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Happy Friday! 

Good to get back into the grind, especially on a three-day week. Nice way to ease back into maelstrom. 

CalPERS: The largest pension system in the U.S. has interviewed four teams of private equity professionals to run to new investment vehicles that will directly invest in companies. Two of those teams are still under consideration, a source told LP reporter Dietrich Knauth recently. 

Bloomberg reported this week that the system has interviewed Silver Lake executives David Roux, who co-founded the firm, and Adam Grosser, who led the firm's Kraftwerk fund. John Cole, CalPERS investment officer, told Bloomberg the system is not close to a deal. 

The system is expected to move quickly on the PE plan, potentially bringing a finalized version to the board in February, Dietrich reported. The plan calls for the creation of two CalPERS-controlled funds focused on long-term investments and late-stage health, science and tech companies. 

That doesn't mean the system will have hired managers for the vehicles by February, though. That process will likely take much longer. 

“The potential partners we are considering have … their own pipeline and their own level of due diligence going on in the marketplace,” Cole said at a meeting in December. “So it’s not starting from a standing start.”

CalPERS has faced a lot of criticism of the plan and its private equity program overall since the bad old days just after the financial collapse. It has struggled ever since to cut the costs of the program, negotiate terms with existing managers and find ways to use its huge leverage to cut better deals. 

Creating a direct investment-type organization, broken off from the core pension organization as a way to pay investment professionals more inline with the private sector, is an interesting concept. It's a model used by Canadian pensions who have become direct competitors with private equity firms and even some university endowments. It could work for CalPERS, and as CalPERS goes, so does the U.S. pension world. This could be a revolutionary moment for the fragile community of U.S. pensions that are trying to find ways of staying strongly funded as many states curtail required contributions. 

Just don't slack on transparency, as I asked in this column. The organization's operating budget should be in full public view, among other things. 

Divorce: Private equity is a relationship like any other, that needs tending and maintenance, time and patience, etc etc. It's not just all about that first year of infatuation. But sometimes, both partners just aren't that invested in the long-term tending of the garden, so to speak.

And so marriages fail. But in private equity, breaking up can be a much tougher prospect, according to a column in Institutional Investor. Especially in the absence of so-called no-fault divorce clauses -- a term that allows LPs to get rid of the GP for reasons less egregious than say, outright fraud. 

Most funds allow LPs, with a simple majority vote, to kick the bums out for cause, which becomes a complicated concept based on how LPAs commonly define the term: “a final adjudication by a court or governmental body…of embezzlement, fraud … criminal conviction of a felony…material violation of securities laws,” and so on, writes Chris Schelling. The challenge is that “final adjudication” qualifier. This often means a cause event cannot be found to have occurred until all venues for possible appeal have been exhausted. 

Now, we all know how slowly the wheels of justice turn. Even if the GP is literally stealing from the fund, LPs may have to wait five, maybe ten years for the judicial process to inch forward, with virtually no recourse to stop the ongoing activity, until final adjudication in a court of law. Only then could a vote be brought to the partnership.

This essentially means there is no removal cause, because the fund could be done by then anyway. 

On the other hand, a no-fault divorce clause permits limited partners to bring forward a vote to remove the general partner for no reason at all, subject to a super majority vote, often 75 percent to 90 percent. In practice, this is never done for spurious reasons, as limited partners all have return targets that must be met, and it is no trivial thing to consider an action that will almost certainly reduce potential gains. It is only with the near consensus of LPs — ostensibly all sophisticated investors — that drastic action is needed to maximize recovery of value that such a vote could pass. 


Check out the column here

Have a great weekend! Hit me up with tips n' gossip, feedback, whatever, at cwitkowsky@buyoutsinsider.com, on Twitter @chriswitkowsky or find me on LinkedIn. 

Who's the best: Buyouts is now accepting nominations for its 19th annual Deal of the Year awards, honoring exceptional buyouts that were fully or mostly realized in 2018. The deadline for submissions is Friday Feb. 22, 2019, but there’s no time like the present to apply. We’re also adding a new category this year, secondaries of the year, to recognize the top transaction relating to the sale of LP stakes, GP-led liquidity process, secondary-led spinout or some combination of all three.
 
Don’t miss this opportunity to be recognized by the editors of Buyouts for your outstanding work in 2018. Send Chris your submissions at cwitkowsky@buyoutsinsider.com. Read more here
 
Winners will be selected in six categories:
 
·         Deal of the year
·         Large market deal of the year
·         Middle market deal of the year
·         Small market deal of the year
·         Turnaround of the year
·         Secondaries of the year
·         International deal of the year

Service providers! Placement agents! Don’t miss your opportunity for a free listing in our widely distributed Guide to Emerging Manager Investors and Service Providers. Several dozen firms are listed for potential clients to see – make sure yours is too!

Take a few minutes to fill out our survey now:
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Today's  Take  

PE HUB First Read

First Read ends the week with news that political fixer Bradley Tusk targets $70 mln for his second fund, Apple's stock plunge has cost Warren Buffett nearly $4 bln and exploring the lack of no-fault divorce clauses.
Read more...  

PE HUB Second Opinion

In Second Opinion, Nancy Pelosi is elected House Speaker, Apple reports that its App Store pulled in $1.22 billion over the holidays with a record $322 million on New Year's Day and Bristol-Myers Squibb is acquiring rival Celgene for about $74 billion.
Read more...  

Mary Meeker swings for more than $1 bln for Bond

Revered venture capitalist Mary Meeker is seeking to raise $1.25 billion on a hard cap of $1.5 billion for a debut fund for her new venture capital firm, Bond, according to a report from Axios.
Read more...  

PE HUB Healthcare Wire Highlights, 1.3.19

Will GPs make tackling the opioid crisis a New Year resolution?
Read more...  

PSP shops $1 bln+ PE portfolio as secondaries activity rolls on

Public Sector Pension Investment Board is shopping a portfolio of private equity stakes valued at more than $1 billion, sources told Buyouts. PSP is one of numerous public-pension systems selling PE stakes on the secondary market, helping drive deal volume to potentially record levels. Other systems that have used or are using the secondary market […]
Read more...  

Bain Double Impact Fund doubles down on healthcare, adding HealthDrive

Echoing major themes supported by its large-cap fund, Bain Capital Double Impact is proving a devoted investor in healthcare providers serving some of the nation’s most vulnerable populations. Bain’s impact-investing arm said Jan. 3 that it acquired specialty physician services company HealthDrive from Riverside Partners. This follows the firm’s October formation of Arosa+LivHOME, a non-medical homecare company […]
Read more...  

Michigan pension system aims to lift PE exposure in ’19

State of Michigan Investment Board at its December meeting reported $435 million in third-quarter PE commitments, aiming to increase its exposure to the asset class in 2019. The board, which manages $73.1 billion in assets in four state retirement plans, set an 18 percent target allocation to private equity for 2019. It just about reached […]
Read more...  

Forget Brexit. U.K. remains atop European VC activity.

Forget concerns about Brexit. Although some feared that the United Kingdom’s departure from the European Union would cause startups to flee to other entrepreneurial friendly nations, the appetite for U.K.-based startups has grown in recent years. In 2018, worldwide venture firms invested more than $12.5 billion in 1,042 European companies, according to VCJ‘s analysis of […]
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Mary Meeker’s new firm Bond to raise $1.25 bln maiden fund: report

Last September, Kleiner Perkins let it be known it was splitting its early and growth investing, with General Partner Mary Meeker leaving to head up a new firm making later-stage investments. Rumors soon swirled that she might be raising up to $1.25 billion. Now Axios has reported the number is correct, with her new firm, […]
Read more...  

Michigan pension system aims to lift PE exposure in ’19

State of Michigan Investment Board at its December meeting reported $435 million in third-quarter PE commitments, aiming to increase its exposure to the asset class in 2019. The board, which manages $73.1 billion in assets in four state retirement plans, set an 18 percent target allocation to private equity for 2019. It just about reached […]
Read more...  

Michigan pension system aims to lift PE exposure in ’19

State of Michigan Investment Board at its December meeting reported $435 million in third-quarter PE commitments, aiming to increase its exposure to the asset class in 2019. The board, which manages $73.1 billion in assets in four state retirement plans, set an 18 percent target allocation to private equity for 2019. It just about reached […]
Read more...  
 
PartnerConnect East 2019
Celebrating 31 Years of Excellence
March 25-27, 2019
Hyatt Regency, Boston

The Premier Networking Event for LPs & GPs in the Private Equity, Venture
Capital and Private Real Estate Sector


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VC Deals 

 
 

Cell therapy company Immusoft inks $20 mln Series B

Seattle-based Immusoft Corporation, a cell therapy company, has raised $20 million in Series B financing. The investors included Breakout Ventures, Alexandria Venture Investments, RBV Capital, DEFTA Partners and Mesa Verde Venture Partners.
Read more...  

Ostara picks up $11 mln

Vancouver, British Columbia-based Ostara, a provider of nutrient management solutions to farms, municipalities and industries, has raised $11 million in funding. Wheatsheaf Group Limited and VantagePoint Capital Partners led the round. The capital will be used to scale the company's fertilizer production as well as support its expansion.
Read more...  

Ablative Solutions takes in $77 mln Series D

Kalamazoo, Michigan and San Jose, California-based Ablative Solutions Inc, a company focused on treating hypertension, has secured $77 million in Series D funding. Gilde Healthcare and BioStar Ventures led the round with participation from other investors that included Michigan Accelerator Fund and Novus Biotechnology.
Read more...  

Tiburio Therapeutics grabs $31 mln Series A

Cambridge, Massachusetts-based Tiburio Therapeutics, a biopharmaceutical company newly launched by Cydan, has raised $31 million in Series A funding. The investors were New Enterprise Associates, Longitude Capital, Lundbeckfonden Ventures and Alexandria Venture Investments.
Read more...  

Israeli Wi-Fi solutions provider Celeno pulls in $10 mln

Israel-based Celeno, a provider of Wi-Fi solutions, has raised $10 million in funding. Iris Capital was the lead investor.
Read more...  

Connect Biopharmaceuticals snags $55 mln Series B

China-based Connect Biopharmaceuticals, a clinical-stage company that focuses on treating autoimmune diseases and inflammation, has closed $55 million in Series B financing. Advantech Capital led the round with participation from return backers Qiming Venture Partners, Northern Light Venture Capital and Cowin Venture. CEC Capital was financial adviser on the transaction.
Read more...  
Mark Your Calendars!
PartnerConnect Event's 2019 Calendar is here!


PartnerConnect LP-GP Outlook- January 22nd, NYC
PartnerConnect East- March 25-27th, Boston
PartnerConnect Family Office & Independent Sponsor Spring- May 21-22nd, NYC
PartnerConnect Midwest- June 24-26th, Chicago
Emerging Manager Connect East- July 23rd, NYC
PartnerConnect West- September 23-25th, San Francisco
 PartnerConnect Family Office & Independent Sponsor Fall- October 29-30th, NYC
PartnerConnect Texas- December 9-11th, Dallas
PE Deals sponsored by  
 
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TA completes investment in Behavioral Health Works

TA Associates completed an investment in Behavioral Health Works, a behavioral health services provider focusing on therapy and services for children with autism spectrum disorder. Financial terms of the deal were not disclosed. TA's Emily McGinty will join Behavioral Health Works's board of directors.
Read more...  

Spectrum Equity, Health Enterprise Partners invest in Payer Compass

Spectrum Equity and Health Enterprise Partners invested in Payer Compass, which provides healthcare reimbursement technology. Jeff Haywood, Steve LeSieur and Michael Radonich from Spectrum Equity, and David Tamburri from Health Enterprise, will join the Payer Compass board.
Read more...  

Resilience buys TSS Technologies

Resilience Capital Partners has acquired West Chester, Ohio-based TSS Technologies, a provider of automation solutions. No financial terms were disclosed.
Read more...  

Nonantum acquires ProVest

Nonantum Capital Partners has acquired Tampa, Florida-based ProVest, a legal support services firm. No financial terms were disclosed. Lincoln International was financial adviser to ProVest on the deal while Goodwin Procter and Covington & Burling both advised Nonantum.
Read more...  

Vector completes Host Analytics acquisition

Vector Capital has closed its previously announced acquisition of Redwood City, California-based Host Analytics, a provider of cloud-based enterprise performance management solutions. No financial terms were disclosed.
Read more...  

Riverside Partners sells HealthDrive to Bain Capital Double Impact

Bain Capital Double Impact, Bain Capital's impact investing business, has acquired HealthDrive from Riverside Partners. No financial terms were disclosed. Wellesley, Massachusetts-based HealthDrive is a specialty provider of on-site dentistry, optometry, podiatry and audiology to residents in long-term care, skilled nursing, and assisted living facilities.
Read more...  

Centre Lane acquires Turning Technologies

Centre Lane Partners LLC has acquired Turning Technologies from Brockway Moran & Partners. No financial terms were disclosed. Based in Youngstown, Ohio, Turning Technologies is a provider of engagement software and audience response technology.
Read more...  

GI Partners buys Single Digits from Bregal

GI Partners has acquired Bedford, New Hampshire-based Single Digits Inc, a provider of managed wireless network solutions. The seller was Bregal Sagemount. No financial terms were disclosed. SunTrust Robinson Humphrey Inc provided financial advice to Single Digits on the transaction.
Read more...  
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IPOs
 
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M&A Deals  
 
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Pfingsten-backed Oliver Printing & Packaging adds-on DISC Graphics

Pfingsten-backed Oliver Printing & Packaging acquired packaging business DISC Graphics, the platform's second add-on. Pfingsten first invested in Oliver in May 2016. In 2017, Oliver acquired Pohlig Bros. Packaging.
Read more...  

PE-backed Foreside acquires NCS

Foreside Financial Group LLC, which is backed by Lovell Minnick Partners, has acquired NCS Regulatory Compliance, a provider of outsourced compliance and regulatory solutions to the registered investment adviser and broker-dealer markets. No financial terms were disclosed.
Read more...  

3i-backed Cirtec acquires Metrigraphics

Cirtec Medical, which is backed by 3i Group plc, is acquiring Lowell, Massachusetts-based Metrigraphics, a maker of ultra-high precision, custom micron-scale circuits and components for the medical devices industry and other critical applications. No financial terms were disclosed.
Read more...  

Cowen buys mid-market financial adviser Quarton International

Cowen Inc has acquired Quarton International for an upfront consideration of $75 million. Quarton International is a middle-market financial adviser.
Read more...  

PE-backed WaterBridge acquires Concho Resources’ produced water assets

WaterBridge Resources LLC, a midstream company focused on the water management requirements of oil and gas producers, has acquired the produced water assets of COG Operating LLC, a subsidiary of Concho Resources Inc in the southern Delaware basin. White & Case LLP represented WaterBridge in connection with the Concho transaction. WaterBridge is backed by Five Point Energy.
Read more...  

PE-backed Tech Air buys Tri-Star Gases

Tech Air has acquired El Monte, California-based Tri-Star Gases LLC, a distributor of industrial and welding supplies and gases. No financial terms were disclosed. Tech Air is backed by CI Capital.
Read more...  

PE-backed Worley buys ReSource

Worley Claims Services LLC, which is backed by Aquiline Capital Partners, has acquired Dallas-based Replacement Source of America Inc, a contents services company. No financial terms were disclosed.
Read more...  

Genstar-backed Mercer Advisors buys Dragon Financial Group

Mercer Advisors Inc, which is backed by Genstar Capital, has acquired San Mateo, California-based Dragon Financial Group, a provider of financial planning and investment management services. No financial terms were disclosed.
Read more...  
Real Estate
 
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Gencom-led partnership acquires two Florida hotels for $100 mln

A Gencom-led partnership has acquired Florida-based The Beachcomber Beach Resort and Hotel and The Grand Plaza Beach Hotel & Beach Resort. The purchase price was $100 million. The partnership will commit an additional $24 million for renovations to upgrade and rebrand the two hotels.
Read more...  
Firms & Funds
 
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March Capital raises $302 mln for venture, opportunity funds

March Capital Partners has raised a $156.6 million second venture-capital fund and a $145.4 million second opportunity fund, according to a pair of filings with the SEC.
Read more...  

Mary Meeker swings for more than $1 bln for Bond

Revered venture capitalist Mary Meeker is seeking to raise $1.25 billion on a hard cap of $1.5 billion for a debut fund for her new venture capital firm, Bond, according to a report from Axios.
Read more...  

Triventures ARC targets $45 mln for healthcare seed fund

Triventures ARC, a venture capital arm of the ARC Innovation Center at Sheba Medical Center, an Israeli hospital, is seeking to raise $45 million for a fund focused on seed investments in healthcare innovations. Triventures, which is based in Herzliya, Israel and Menlo Park, California, will manage Triventures ARC.
Read more...  

Prime Movers Lab collects over $22 mln for debut fund

Prime Movers Lab has raised over $22 million for its inaugural fund, according to an updated SEC filing. Jackson, Wyoming-based Prime Movers Lab invests in physics-powered startups founded by Prime Movers.
Read more...  

North Castle rakes in $278.5 mln for seventh fund

North Castle Partners has raised $278.5 million for its seventh fund, according to an SEC filing. No target was listed in the document. The Greenwich, Connecticut-based private equity firm invests in the health, wellness and active living sector.
Read more...  
Human Resources
 
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PE-backed Gopher Resource taps Leen as president/CEO

Eagle, Minnesota-based Gopher Resource, a national environmental solutions provider, has named Brian Leen as president and CEO. Previously, Leen worked at ADA Carbon Solutions where he was also president and CEO. In addition to this appointment, Eric Robinson is also joining from ADA Carbon Solutions as senior vice president and chief operating officer. Gopher Resource is backed by Energy Capital Partners.
Read more...  

Latham & Watkins adds Johnson to M&A and PE practice

Alexander Johnson has joined law firm Latham & Watkins' New York office as a partner in the corporate department and a member of the M&A and private equity practice. Previously, Johnson worked at Hogan Lovells.
Read more...  

VC-backed StrideBio recruits Shah as CEO

Durham, North Carolina-based StrideBio Inc, a gene therapy company, has named Dr. Sapan Shah as CEO and a member of the company's board. Shah is a former chief executive at ARMGO Pharma and Ezose Sciences. StrideBio's backers include Hatteras Venture Partners, Takeda Ventures Inc, UCB Ventures and Alexandria Venture Investments LLC.
Read more...  

Amunix Pharmaceuticals appoints You as CEO and Heyman as board chairman

Amunix Pharmaceuticals Inc, which is backed by Frazier Healthcare Partners, has named Dr. Angie You as CEO and Dr. Rich Heyman as chairman of board of directors. Prior to joining Amunix, You worked at Sierra Oncology where she was chief business and strategy officer and head of commercial while Heyman was CEO of Seragon Pharmaceuticals. Based in Mountain View, California, Amunix is a biopharmaceutical company focused on the discovery and development of novel protein therapeutics.
Read more...  

Flare promotes Gebremedhin to partner

Flare Capital Partners has promoted Dan Gebremedhin to partner. Gebremedhin joined the healthcare tech-focused venture firm in 2015.
Read more...  

MidOcean-backed KidKraft appoints Walker as president/CEO

KidKraft Inc, which is backed by MidOcean Partners, has named Geoff Walker as president and CEO. Walker is a former Mattel executive. Dallas-based KidKraft is a maker of toys.
Read more...  
Credit
 
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Mergers, buyouts, refinancing spur record U.S. loan issuance: Reuters

Record financing for mergers and acquisitions as well as a push to lock in borrowing costs before interest rates headed higher drove US syndicated loan issuance to an all-time high of $2.6 trillion in 2018, surpassing by 6 percent the prior record set a year earlier, Reuters reported.
Read more...  

Churchill supports Sentinel’s acquisition of Pet Supplies Plus

Churchill Asset Management has provided a credit facility to back Sentinel Capital Partners‘ acquisition of Pet Supplies Plus. No financial terms were disclosed. Based in Livonia, Michigan, Pet Supplies Plus is a franchisor and operator of pet-specialty stores. Churchill was the joint lead arranger on the financing.
Read more...  
Odds & Ends + Hot Links 
 
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PE HUB First Read

First Read ends the week with news that political fixer Bradley Tusk targets $70 mln for his second fund, Apple's stock plunge has cost Warren Buffett nearly $4 bln and exploring the lack of no-fault divorce clauses.
Read more...  

PE HUB Second Opinion

In Second Opinion, Nancy Pelosi is elected House Speaker, Apple reports that its App Store pulled in $1.22 billion over the holidays with a record $322 million on New Year's Day and Bristol-Myers Squibb is acquiring rival Celgene for about $74 billion.
Read more...  

PE HUB Healthcare Wire Highlights, 1.3.19

Will GPs make tackling the opioid crisis a New Year resolution?
Read more...  
 
 
 
 
 
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