Happy Wednesday. Here’s what we’ve got today…

• A look at how private equity and private credit are benefitting from carbon concerns

• The deal sheet, plus General Electric’s story

Private markets see opportunity in fossil fuel deals

By Bob Clair

As banks shy away from fossil-fuel deals because of perceived climate risks, private credit managers have stepped in to plug the gap, taking down meaningfully more energy deals than in years past.

Private credit completed more than $9 billion in cumulative oil and gas financings for the 24 months through year-end 2023, up $450 million from the proceeding two years, according to a report by Preqin.

In Canada and the U.S., banks that used to service oil and gas borrowers have been retreating, leaving a financing hole that the private credit market has been filling. The shift is even more pronounced in Europe, where climate-based regulations are stricter than in the U.S.

Sydney, Australia-based Whitehaven Coal Ltd. recently attempted to secure a new $1.1 billion loan and received offers from 17 direct lenders and only one bank, per Bloomberg. The lack of competitive syndicated loan proposals often means borrowers pay a higher rate thanks to private credit financings that are typically more expensive.

“If banks continue to abandon these deals, private credit will step in,” one private credit manager said.

Private equity firms are also benefitting from the aversion to legacy energy assets. Investors have accelerated their purchases of upstream oil and gas assets from large producers, who are offloading their most carbon-intensive operations in an attempt to reduce their overall carbon footprint (and ease related public and regulatory pressures).

For oil and gas companies, divesting less productive assets allows them to claim reductions in their overall carbon footprint. It also allows private equity firms to continue operating these assets in the less regulated private markets, which are exempted from most disclosure requirements. It’s a growing trend that investors believe is still in its early innings.

In one such deal, Exxon Mobil sold approximately 5,000 less lucrative, non-core natural gas wells and related infrastructure in Arkansas to Flywheel Energy, a portfolio company of Kayne Anderson. In another deal, EIG Global Energy Partners spent $4.8 billion to buy a 25 percent stake in Spanish energy group Repsol’s oil and gas division.

In total, private equity acquired at least $25 billion in public markets energy assets in 2021 and 2022. KKR alone closed $14.5 billion in energy take-private transaction value.

Current industry expectation is for a gradual increase in the restrictiveness of climate regulations, which will likely lead to even more deals for private equity and private credit.

• Silver Lake has agreed to acquire the 69 percent stake it doesn't already own in Endeavor Group, a sports and entertainment firm that owns properties such as UFC, WWE, and New York Fashion Week, at a $13 billion valuation.

• SLB has agreed to acquire ChampionX, a provider of production chemicals and artificial lift technologies, in an all-stock transaction valued at $7.8 billion.

• Advent International has agreed to acquire Nuvei (Nasdaq: NVEI), a Canadian payments company, for around $6.3 billion.

• Clayton, Dubilier & Rice agreed to acquire Presidio Inc., an IT services provider, from BC Partners for around $4 billion.

• EQT agreed to acquire Avetta, a provider of supply chain risk management solutions, from Welsh Carson Anderson & Stowe for around $3 billion.

• Honeywell International (Nasdaq: HON) is considering selling its personal protective equipment division for more than $2 billion, per Bloomberg.

• Genmab (Nasdaq: GNMSF) agreed to acquire ProfoundBio, a clinical-stage biotech specializing in antibody-drug conjugates for cancer treatment, for $1.8 billion.

• Authentic Brands Group agreed to acquire Champion, an athletic apparel label, from Hanesbrands for around $1 billion.

• Blue Owl Capital agreed to acquire Kuvare Asset Management, a provider of asset management services to the insurance industry, for $750 million.

• Littlejohn & Co. has acquired United Air Temp, Air Conditioning and Heating, a provider of HVAC and plumbing services across the Mid-Atlantic and Southeastern US.

• Brera Partners acquired a 70 percent stake in GBSAPRI Group, an Italian insurance broker, for under €100 million.

• Broad Sky Partners acquired Punctual Pros, a franchisee operator within Authority Brands, a home service franchisor.

• Blue Sage Capital invested in American Alloy, a provider of complex geotechnical and environmental remediation services, formerly backed by Silver Peak Partners and Peninsula Capital Partners.

• Morgan Stanley Capital Partners acquired Resource Innovations, a provider of energy efficiency solutions and services, from BV Investment Partners.

• Outdoor Living Supply, a Trilantic North America-backed distribution platform for outdoor living products, acquired Willow Creek, a hardscape and landscape supplies provider.

• OutSolve, a Riverside Company-backed provider of outsourced labor and employment compliance solutions, acquired FWLLI, a labor law consulting firm.

• Petershill acquired a minority stake in alternative credit manager Kennedy Lewis Investment Management from Azimut for $225 million.

• Nucor (NYSE: NUE) acquired Southwest Data Products, a manufacturer of custom data center infrastructure solutions, from Montage Partners for $115 million.

• Summit Partners invested $35 million in Netgain, a finance and accounting software provider.

• Kinderhook Industries' portfolio company, Vehicle Accessories, acquired Maxton Group, a Florida-based manufacturer of automotive emblems, badges, and logos for various brands and aftermarket applications.

• GE HealthCare Technologies (Nasdaq: GEHC) acquired MIM Software, a provider of advanced imaging software solutions for medical professionals.

• Hilton Worldwide has agreed to acquire a controlling stake in Sydell Group, a boutique hotel management company.

• Surescripts, a provider of electronic prescribing, medication history, and clinical support services, is preparing to sell itself, with TripleTree advising on the process.

• Colohouse, a Valterra Partners portfolio company, acquired Hivelocity, a Tampa-based bare metal hosting provider.

• Fortis Solutions Group, a label printing services provider backed by Harvest Partners, has acquired the print division of MASA Corporation.

• KKR acquired SunFireMatrix Inc., a software and technology-focused services platform for the Medicare insurance distribution market, with prior owner Stone Point Capital retaining a minority stake

• Mitsubishi Corporation invested in MidOcean Energy, a global liquefied natural gas company owned by EIG.

• Quantix, a supply chain services company owned by Wind Point Partners, acquired CLX Logistics, a chemical logistics management solutions provider.

• Shermco Industries, backed by Gryphon Investors, acquired Power Test, a provider of load bank solutions for power generation, distribution, transmission, and transportation applications.

• Direct Travel, a corporate travel management solutions provider, has been acquired by a consortium including Steve Singh (Concur founder), Durable Capital Partners, Madrona Ventures, Top Tier Capital Partners, and Blackstone Credit & Insurance.

• Altamont Capital Partners and Fortress Investment Group are exploring options for Alamo Drafthouse Cinema, a cinema chain, including a potential sale.

• Loar, an aerospace and defense components manufacturer backed by Blackstone and Abrams Capital Management, filed for an IPO on the NYSE.

Tech, Vertical SaaS, & Misc. Enterprise

• Hailo, an Israeli developer of deep learning processors for edge devices, raised $120 million in Series C extension funding from the Zisapel family, Delek Motors, Alfred Akirov, and prior backers OurCrowd, Comasco, Vasuki, AEV, Poalim Equity, Talcar, and DCLBA.

• Homebase, a provider of workforce management and communication tools, raised $60 million in Series D funding. Catterton Growth led, with participation from Emerson Collective, Notable Capital, Bain Capital Ventures, Khosla Ventures, Cowboy Ventures, and PLUS Capital.

• Luminance, a UK-based legal technology specializing in AI-powered contract lifecycle management, raised $40 million in Series B funding led by March Capital, with participation from National Grid Partners and Slaughter & May.

• Seso, a developer of workforce management solutions for the agriculture sector, raised $26 million in Series B funding. Bond led, with participation from Index Ventures, NFX, SV Angel, and previous investors.

• Lumana, developer of an AI-enabled video security platform, raised $24 million in seed funding led by Norwest and Israel-based S Capital.

• Proxima, a developer of data intelligence software focused on consumer technology and retail businesses, raised $12 million in Series A funding. Mucker Capital led, with participation from Aglae Ventures, Great Oaks Venture Partners, Data Point Capital, and Broadway Venture Partners.

• Scrut, a provider of governance, risk, and compliance software that targets tech-centric mid-market enterprises, raised $10 million in new funding led by Lightspeed, with participation from MassMutual Ventures and Endiya Partners.

• Higgsfield, developer of an AI-powered video creation and editing platform, raised $8 million in seed funding led by Menlo Ventures.

• Quadratic Growth, a developer of data science spreadsheet software, raised $5.6 million in seed funding. GV led, with participation from Catapult Ventures, Betaworks, The Fund Rockies, and angels including Wes McKinney, Amjad Masad, Spencer Kimball, Swyx, and Nick Sullivan.

Fintech

• Constantinople, a developer of banking infrastructure platforms, raised A$50 million in Series A funding led by Prosus Ventures, with participation from Square Peg Capital, Airtree Ventures, and Great Southern Bank.

• Xion, a blockchain platform designed for ease of use in mainstream adoption, raised £17.6 million ($25 million) in fresh funding led by Arrington Capital, Nomura’s Laser Digital, and GoldenTree.

• Coadjute, a developer of real estate transaction management software, raised £10 million from Lloyds Banking Group, Nationwide, NatWest, and Rightmove.

• Lockchain, an AI-powered blockchain risk management platform, raised $4.6 million in seed funding led by Lerer Hippeau, with participation from Arrington Capital, Valhalla Ventures, ARCA, RSE/Vayner, Sonic Boom, and Clear Sky Capital’s Alex Weiss.

Media & Consumer

• Onego Bio, a Finnish biotechnology firm developing fermentation food tech, raised $40 million of Series A funding from NordicNinja, holding firm Tesi, and existing backers Agronomics, Maki.vc, Holdix, Turret, and certain strategic partners, alongside $10 million in non-dilutive capital from Business Finland.

• Modal, an enterprise upskilling company focused on data and AI proficiency, raised $25 million of Series A funding led by Left Lane Capital and Ensemble VC, with participation from Learn Capital and Signalfire.

• Oros Labs, a body temperature regulation technology developer, raised $22 million in Series B funding led by Airbus Ventures. REI Co-Op Path Ahead, Platinum Mile, Culper Ventures, Crumpton Ventures, Iron Gate Capital, Enlightenment Capital, CTK, and Goldwin also participated.

• Full Glass Wine, an online wine brand aggregator, raised $14 million in Series A funding led by Shea Ventures.

• Lil Snack, a developer of trivia games, raised $3.1 million from A16z Games Speedrun, Powerhouse Capital, Lerer Hippeau, and Waverley Capital.

Healthcare

• Alterome Therapeutics, a biotech developing small-molecule, cancer-targeted therapies, raised $132 million in Series B funding. Goldman Sachs Alternatives led, with participation from Canaan Partners, Invus, Driehaus Capital Management, and Digitalis Ventures, as well as existing backer Orbimed.

• Praia Health, a developer of a digital health platform, raised $20 million in Series A funding led by Frist Cressey Ventures, with participation from SignalFire, Epsilon Health Investors, and Providence Ventures.

• Selux Diagnostics, a developer of antibiotics susceptibility testing, raised $48 million in new funding led by RA Capital, with participation from Northpond Ventures, Sands Capital, and Schooner Capital.

• ViaLase, a developer of lasers for glaucoma treatment, raised $40 million in new funding from Venture Investors Health Fund, Arboretum Ventures, and Falcon Vision.

• EarliTec Diagnostics, a medtech company developing a device for autism diagnosis, raised $21.5 million in Series B funding led by Nexus NeuroTech Ventures and Venture Investors Health Fund.

Industrials, Greentech, & Other

• Alsym, a Massachusetts-based energy storage company focused on developing non-flammable batteries for renewable energy storage, raised $78 million in new funding. General Catalyst and Tata co-led, with participation from Drads Capital, alongside existing backers Thrive Capital and Thomvest.

• Delivery Collective, a last-mile tech and operational infrastructure provider, raised $3.8 million in seed funding led by Defy and Bling Capital, with participation from Pathbreaker Ventures, GTM Fund, and 640Oxford Ventures.

• Arctos raised $4.1 billion for its latest professional sports fund.

• Tiger Global raised $2.2 billion for its latest venture fund, falling short of its $6 billion target announced in 2022.

• GoldenTree Asset Management raised $1.3 billion for a new fund focused on CLO first-loss equity tranches.

• OceanSound raised a $1.15 billion continuation fund for SMX Group, a provider of technical consulting and managed services solutions.

• Commonfund raised $1.2 billion for a new secondaries fund.

• ICG raised $1 billion for its first secondaries fund.

• Hildred Capital Management raised a $750 million multi-asset continuation fund.

• Warren Equity Partners raised $550 million for its second small-cap infrastructure fund.

• Adenia Partners raised $470 million for its fifth fund focused on African buyout and growth investments.

1. GE’s final split, a breakup 130 years in the making.

• A visual display of General Electric’s growth and shrinkage following its decision to focus solely on jet engine manufacturing within the core business. — WSJ

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