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Hedge fund goes to the Supreme Court

Moab wants to leave its mark on securities law

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

  • A look at Moab Partners’ trip to the Supreme Court this week

  • The deal sheet, plus an analysis of the Incora bankruptcy opinion


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A hedge fund and the U.S. Securities and Exchange Commission aren’t groups that you would typically expect to see working together as allies. This week is different – Moab Capital Partners is presenting oral arguments to the Supreme Court and has the backing of the SEC (via a friend-of-the-court brief).

At issue is a reading of U.S. securities law, which Moab thinks should be interpreted in a way that allows investors, in addition to regulators, to sue companies for failing to disclose negative business trends known to management—all part of Moab’s ongoing litigation against Macquarie Infrastructure Corp. (MIC), which the hedge fund says purposefully withheld information from investors.

The Background

Founded in 2006, Moab says it employs an event-driven, value-oriented strategy spanning “arbitrage, equity restructuring, special situations, credit, and distressed strategies.”

In 2018, the fund launched an activist campaign against MIC, calling for an immediate reconstitution of the board and pursuit of strategic alternatives, including a sale of the company.

Moab’s justification was partially based on MIC’s unique structure, which included a management services agreement that paid Macquarie Infrastructure Management, a unit of the eponymous Australian financial services firm, various management and performance fees. Per Moab, those fees totaled more than $500 million over the preceding three years, despite a falling share price and 2018 EBITDA of just $221 million.

But, the origin of this week’s SCOTUS visit was Moab’s allegations that MIC fraudulently withheld information from its shareholders, covering up an upcoming hit to the business brought by a new maritime fuel law that banned the use of sulfur-heavy No. 6 fuel oil. Specifically, that the law would decimate MIC’s fuel storage unit, which owned facilities specifically designed for No. 6 fuel.

Moab says MIC management knew the severity of the situation well in advance, yet continued to provide only a positive narrative on the business’ trajectory.

Then, in February 2018, Macquarie announced it had missed its financial projections and would cut its dividend, disclosing that the percentage of its storage capacity in use had plummeted.

Even then, Macquarie waited until the following day to acknowledge that many of the business’ No. 6 fuel oil customers had previously terminated their contracts. Post-announcement, the company’s share price fell more than 40 percent.

Moab sued MIC under the claim that, by not disclosing this information in the company’s public filings, MIC ran afoul of Rule 10b-5 of the Securities Exchange Act, which allows private investors to sue a company that knowingly provides false or misleading statements.

The legal question is whether Rule 10b-5 and its right to sue also extends to omissions of information, rather than outright falsehoods, in the section of a company’s public filings where management provides an update on the business, known as Management’s Discussion & Analysis (MD&A).

The MD&A section is governed under the separate Item 303 of Regulation S-K. While Item 303 isn’t specific about what should and shouldn’t be disclosed, the SEC has historically pursued actions against companies that knowingly leave out material information—Item 303 does not, however, grant private investors the same right to sue.

“It comes down to a question of how broad Section 10(b) is as a tool for private enforcement,” Jill Fisch, a professor at the University of Pennsylvania Carey Law School, told Bloomberg Law.

Earlier this year, The Second Circuit Court of Appeals unanimously sided with Moab and vacated a lower court’s earlier dismissal of the case. Now, the Supreme Court will decide.

The SEC Wants a Helping Hand

The SEC is in full agreement with Moab’s interpretation of the law, which mirrors its longstanding position that omissions in the management discussion & analysis portion of a public filing can be the basis for securities fraud liability.

On the topic of a hedge fund-turned-regulator, the SEC calls private suits an “essential supplement” to its own work and, along with the Department of Justice, will participate in this week’s arguments.

Implications of the Upcoming Decision

In an amicus brief on behalf of institutional investors, Richard Bodnar of Rolnick Kramer Sadighi LLP likened Item 303 ommissions to “‘the dog that did not bark in the night,’” in reference to a Sherlock Holmes clue occasionally cited by courts. “The absent disclosure tells investors not to concern themselves with that issue.”

“Item 303 disclosure failures can be particularly harmful for sophisticated investors, who may be comparing trend disclosures across companies in a given sector or industry or over time for a specific issuer,” he added.

That sentiment isn’t universally shared, with other parties warning that a ruling in Moab’s favor could unleash a torrent of new suits brought by investors. “That would cost companies a great deal of money,” Elizabeth Gingold Clark of Alston & Bird told Bloomberg Law. “Securities litigation is very expensive and very protracted.”


General Catalyst has agreed to acquire Summa Health Care, an Akron, OH-based health system, as part of its health assurance thesis.

General Atlantic today announced an agreement to buy Actis, a private equity firm focused on sustainable infrastructure.

Macquarie and PSP Investments are preparing to sell AirTrunk, an Australian data center operator, in a deal that could be worth around US$8 billion.

EQT, KKR, and Thoma Bravo are each considering bids for Carbon Black, a cybersecurity company acquired by Broadcom via its Symantec acquisition, for around $5 billion.

Synopsys (Nasdaq: SNPS) agreed to acquire Ansys (Nasdaq: ANSS), a maker of engineering simulation software, in a cash-and-stock deal valuing the target at around $35 billion.

• A federal judge blocked JetBlue’s planned $3.8 billion acquisition of budget carrier Spirit Airlines, citing antitrust concerns. Spirit shares fell more than 60 percent this week.

Ardagh Group and Ontario Teachers' are preparing to sell Trivium Packaging, a metal packaging company, in a deal that could be worth around $3.5 billion.

McKesson Corporation (NYSE: MCK) is preparing to sell Rexall Pharmacy Group, a Canadian drugstore chain that it previously acquired for $2.2 billion in 2016.

SoftwareOne (SWX: SWON), a Switzerland-based software and cloud solutions company, has rejected an improved $3.5 billion takeover offer from Bain Capital.

CVC Capital Partners acquired La Piadineria, an Italian quick-service restaurant chain, from Permira for €600 million.

• MCI Capital-backed eSky is in advanced talks to acquire the Thomas Cook brand from Fosun Tourism Group.

H.I.G. Capital acquired Patriot Pickle, a Wayne, New Jersey-based manufacturer and distributor of pickles and fermented foods, from Swander Pace Capital.

Core Industrial Partners acquired a minority stake in Aviation Concepts, an aviation services company.

LS Power agreed to buy Hunterstown, a coal and natural gas-fired power plant in Pennsylvania, from Platinum Equity.

Oakley Capital has agreed to acquire Steer Automotive Group, a British accident repair business, from Chiltern Capital and Keyhaven Capital.

Sentinel Capital Partners acquired Market Performance Group, a provider of revenue growth and profit improvement consulting solutions for CPG brands.

TPG Growth acquired a majority stake in Sayari, a provider of counterparty registration and supply chain risk products, for $228 million.

VMG Health, a healthcare consulting firm backed by Northlane Capital Partners, acquired the Compliance Risk Analyzer (CRA) platform from DoctorsManagement.

David D. Smith, chairman of media company Sinclair Broadcasting Group, has acquired The Baltimore Sun from Alden Global Capital.

• UK-based investment bank Liberum and rival Panmure Gordon, backed by Bob Diamond's Atlas Merchant Capital, have agreed to merge.

Cascadia Capital, a Seattle-based investment bank, agreed to acquire Threadstone Capital, a New York- and Atlanta-based consumer and retail-focused investment bank.

Restaurant Brands International (NYSE: QSR) agreed to acquire Carrols Restaurant Group (Nasdaq: TAST), a franchisee of Burger King and Popeyes, for $1 billion.

• A consortium of Nigerian energy firms has agreed to acquire Shell's (LSE: RDSA) onshore assets in Nigeria for over $1.3 billion.

Talos Energy (NYSE: TALO) agreed to acquire upstream oil and gas producer QuarterNorth for $1.29 billion.

Starwood Capital Group acquired a portfolio of London hotels from Edwardian Hotels for around £800 million.

The Dutch government has agreed to lend grid operator Tennet Holding BV €25 billion ($27.4 billion) to support its capital expenditure program and energy infrastructure, as the company prepares for the sale of its German grid.

Uber (NYSE: UBER) is shutting down Drizly, an alcohol delivery service it acquired for $1.1 billion three years ago.

Accel-KKR agreed to acquire Accertify, a provider of fraud prevention and payment solutions, from American Express (NYSE: AXP).

Ardian agreed to acquire a majority stake in Healthy Group, owner of French pharmacy chain Aprium Pharmaciea, from Sagard.

CIVC Partners agreed to acquire Datavail, a provider of managed services for database administration and data analytics, from Catalyst Group.

Compass Diversified acquired a majority stake in The Honey Pot Co., a provider of natural feminine hygiene products, at a $380 million valuation.

HCAP Partners invested in Apprio, a Washington, D.C.-based provider of specialized hospital technology solutions.

M/C Partners invested in AccessParks, a provider of broadband connectivity solutions for U.S. National Parks and campgrounds.

MidOcean Partners acquired a stake in Re-Sourcing, a provider of staffing solutions for roles across finance & accounting, legal & compliance and IT, from McNally Capital.

Straightaway Tire & Auto, backed by O2 Investment Partners, is in talks to acquire Maple Grove Auto Service and Warzecha Auto Works.

Vesey Street Capital Partners acquired Inceptua, a provider of clinical trial supplies and related services.

L Catterton acquired Sploot, a veterinary chain with locations in Denver and Chicago.

Wind Point Partners acquired MoreGroup, an architecture, design, and engineering firm, from Godspeed Capital Management.

Accenture (NYSE: ACN) acquired Impendi Analytics, a London-based spend analytics firm.

Amazon (Nasdaq: AMZN) acquired a minority stake in Diamond Sports Group, a sports media company currently in bankruptcy proceedings.

Snyk, a cloud computing-focused cybersecurity provider, acquired Helios, an Israeli microservices troubleshooting platform.

GlaxoSmithKline (LSE: GSK) sold down a portion of its stake in Haleon, it's previously spun-out consumer health company (merged with a similar Pfizer unit), for $1.24 billion.

Thomson Reuters acquired World Business Media, a provider of insurance industry news.

Transom Capital and Angeleno Group have agreed to sell Locana, a provider of enterprise geospatial solutions, to TRC Companies.

Northvolt, a Swedish-based manufacturer of lithium-ion batteries, raised $5 billion in debt financing from a consortium of 23 banks, as well as the European Investment Bank and the Nordic Investment Bank.

CoinShares, a crypto-focused exchange-traded products provider, exercised an option to acquire Valkyrie Funds, a rival manager with $110 million in AUM that just received SEC approval to launch a bitcoin ETF.


Kyverna Therapeutics, a biotech targeting autoimmune diseases, filed for a $100 million Nasdaq IPO.


Battery Ventures invested in ORTEC, a Dutch provider of optimization software and advanced analytics.

LegoChem Bioscience, a South Korean biotech using its antibody-drug conjugate platform to target multiple therapeutic areas, raised $411 million from diversifying confectionary company Orion.

Electra, a developer of electric vehicle charging stations, raised $330 million in Series B funding. PGGM and Bpifrance co-led, with participation from Eurazeo, RIVE Private Investment, SNCF, Serena, EIP, RATP Capital, CDC's Banque des Territoires, Ademe Investissement, Eiffel Investment Group, RGreen, Frst, Altarea, Allianz, and Groupe Chopard.

Quantinuum, Honeywell's quantum computing unit, raised $300 million in new funding at a $5 billion valuation. JPMorgan Chase led, with participation from Mitsui, Amgen, and Honeywell.

Aira, a Stockholm-based provider of clean energy-tech solutions, raised €145 million in Series B funding led by Altor, Kinnevik, and Temasek.

Ineratec, a developer of renewable energy technology, raised $129 million in Series B funding, co-led by Piva Capital and Planet A Ventures, with participation from MPC, High-Tech Gründerfonds, FO Holding, Safran Corporate Ventures, Honda, ENGIE New Ventures, HG Ventures, TDK, Copec WIND Ventures, RockCreek, Emerald, and Samsung Ventures.

Build A Rocket Boy, a game studio launched by former Grand Theft Auto Developer, raised $110 million in Series D funding led by RedBird Capital Partners, with participation from NetEase Games, Galaxy Interactive, Endeavor, Alignment Growth, Woodline Partners, and GTAM Partners.

HashKey Group, a Hong-Kong-based crypto asset services firm, raised around $100 million at a $1.2 billion valuation led by OKX Ventures.

Forta, an AI-assisted therapy startup, raised $55 million in Series A funding led by Insight Partners, with participation from Exor Ventures and Alumni Ventures.

Xyte, a developer of servitization software for device manufacturers, raised $30 million (including $10 million of venture debt). Intel Capital led, with participation from Samsung Next, S Capital, Mindset Ventures, and BlackRock.

Onera Health, a developer of home-based sleep diagnostic equipment, raised €30 million in Series C funding. EQT Life Sciences, Gimv, and existing backers Innovation Industries, Invest-NL, imec.xpand, BOM, and 15th Rock participated.

Fullcast, a provider of revenue operations software, raised $34 million in seed funding led by Epic Ventures, with participation from Companyon Ventures, Firsthand Alliance, True Blue Partners, and Sepio Capital.

Soly, a Dutch solar energy supplier, raised €30 million in funding led by ArcTern Ventures and Fifth Wall, with participation from Shell Ventures and ABP.

Vicarius, a New York-based startup offering a cybersecurity vulnerability remediation platform, raised $30 million in Series B funding. Bright Pixel Capital led, with participation from AllegisCyber Capital, AlleyCorp, and Strait.

Trojan Energy, a developer of flush electric vehicle chargers, raised £26 million from BGF and the Scottish National Investment Bank.

Vertice, a spend management software provider, raised $25 million in Series B funding from 83North and Bessemer Venture Partners.

Panacea Financial, a fintech providing digital banking and financial services to healthcare providers, raised $24.5 million in Series B funding led by Valar Ventures.

Weavix, a developer of smart radios for frontline workers, raised $23.6 million in Series B funding. Insight Partners led, with participation from Four More Capital, The Friedkin Group, and Perkins Coie.

Prismatic, a provider of an embedded integration platform for SaaS businesses, raised $22 million in Series B funding. Five Elms Capital led the round.

Disco Pharmaceuticals, a biotech focused on targeting cancer cell surface proteins, raised €20 million in seed funding. Sofinnova Partners led, with participation from M Ventures, Panakes Partners, and AbbVie Ventures.

Carmoola, a used car finance platform, raised £15.5 million in an all-equity round led by QED Investors, with participation from VentureFriends, InMotion Ventures, AlleyCorp, and U.Ventures.

Granata Bio, a developer of fertility drugs, raised $14 million in Series A funding. GV led, with participation from CooperSurgical, Gedeon Richter, Amboy Street, Vibe Bio, and Alumni Ventures.

Prometeo, an open banking API infrastructure provider in Latin America, raised $13 million in Series A funding led by Antler Elevate, with participation from PayPal Ventures, Samsung Next, and DN Capital.

Digital Infrastructure, a protocol developing plug-and-play networks for vehicle data, raised an $11.5 million Series A led by CoinFund, with participation from Slow Ventures, ConsenSys Mesh, and Borderless Capital, among others.

Grip Invest, a platform offering digital access to alternative investments, raised $10 million led by Stride Ventures, with participation from LC Nueva, Multiply Ventures, and existing backers Venture Highway, Anicut Capital, and AdvantEdge.

Care Continuity, a provider of healthcare patient navigation solutions, raised $10 million in Series A-3 funding led by Empactful Capital and Viewside Capital, with participation from Flat Creek Capital and Loop 289 Limited Partners.

Nasekomo, a bioconversion technology company specializing in insect farming, raised €8 million in Series A funding led by Invenio Partners.

Delfos, a provider of virtual engineer software supporting renewable energy assets, raised €6.3 million in seed funding. Contrarian Ventures and Headline co-led, with participation from existing backers DOMO and EDP Ventures.

Tandem PV, an early-stage perovskite solar panel manufacturer, raised an additional $6 million, bringing its Series A total to $27 million. The round was led by Planetary Technologies, with participation from Uncorrelated Ventures.

XRHealth, a virtual and augmented reality platform for mental and physical health care, raised $6 million from Asabys Partners and NOVA Prime Fund.

Membion, a developer of wastewater treatment technology, raised €5 million led by TechVision Fonds and DeepTech & Climate Fonds.

QDI Systems, a Dutch medical imaging technology firm, raised €5 million in Series A funding. NOM led, with participation from returning investors Carduso Capital, RuG Ventures, and Maki.vc.

Meiro, a Singaporean data management platform, raised $3 million in pre-Series A funding led by Wavemaker Partners, with participation from Angel Central.

Infield, a developer of open-source dependency management tools, raised $3 million in seed funding from Foundation Capital, Y Combinator, and Firsthand Alliance.

Mercor, a developer of AI-driven hiring and candidate assessment tools, raised $3.6 million in funding. General Catalyst led, with participation from Scott Sandell, Soma Capital, and Link Ventures.

Spot Technologies, a cloud-based AI retail surveillance and theft prevention platform, raised $2 million in seed funding from Femsa Ventures, Bridge Latam, Daedalus, Kuiper, and Casque.


Coatue Management raised $3 billion for a new structured equity fund.

Rokos Capital Management is hoping to raise an additional $2 billion for its $16 billion macro hedge fund.

KSL Capital Partners raised $1.26 billion for its latest private credit fund.

Top Tier Capital raised $1.05 billion for its 10th venture fund.

Vidia Equity raised €415 million for its latest climate solutions fund.

Thomvest Ventures raised $250 million for its latest fund.

Sandwater raised €125 million for a new venture fund.


1. An update on Incora, Platinum Equity’s aerospace supplier.

• Reorg’s Dan Kamensky shares his thoughts on the Incora bankruptcy opinion — Incora decision is the most favorable to come down in favor of creditors so far, Reorg


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