neared finalizing a deal to sell its stake in the Austrian digital marketplace Willhaben, an Austrian digital marketplace, to joint venture partner Styria Media Group, its partner in the venture, alongside European growth investor Sprints. The transaction will likely be valued at approximately €500 million ($519 million).

• KKR’s medical device platform Ajax Health collaborated with Boston Scientific to launch FlowMod, a new company that will seek to accelerate clinical validation and regulatory approval for heart failure treatments. The company will be led by Dr. Philippe Marco, former president and chief operations officer of Ajax-led companies Epix Therapeutics and CV Ingenuity.

And there were some key people moves:

• Charlesbank Capital Partners appointed Michael Treisman, formerly in-house counsel at Bain Capital, to be its next general counsel and chief compliance officer. He replaces Jerome McCluskey, who left Charlesbank to become a partner at Latham & Watkins last month.

• AE Industrial Partners hired ex-CIA cyber intelligence director Andrew G. Boyd as an operating partner for its aerospace, defense, and industrial portfolio.

• Leeds Equity Partners brought on Andrew Hermalyn as an operating partner for its education portfolio. Hermalyn has 20 years of experience in the education industry, 17 of which were spent at the online education company he founded, 2U, Inc.

Finally, don’t say we didn’t warn you — the FTC remains unfriendly to PE-backed healthcare, even without Lina Khan at the helm:

• The FTC sued to block GTCR's $627 million acquisition of medical device coatings manufacturer Surmodics. The FTC’s main concern is that GTCR owns Biocoat, which, combined with Surmodics, constitutes over 50 percent of the hydrophilic coatings market. Surmodics plans to defend the deal in court.

The VIP Section. Warburg Pincus agreed to buy Vermont Information Processing last week for $1 billion including debt. The firm is a software company focused on wholesale beverage distributors.

Warburg Pincus’s last comparable asset was TriMark, a restaurant supply company, which it bought from Audax Group in 2014 for an unknown sum and sold to Centerbridge Partners in 2017 at a $1.35 billion valuation.

Trifold. The PE firm’s value creation strategy with TriMark was three-pronged: digital transformation, leadership changes, and M&A.

First, TriMark’s website was reworked to be more customer-focused. Warburg Pincus also implemented enterprise resource planning software across the company to improve cost margins.

Then, the firm “added a number of seasoned professionals to the management team and created a number of new positions needed to efficiently manage the growing business,” according to Warburg Pincus. On the sponsor side, Warburg Pincus added Michael A. Pulick as an industry advisor to help oversee the asset.

Finally, Warburg Pincus made two add-on acquisitions of smaller competitors to the firm in 2016: RW Smith & Co. and Adams-Burch. These acquisitions strengthened TriMark’s market share in the southwest and the mid-Atlantic, respectively.

Parched. When asked if Warburg Pincus intends to implement any of these strategies at VIP, the firm declined to comment. However, it is worth noting that Pulick, the industry advisor who helped Warburg Pincus oversee TriMark, is no longer affiliated with Warburg Pincus.

The food and beverage distribution industry is a different world, too, from what it was from 2014 to 2017. For starters, consumption of alcoholic beverages has been on the decline, with sales of high-margin beverages (alcoholic beverages) down for the first time in three years and expected to continue decreasing due to a rising “sober-curious” movement. President Trump’s proposed tariff plan is expected to exacerbate this trend.

Portco Newswire

PE portcos also saw some full and partial exits last week:

• Hg and GRO Capital sold Trackunit, a SaaS and data platform for the construction industry, to Goldman Sachs Asset Management’s private equity business for an undisclosed amount. Previous reports from Bloomberg indicate that the company’s valuation is about $1 billion.

• Pharma giant Novartis bought Anthos Therapeutics, a therapy developer for cardiometabolic diseases, from Blackstone for upwards of $3.1 billion. Shareholders will receive $925 million upfront and further payments will be made if regulatory hurdles and commercial milestones are cleared.

• Apollo sold its remaining 12 percent stake in Sun Country Airlines for $10 million, or $16.50 per share. The buyer was Sun Country Airlines itself, a portco Apollo acquired in 2017 and took public in 2021 (at $36.38 per share, above its $24 asking price).

• KKR sold Kito Crosby, an industrial manufacturer the PE firm bought in 2013 for $1 billion, to Columbus McKinnon, for $2.7 billion in an intended merger. Columbus McKinnon motion technology manufacturer and a portfolio company of CD&R, which will own a 40 percent stake in the combined entity post-transaction.

• Thoma Bravo’s Sailpoint, a cybersecurity software firm, IPO'ed at $23 per share, or a $12.8 billion valuation.

• PAI Partners sold Apleona, a provider of industrial facility management services, to Bain Capital for €4 billion ($4.2 billion).

• EQT IPO'ed HBX Group, a travel software platform, on the Spanish stock exchange for €10.54 per share, below its €11.50 asking price. The implied market capitalization is about €2.7 billion.

• CVC Partners agreed to sell a 51 percent stake in Indian oncology hospital chain Healthcare Global Enterprises to KKR for ₹430 to ₹440 per share (between $4.95 and $5.06), or at an enterprise valuation of about ₹3,128 Cr (just under $360 million).

Meanwhile, portco M&A was in full swing:

• Ares-backed Resource Label Group, a provider of label and packaging solutions, bought competitor Imprimerie Ste-Julie in its 34th acquisition. Financial terms were not disclosed.

• Baker Tilly, a tax, advisory, and assurance firm backed by Hellman & Friedman and Valeas Capital, agreed to buy Connecticut-based CPA advisor CironeFriedberg for an unknown sum.

And there were some key people moves:

• Apax-backed tech consultancy Thoughtworks appointed Gene Reznik as chief strategy officer and global head of service lines, and Steven Yurisich as APAC regional managing director. Reznik joins from German data processing company Celonis and Yurisich from IT consultant Merkle Australia, respectively. Additionally, Ami Kaplan, a recently retired senior partner at Deloitte, and Michael Carajohn, a principal on Apax’s tech team, joined Thoughtworks' board of directors.

• CD&R hired Peter Crawford, former CFO of Charles Schwab, as an operating advisor for its financial services portfolio.

Hot Take

Alarm bells. LPs require private equity firms to enlist third-party auditors when they report their portfolio valuations. However, even with a seemingly independent third party involved, there has long been industry criticism that valuations are inflated and valuation methods are not transparent.

These concerns have been cropping up a lot lately with the rise of private equity purchases of those third-party auditors. Experts predict that one-third of the US’s largest accounting firms will likely be PE-backed in the near future.

For example, President Biden’s outgoing SEC chief accountant Paul Munter preached skepticism of private equity accounting deals at the end of 2024, stating, “You’re talking about a capital provider who’s not grounded in a public interest mentality as the CPA profession is,” and arguing that PE-backed firms should be closely monitored “so that you don’t end up in a situation where you’ve had a significant culture shift away from a public interest mindset and focus on audit quality.”

Meanwhile, the UK’s audit watchdog recently increased the potential risks it believes private equity poses to the industry from “moderate” to “high” and the ethics committee of the American Institute of Certified Public Accountants (AICPA) is looking to revise its independence rules to incorporate the realities of private equity ownership in the industry.

Always the skeptic. I can’t say with data-backed certainty that these concerns are based in fact. But I can say that in my experience, LPs are right to question the system, and should likely do so more.

I recall a conversation I had with one of my sources last year, a C-suite level executive whose decade-plus of experience in private markets spanned both large-cap and boutique GPs.

“It's a sham,” they said. “This is kind of like the financial crisis; I'll use the analogy of Moody's and S&P, for example. They were paid by the underwriters, the banks, in order to value mortgage-backed securities. If they didn't give them a good rating, the banks wouldn't pay and they’d go somewhere else. Well, in the world of private equity, we have NAVs.”

Can we fix the broken system overnight? Absolutely not. But staying skeptical of valuations – and PE deals in the accounting space – is step one to creating a healthier PE playing field.

Deal of the centuries. A common private equity deal? A software company established in the early oughts. Less common? An industrials firm established during the last century.

Unheard of? A private equity deal for a 340-year-old Japanese pharmaceutical company. But there’s a first time for everything.

Last week, Bain Capital placed its $3.3 billion bid for Tanabe Pharma, the pharmaceutical business of Mitsubishi Chemical Group that was founded in Osaka in 1678. If approved, the take-private would constitute the largest private equity deal ever in Japanese healthcare.

Regime change. Why Japanese pharma, and why now? Japan is notoriously slow to approve new drugs due to archaic rules such as requiring testing on Japanese citizens. As a result, far fewer drugs are available to Japanese citizens when compared to those in other developed countries. However, the Japanese Ministry of Health, Labor, and Welfare is looking to ease these rules for specific drugs.

And it looks like the firm is trying to be a first mover, recently expanding into cancer drugs, central nervous system medications, and immuno-inflammation drugs.

Pharm to table. Tenabe is not Bain’s first APAC pharma play. Bain bought a stake in Emcure, an Indian pharmaceutical company, from Blackstone in 2013 for just over $82 million. The PE firm only recently exited the asset, with Emcure staging a highly successful initial public offering in July of last year. Seeking to raise $234 million, Emcure raised $11.2 billion in bids, or 68x higher than the amount on offer.

How did Bain get it there? Much like Tanabe, the process for Emcure focused on local markets, with Emcure spinning out its American presence (Heritage Pharmaceuticals, now Avet Pharmaceuticals) in 2022.

Unlike Tenabe, though, Emcure was a relatively young and nimble company, established in 1981. And more importantly, the asset wasn’t carved out from a larger corporation.

When it comes to Tenabe, however, this is not the case. Most carve-out deals have issues replacing core operational teams like human resources and compliance. Given that Mitsubishi Chemical is centuries old, those elements of Tanabe’s business are probably well-entrenched. This will be one major hurdle for Bain to overcome when spinning out the business.

Bain did not respond to request for comment.

Portco Newswire

PE portcos also saw some full and partial exits last week:

• Multinational manufacturing company Jabil bought Pharmaceuticals International, Inc. (PII), a pharmaceutical contract development and manufacturing organization backed by a consortium of investors including Athyrium Capital Management and Hildred Capital Partners, in an all-cash transaction. Financial details were not disclosed.

• Warburg Pincus sold its majority stake in Kestra Holdings, a platform for wealth management professionals with $117 billion in assets under management, to Stone Point Capital for an undisclosed amount. Oak Hill Capital will retain its minority stake.

• Providence Equity Partners sold Tempo Music – the owner of a catalog of rights to songs by top-name artists including Wiz Khalifa, Adele, and Bruno Mars – to Warner Music Group (owned by Warner Bros) at a $450 million valuation.

There were also a number of exits-to-be:

• News broke that IVC Evidensia, Europe’s largest veterinary group backed by EQT and Silver Lake, is considering an IPO on the London stock exchange. The firm was last valued at over €12.3 billion ($12.7 billion) in 2021.

• Also rumored to IPO was SailPoint, a cybersecurity firm owned by Thoma Bravo. The firm would be seeking to raise $1.05 billion, or a $11.5 billion total enterprise valuation.

• News also leaked that GTCR has been looking to offload Ultimus, an independent fund administration provider, at a valuation of $2 billion.

• Similarly, Aquiline Capital Partners looked into exiting Hedgeserv, another administrative service provider for funds, at a valuation of $1 billion.

• Also, Ontario Teachers Pension Plan looked into the possibility of selling Miratech, a legal and compliance software company. The pension fund has enlisted Lazard to launch the sale process, which it hopes will garner a valuation of $4 billion inclusive of debt.

Meanwhile, portco M&A was in full swing:

• TA Associates bought and merged FGE and NexantECA, two energy and chemical consultancies. Financial terms of the transaction were not disclosed.

• Encora, a digital services provider backed by Advent International and Warburg Pincus, acquired the business capabilities portfolio of its competitor DMI for an undisclosed sum.

• Audax-backed RIA CW Advisors bought Aspire Wealth Management and Fernwood Investment Management, two wealth management firms based in Massachusetts. The deals added $800 million in client assets to CW’s platform.

• Paradox, an AI-based conversation platform backed by Thoma Bravo, acquired Eqtble, a human resources analytics platform, for an unknown sum.

• KKR-backed Cotiviti, a healthcare data company, closed in on a deal to buy competitor Edifecs at a $3.05 billion valuation.

And there were some key people moves:

• Former US Senator Joe Manchin joined Apollo as an advisor and was appointed to the board of directors of Athene, a retirement services business that merged with Apollo in 2022.

• Summit Partners promoted Sergio Mur to partner in the firm’s “Peak Performance Group”, where his job will entail the recruitment of senior executives for portfolio companies.

Hot Take

Lessons unlearned. The silver lining of the “higher for longer” interest rate environment was supposed to be that private equity dealmakers would ween off their dependency on debt. For a while, that was true – debt-to-equity ratios for leveraged buyouts were at historic lows, with 2023 and 2024 seeing an average of 51 percent and 48 percent equity infusions in PE-backed deals.

Despite 2024 being a banner year, Q4 showed warning signs of this reversal.

According to Pitchbook’s recent US LBO Debt Quarterly Trend Lines Report, the percentage of equity on deals for that period was 47 percent for take-privates (still relatively high) and 42 percent for other PE-backed deals (shockingly low – closer to figures seen before 2022’s rate hikes).

And, for the first time, more-risky private credit loans are taking the front seat in financing LBOs. Indeed, according to S&P Global, private credit funds financed 77 percent of leveraged buyouts in 2024 (and 83 percent of buyouts between January 1 and January 22 of this year) – a record-setting figure.

Stunted value creation. You can’t have a leveraged buyout without leverage – so why raise the alarm bells? Going beyond the typical bankruptcy risk argument, there’s also a significant restriction to value creation when portcos are saddled with debt, even if it's debt they’re able to repay. Money spent on interest payments could easily be used for R&D for new products, roll-up acquisitions, or talent amelioration.

And furthermore, with dry powder levels still at record highs, it’s not only a bad look to load portcos up with debt and minimize your firm’s skin in the game, but also an ill-advised move. Better to put cash to work than have it sitting while interest payments build at portfolio companies.