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

• A look at Pluralsight’s ownership transition

• Plus, TowerBrook and CD&R purchase R1

Marked down to zero:

Vista Equity Partners is handing over control of edtech company Pluralsight to a group of private lenders.

The agreement, which has yet to be finalized, will see lenders take full ownership of Pluralsight through a debt-for-equity swap. The group includes Blue Owl Capital, Ares Management, BlackRock, Goldman Sachs, Golub Capital, Oaktree Capital Management, Benefit Street Partners, and Guggenheim Partners.

Vista acquired Pluralsight for $3.5 billion in 2021 and subsequently merged the business with competing tech learning platform A Cloud Guru. Debt financing for the initial transaction was provided via a $1.175 billion recurring revenue term loan (and $100 million revolver) that allowed for higher-than-normal leverage relative to traditional EBITDA-based financing.

Alongside the purchase at peak valuation, the pandemic also proved to be a high water mark for sales of the technology upskilling courses and certificates that Pluralsight offered. Topline growth turned negative just as rate hikes picked up—a similar story to peers like 2U, which filed for Chapter 11 last week, and Byju's, whose insolvency proceedings were halted this morning after the company reached a last-minute settlement deal.

Pluralsight’s own deal is expected to eliminate around $1.3 billion, or 75 percent, of the company’s debt. Lenders will also provide around $250 million in additional capital.

Vista first approached lenders in early 2023 with a request to loosen covenants as it provided $75 million in new equity to shore up Pluralsight’s cash position. The firm later warned its investors to expect "liquidity challenges" at Pluralsight in the first half of 2024 and also funded a separate $163 million subscription line facility for the business.

The firm eventually marked down the value of its stake to zero and began discussions with lenders in March over a potential restructuring, hiring Ducera Partners and Kirkland & Ellis as advisors.

In June, Vista completed a new preferred equity financing that involved a drop-down transaction in which Pluralsight's intellectual property was transferred to an unrestricted subsidiary (out of creditors' reach).

Vista, which has historically been less aggressive with liability management than some of its peers, may have damaged relationships with lenders as a result—the Financial Times quoted sources close to the deal who said the aftermath of the maneuver forced Vista into "damage control" as it tried to patch things up with lenders. The FT also quoted a lender who said that certain creditors were "apoplectic,” even as observers agreed that Vista was well within its rights laid out in the credit agreement.

Kip deVeer, CEO of Ares Capital Corporation and head of Ares Credit Group, suggested this week that previous coverage of events may have been overblown.

"So look, what I’d say is most of what’s been reported in the press is not accurate. So I think that’s important to just put out there," deVeer told analysts on an earnings call. "When we really drill through and look at who are the biggest sponsors in the portfolio, they’re obviously sponsors that we do a tremendous amount of business with and that we have a lot of confidence in. Vista is one of them."

Avoidance of such liability management transactions, however, is top of mind at Ares.

"We spend a tremendous amount of time just because of the experience we have in the market thinking about, frankly, documentations,” deVeer added. “The way that we come into transactions, we like to lead our own deals, we like to write documents, we like to structure covenants because we've been doing this a long time … Over the last 12 to 18 months, we probably passed on deals more often on the documentation than any other reason for passing on a deal."

When things do go south, DeVeer said Ares has no problem stepping in. “Unfortunately, for Visa Equity Partners, it’s not going to be a situation that works out very well for them.”

• TowerBrook Capital Partners and Clayton, Dubilier & Rice agreed to acquire R1 RCM (Nasdaq: RCM), a provider of healthcare revenue cycle management solutions, for around $8.9 billion in an all-cash transaction.

• BNP Paribas is in exclusive talks to acquire AXA Investment Managers for €5.1 billion, which includes a 15-year agreement to continue asset management activities for Axa’s insurance arm.

• Berkshire Partners and Leonard Green & Partners invested in Vital Care, a franchisor of infusion therapy pharmacies, joining existing investor Linden Capital Partners.

• Outbrain (Nasdaq: OB) agreed to acquire video-based adtech company Teads from Altice for $1 billion.

• Eurazeo is weighing an exit for Elemica, a supply-chain software provider that could fetch more than $1 billion, per Bloomberg.

• JPMorgan Global Alternatives acquired Bold Ocean, a Maryland-based maritime logistics provider, from Nova Infrastructure.

• NLX acquired Radish Systems, a Boulder, Colorado-based provider of voice response solutions for contact centers.

• ITT (NYSE: ITT) agreed to acquire kSARIA Holdings, a manufacturer of aerospace and defense connectivity solutions, for $475 million from Behrman Capital.

• NSUS Group agreed to acquire the World Series of Poker brand and intellectual property rights from Caesars Entertainment (Nasdaq: CZR) for $500 million.

• GrowthCurve Capital invested in PureFacts Financial Solutions, a provider of SaaS-based revenue management solutions for the investment industry.

• Mainsail Partners invested in INNERGY, an ERP for woodworking and other engineer-to-order industries.

• 23andMe (Nasdaq: ME) rejected CEO Anne Wojcicki's $0.40 per share take-private offer, citing insufficient premium and lack of committed financing, and requested she withdraw opposition to alternative transactions.

• PSC Group, a portfolio company of TJC, acquired Delta Petroleum Company, a provider of outsourced specialty chemical filling and warehousing services, from Greif.

• Shore Capital Partners formed ONDEX Automation, a new factory automation systems integrator platform, following the acquisition of Sterling, Massachusetts-based LIVE Automation.

• BharCap Partners invested in Electronic Merchant Systems, a Cleveland-based merchant solutions and payments processing provider.

• WellSpring Consumer Healthcare, a portfolio company of Avista Healthcare Partners, acquired vH essentials, an OTC women's intimacy care product manufacturer, from Wisconsin Pharmacal Company.

• BridgeTower Media, a portfolio company of Transom Capital, agreed to acquire Virginia Business, a state and local business publication.

• Interconnected Ventures' Coalition Capital agreed to acquire Oaktree Capital Management’s stake in French soccer club Stade Malherbe Caen.

Tech, Vertical SaaS, & Misc. Enterprise

• Contextual AI, a startup developing tools to enhance AI model performance, raised $80 million in Series A funding led by Greycroft, with participation from Bain Capital Ventures, Lightspeed, NVentures, HSBC Ventures, and Snowflake Ventures.

• Protect AI, a Seattle-based AI and machine learning security company, raised $60 million in Series B funding led by Evolution Equity Partners, with participation from 01 Advisors, StepStone Group, Samsung, Acrew Capital, boldstart ventures, Knollwood Capital, Pelion Ventures, and Salesforce Ventures.

• Ema, a creator of universal AI employees for enterprises, raised $36 million in additional Series A funding led by Accel and Section 32, with participation from Prosus Ventures, Hitachi Ventures, Sozo Ventures, Wipro Ventures, SCB10X, Frontier Capital, and Colle Capital.

• Hedra, an AI video creation platform, raised $10 million in seed funding from Index Ventures, Abstract, and A16Z Speedrun.

• Tezi, an AI-powered autonomous recruiting platform, raised $9 million in seed funding led by 8VC and Audacious Ventures, with participation from Liquid 2, Afore, Prime Set, and South Park Commons.

• Icebreaker, a professional network with cryptographically verifiable identity, raised $5 million in seed funding led by CoinFund, with participation from Accomplice, Anagram, and Legion Capital.

• When, an AI-powered offboarding solution, raised $4.6 million in seed funding led by B Capital, with participation from TTV Capital, Joyance Partners, Alumni Ventures, Network Ventures, and Enfield Capital Partners.

Fintech

• Bilt Rewards, a rent rewards credit card startup, raised $150 million in new funding led by Ontario Teachers' Pension Plan.

• Morpho, a decentralized crypto lending protocol, raised $50 million in new funding led by Ribbit Capital, with participation from a16z crypto, Coinbase Ventures, Variant, Pantera, Brevan Howard, BlockTower, Kraken Ventures, Hack VC, IOSG, Rockaway, L1D, Mirana, Cherry, Semantic, Fenbushi, LeadBlock, Bitpanda Ventures, and Robot Ventures.

• Pichi Finance, a trustless points trading protocol, raised $2.5 million in seed funding led by UOB Venture Management, Signum Capital, and Mantle Network, with participation from DWF Ventures, Wise3 Ventures, and Genesis Block Ventures.

Consumer & Media

• Heeyo, an AI-enabled learning platform for children, raised $3.5 million in seed funding from OpenAI Startup Fund, Alexa Fund, and Pear VC.

Healthcare

• Spring Health, a mental health platform for employers and health plans, raised $100 million in Series E funding led by Generation Investment Management, with participation from Kinnevik, William K Warren Foundation, RRE, and Northzone.

• Healx, a clinical-stage biotech focused on rare diseases, raised $47 million in Series C funding co-led by R42 Group and Atomico, with participation from Balderton, Global Brain, btov, Ayana Capital, o2h, and VU Venture Partners.

• Mindera Health, a precision medicine startup developing skin analytics technology, raised $14 million in convertible note financing led by Mountain Group Partners.

• AMAL Therapeutics, a Swiss biotech developing peptide-based therapeutic cancer vaccines, raised €8 million in Series B funding co-led by Boehringer Ingelheim Venture Fund, BioMedPartners and Helsinn Investment Fund, with participation from VI Partners, High-Tech Gründerfonds and Schroder Adveq.

Industrials, Greentech, & Other

• Agrovision, a superfruit producer, raised $100 million in new equity funding led by Aliment Capital.

• Applied Carbon, a developer of automated biochar production machines, raised $21.5 million in Series A funding led by TO VC, with participation from Congruent Ventures, Grantham Foundation, Microsoft Climate Innovation Fund, S2G Ventures, Overture.vc, and Wireframe Ventures, among others.

• Sora Fuel, a startup producing sustainable aviation fuel from atmospheric CO2, raised $6 million in seed funding led by The Engine Ventures, with participation from Wireframe Ventures.

• Raad Labs, a blockchain-based distributed weather sensors startup, raised $2.25 million in seed funding led by CoinFund, with participation from Tribe, EV3, and Protagonist.

• Quinbrook Infrastructure Partners raised $3 billion for its Net Zero Power Fund, targeting investments in large-scale solar and storage, sustainable data center infrastructure, renewable fuels production, and grid support technologies across the US, UK, and Australia.

• venBio Partners raised $528 million for its fifth life sciences venture fund.

Interested in partnering with Transacted? If you’re a financial services firm looking to connect with an engaged audience, please reach out.

Got a tip or an idea for a story? Email [email protected], or Tweet/DM @transactedInc