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

• A look at today’s SEC setback

• Plus, Illumina spins-off cancer detection business Grail for the second time

SEC private funds rule struck down

By Bob Clair

A Securities and Exchange Commission rule that was set to significantly increase disclosure requirements for private fund advisors and prohibited certain fee agreements was struck down by a federal appeals court on Wednesday.

The rule, which was slated to go into effect this August, would have forced fund managers to provide their investors with more transparent quarterly performance updates and expense reports and imposed limits on preferential side agreements that grant some investors more favorable terms than others.

It also mandated an annual fund audit and required a fairness opinion as part of any secondary transactions.

A three-judge panel from the Fifth Circuit Court of Appeals in New Orleans vacated the rule in a unanimous decision, which questioned the SEC’s power to enact the proposed changes.

“The Commission has exceeded its statutory authority … because the promulgation of the Final Rule was unauthorized, no part of it can stand,” wrote Judge Kurt Engelhardt.“

Industry representatives were quick to praise the decision. “The court has sent Washington regulators a strong message that they cannot bypass Congress when pushing their extreme agenda,” said Drew Maloney, president of the American Investment Council.

Six groups—the National Association of Private Fund Managers, Alternative Investment Management Association, American Investment Council, Loan Syndications and Trading Association, Managed Funds Association, and National Venture Capital Association—had filed a lawsuit in September to challenge the rule, which they called “arbitrary, capricious, and otherwise unlawful.”

The decision is a major setback for SEC Chair Gary Gensler’s private equity regulatory agenda. The Fifth Circuit rejected the SEC’s position that financial crisis-era reforms granted it broad authority over private funds and also said that the agency had failed to show how its proposed rule was supported by its broad fraud-prevention powers.

“While the Dodd-Frank Act expanded the Commission’s oversight in many respects, it did not do so to the extent the Commission argues here,” Engelhardt added.

An SEC spokesman said the agency is reviewing the decision and will determine its next steps—options include the request for a hearing in front of the full panel of appellate judges in the Fifth Circuit or the request for a review from the Supreme Court.

• SAP (NYSE: SAP) agreed to acquire WalkMe (Nasdaq: WKME), a digital adoption platform, for $1.5 billion in an all-cash deal.

• Illumina (Nasdaq: ILMN) announced its board of directors approved the spin-off of GRAIL, the early cancer detection business it re-acquired (despite antitrust opposition) after a previous spin-off.

• Indie Semiconductor (Nasdaq: INDI), an automotive chipmaker trading at a $1.5 billion market value, has hired an advisor to gauge market interest as it explores strategic options, including a potential sale.

• Frontdoor (Nasdaq: FTDR) agreed to acquire 2-10 Home Buyers Warranty, a provider of new home warranties, from Genstar Capital for $585 million.

• Oaktree Capital Management agreed to acquire Ambac Financial Group's (NYSE: AMBC) legacy financial guarantee businesses, Ambac Assurance Corporation and Ambac UK, for $420 million in cash.

• Curtiss-Wright Corporation (NYSE: CW) agreed to acquire Ultra Energy, a manufacturer of safety systems and sensors for nuclear power plants, from Ultra Electronics for $200 million in cash.

• Blackstone executive David Blitzer is working with Lazard to explore the sale of his stake in FC Augsburg, a German soccer club, at a potential valuation above €150 million, per Bloomberg.

• Stryker (NYSE: SYK) agreed to acquire Artelon, a maker of soft tissue foot and ankle fixation products.

• Intesa Sanpaolo acquired a 99.98 percent stake in First Bank, a Romanian commercial bank, from JC Flowers & Co.

• Databricks agreed to acquire Tabular, a data management company founded by the original creators of Apache Iceberg.

• Advent International and Leonard Green agreed to acquire Prometheus Group, an industrial software provider, from Genstar Capital.

• Insight Partners invested in Nexus Cognitive, an Atlanta-based enterprise data & AI solutions provider.

• L Squared Capital Partners agreed to acquire TeachTown, a provider of special education solutions, from Bain Capital Double Impact.

• Providence Equity Partners invested in Brandt Information Services, a provider of outdoor recreational technology platforms, joining existing backer NexPhase Capital.

• Qatar Investment Authority is in talks to acquire a 10 percent stake in China Asset Management Co., one of China's largest mutual fund providers, from Primavera Capital.

• Trilantic North America agreed to make a growth investment in SOFIE Biosciences, a PET radiopharmacy and CDMO.

• Rockbridge Growth Equity acquired a majority stake in Vici Media, a provider of white label digital marketing and advertising.

• Wynnchurch Capital acquired Hydraulic Technologies, a manufacturer of high-pressure hydraulic tools, from SPX FLOW.

• Cloudera, backed by Clayton Dubilier & Rice and KKR, agreed to acquire Verta, an AI model management and operations platform.

• Sheer Logistics, a portfolio company of Woodlawn Partners, agreed to acquire CargoBarn, an Atlanta-based TPL provider focused on full truckload freight.

• Accurate Background, a portfolio company of Apax Partners, agreed to acquire background check provider Orange Tree Employment Screening from Tonka Bay Equity Partners.

• RoadSafe Traffic Systems, a portfolio company of Trilantic North America, acquired Site-Safe, a provider of work-zone safety products.

• Thermal Concepts, a portfolio company of Trivest Partners and Halmos Capital Partners, acquired commercial HVAC maintenace provider 5 Seasons Mechanical.

• Tyto Athene, an Arlington Capital Partners portfolio company, agreed to acquire MindPoint Group, a provider of managed cybersecurity solutions to government agencies.

• NDH Advisors, a portfolio company of Unity Partners, agreed to acquire McGowan Guntermann, a Santa Barbara, California-based tax and accounting firm.

• Kymera International, a portfolio company of Palladium Equity Partners, agreed to acquire Fiven ASA, a silicon carbide materials developer, from OpenGate Capital.

• Western Smokehouse Partners, a portfolio company of AUA Private Equity Partners, agreed to acquire Golden Valley Natural, dba Hero Snacks, a distributor of organic jerky products.

• Buchanan Technologies, a managed IT and cloud services provider backed by Lightview Capital, agreed to acquire Technology Spa, a cloud orchestration platform.

• US Signal, a portfolio company of Igneo Infrastructure Partners, agreed to acquire OneNeck IT Solutions and OneNeck Data Center Holdings, providers of hybrid IT and multi-cloud solutions through data centers in six states, from Telephone and Data Systems (NYSE: TDS).

• Ardent Health Services, an acute care operator backed by Equity Group Investments and Ventas, is planning an IPO that could raise up to $500 million at a $5 billion valuation, per Bloomberg. This would be its second attempt to go public after withdrawing a 2018 IPO filing.

Tech, Vertical SaaS, & Misc. Enterprise

• Storyblok, a content management system for teams, raised $80 million in Series C funding led by Brighton Park Capital, with participation from HV Capital, Mubadala Capital, 3VC, and firstminute capital.

• Twelve Labs, a video search startup, raised $50 million in Series A funding co-led by NEA and NVentures, with participation from Index Ventures, Radical Ventures, WndrCo, and Korea Investment Partners.

• GetWhy, a Danish consumer research startup, raised $34.5 million in Series A funding led by PeakSpan Capital.

• Neural Concept, a Swiss AI-powered engineering intelligence platform for product design, raised $27 million in Series B funding led by Forestay Capital, with participation from the D. E. Shaw group, Alven, CNB Capital, HTGF, and Aster Group.

• imagino, a Paris-based customer data platform and campaign management solution, raised €25 million in Series A funding led by Cathay Innovation, with participation from henQ.

• Vantage Discovery, an Austin-based AI-powered search and content discovery platform for ecommerce, raised $16 million in Series A funding led by Lobby Capital, with participation from The Hive, Future Positive, Common Metal, Jony Ive, Evan Sharp, and Biz Stone.

• Stacklet, a cloud governance and optimization as code platform, raised $14.5 million in Series B funding led by SineWave Ventures, with participation from Strait Capital, Uncorrelated Ventures, Capital One Ventures, Foundation Capital, and Relentless VC.

• Zingly, a US-based collaborative customer experience platform, raised $10 million in seed funding led by Dell Technologies Capital, with participation from WestWave Capital, Scribble Ventures, Formus Capital, Geekdom Fund, Array Ventures, Firebolt Ventures, Burst Capital, and leaders in the CX industry.

• Viaduct, a Menlo Park-based developer of product failure prevention tech, raised $10 million in Series B funding led by FM Capital, with participation from Innovation Endeavors, Exor, Stellantis Ventures, and Sumitomo Rubber.

• Inventive, a San Francisco-based startup building embedded AI for SaaS products, raised $6.5 million in Seed funding led by Wing VC, with participation from Tokyo Black.

Fintech

• Avail, a modular blockchain platform, raised $43 million in Series A funding co-led by Founders Fund, Dragonfly, and Cyber Fund, with participation from SevenX Ventures, Figment Capital, Nomad Capital, LocalGlobe, Altos Ventures, Chapter One, Superscrypt, Foresight Ventures, Mirana Ventures, KR1, RW3 Ventures, Alliance DAO, Hashkey, Elixir Capital, and Spark Digital Capital.

• Understory, a Madison, Wisconsin-based provider of climate insurance solutions, raised $15 million in Series A funding co-led by True Ventures and Prelude Ventures.

• Sipay, a Turkish payments services platform, raised $15 million in Series A funding led by Anfa.

• re:cap, a Berlin-based financing and data insights company, raised $14.6 million in Series A funding led by Entrée Capital, with participation from Felix Capital and Project A.

Healthcare

• Sword Health, a virtual musculoskeletal care provider, raised $130 million in a mix of primary and secondary funding at $3 billion valuation.

• AcuityMD, a Boston-based technology provider to MedTech companies, raised $45 million in Series B funding led by ICONIQ Growth, with participation from Atreides Management, Stepstone Group, Redpoint Ventures, Benchmark Capital, and Artisanal Ventures.

• Eko Health, a cardiopulmonary digital health platform, raised $41 million in Series D funding led by Artis Ventures, Highland Capital Partners, NTTVC, and Questa Capital.

• Materna Medical, an OBGYN platform, raised $20 million in Series B2 funding led by InnovaHealth Partners, with participation from Wavemaker Three-Sixty Health, Kimera Limited, Women's Venture Capital Fund, Golden Seeds, Band of Angels, and Houston Angel Network.

• HypeSpectral, a Cambridge-based startup developing hyperspectral imaging tech for pathogen detection, raised $8.5 million in Series A funding co-led by RRE Ventures and Kibo Ventures, per Axios.

Industrials, Greentech, & Other

• Xcimer Energy, a Denver-based inertial fusion startup, raised $100 million in Series A funding led by Hedosophia, with participation from Breakthrough Energy Ventures, Lowercarbon Capital, Prelude Ventures, Emerson Collective, Gigascale Capital, and Starlight Ventures.

• Euler Motors, an Indian commercial EV manufacturer, raised $24 million in Series C extension funding led by Piramal Alternatives India Access Fund, with participation from British International Investment and Blume Ventures.

• Samara, a Spanish solar transition startup, raised €9 million in Series A funding co-led by Green Generation Fund and Move Energy, with participation from Ring Capital, Athletico Ventures, Seaya, and Pelion Green Future.

• StepStone Group raised $3.3 billion for its sixth venture secondaries fund.

• Cisco Systems launched a $1 billion investment fund targeting artificial intelligence startups.

• Yukon Partners raised $765 million for its fifth middle market sponsor-backed mezzanine debt fund.

• WndrCo raised over $460 million for new seed and venture funds focused on internet safety, future of work, and consumer software.

• MFG Partners raised around $300 million for its debut buyout fund focused on lower-middle market industrials.

• Hakluyt Capital, the investment arm of advisory firm Hakluyt, raised more than $50 million for its debut growth-stage fund.

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