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

• A look at KKR’s new middle market strategy

• Plus, OpenAI considers Sam Altman equity grant

Middle market ambitions:

On Monday, KKR announced it had raised $4.6 billion for its first dedicated middle market buyout fund, Ascendant Fund SCSP.

Ascendant will target companies with enterprise values between $200 million to $1 billion and EBITDA of less than $75 million, working across seven industry verticals: consumer, financial services, healthcare, industrials, media, software, and tech-enabled services.

"We are very proud of the strong response we have received from our fundraising efforts and believe that Ascendant is well-positioned to address the robust and attractive opportunities in the North American middle market," said Pete Stavros and Nate Taylor, Co-Heads of KKR Global Private Equity.

A long-running advocate for employee ownership initiatives (see KKR's CHI Overhead Doors investment and Stavros-led Ownership Works), Stavros’ influence is apparent. Ascendant is the first fund of its kind with an explicit commitment to broad-based employee ownership programs at every majority-owned company in which it invests.

KKR says all employees will be offered an equity stake, to be paid out at exit, worth at least six months of salary.

To be clear, KKR has not transformed into some sort of philanthropic organization—properly implemented employee ownership appears to have measurable benefits that directly impact financial performance and returns.

Stavros, who previously ran the firm's Industrials group, has been using similar programs in his investments since at least 2011. In all, more than 50 KKR portfolio companies now have equity incentive plans that extend beyond senior management, and the firm cites a range of positive outcomes across topline growth, margins, and employee turnover.

The firm also plans to make its operational consulting arm, KKR Capstone, readily available to Ascendant investments. The group includes nearly 100 professionals with expertise across sales & marketing, price optimization, inorganic growth, procurement, and talent management.

Less operationally mature companies in the middle market could mean greater leverage for Capstone initiatives relative to typical KKR deals. One example, says KKR, is an ability to attract talent that would otherwise be out of reach for companies of this size.

Within the firm, the fund is supported by a dedicated Ascendant team whose members—15 in total—have been embedded within the individual industry groups of the firm’s flagship buyout strategy.

For limited partners, Ascendant offers exposure to an attractive segment of the market through a well-known manager. Though it may be harder for KKR to deploy capital at scale, middle market and lower middle market strategies have been shown to consistently outperform large-cap buyout—a combination of greater opportunities for value creation and multiple expansion (both from increased scale at exit and less competitive processes at entry).

KKR’s early marketing materials for Ascendant showcased a target returns profile of around 30 percent net IRR and 3.0x net MOIC, citing an "Ascendant Fund Reference Portfolio" that was said to be representative of the strategy.

As a benchmark, the firm’s 2016 vintage flagship Americas Fund XII was held at a net IRR of 18.7 percent and TVPI of 1.86x as of March 31.

There is some precedent for the optimism. Similar efforts have already demonstrated a track record of success: Thoma Bravo launched its first middle market software-focused Discover Fund in 2015. After a series of positive outcomes and quick subsequent funds, the firm is now actively fundraising for a $7 billion Discover Fund V.

KKR’s Ascendant fund has already completed six investments, including software provider Alchemer, dental care chain 123Dentist, and fire equipment provider Marmic Fire & Safety. Marketed terms include a management fee of 1.5 percent and carried interest of 20 percent above a 7 percent hurdle with full GP catch-up.

• Arm (Nasdaq: ARM) approached Intel (Nasdaq: INTC) over a possible acquisition of Intel’s products division, but was rebuffed, per Bloomberg.

• L Catterton agreed to acquire a majority stake in pilates studio Solidcore from VMG Partners, Peterson Partners, and Kohlberg & Company.

• Leonard Green & Partners agreed to acquire GeoStabilization International, a provider of geohazard mitigation solutions, from KKR.

• Koch Equity Development is in talks to acquire Forbes, per Axios.

• Validus Energy agreed to acquire Citizen Energy, an oil and gas producer in the Mid-Continent basin, from Warburg Pincus for over $2 billion, per Reuters.

• Sodexo is exploring a potential acquisition of Aramark (NYSE: ARMK), a U.S.-based food and facilities management provider trading at a market value above $9.8 billion, per Bloomberg.

• Lightspeed Commerce, a Canadian payments software provider trading at a market value above $2.3 billion, hired J.P. Morgan to explore a potential sale, per Reuters.

• PAG and Apex Technology are considering a possible sale of Lexmark International, a laser printer maker, which could be worth up to $2 billion, per Bloomberg.

• TPG agreed to acquire a minority stake in New Mountain Capital-backed Homrich Berg, an Atlanta-based wealth management firm, for around $1 billion.

• ADP is in talks to acquire WorkForce Software, a provider of bespoke payroll solutions backed by Elliott Investment Management and Insight Partners, for around $1.2 billion.

• Equativ, backed by Bridgepoint Development Capital, acquired Kamino Retail, an on-site retail media platform.

• RedBird IMI acquired Bright North Studios, a Toronto-based TV production company behind nonfiction series like "FBI True" and "Never Seen Again.”

• New State Capital Partners acquired a majority stake in The Expo Group, a provider of services for trade shows and live events.

• Graco agreed to acquire Corob, an Italian manufacturer of automated dosing and dispensing systems for paint and ink, from Ardian.

• Los Angeles FC acquired a minority stake in Angel City FC, the city’s NWSL team.

• Visa (NYSE: V) agreed to acquire Featurespace, a UK-based AI payments protection developer.

• Everise, backed by Warburg Pincus and Brookfield, acquired the healthcare business of Continuum Global Solutions, a customer services management provider, from Skyview Capital.

• Investcorp acquired Stowe Family Law, a UK-based law firm, from Livingbridge.

• KKR and the Skip Essential Infrastructure Fund agreed to acquire a 74.25 percent stake in Queensland Airports Limited from The Infrastructure Fund, State Super, and Australian Retirement Trust.

• Horizon Capital is exploring the sale of Sabio Group, a digital customer services and cloud migration firm that could be worth up to £400 million.

• HP (NYSE: HPQ) acquired Vyopta, a provider of network analytics and monitoring solutions.

• The family office of Bill Ford, CEO of General Atlantic, acquired a 24 percent stake in York City FC, a 102-year-old English football team competing in the National League.

Tech, Vertical SaaS, & Misc. Enterprise

• OpenAI is reportedly in discussions to grant CEO Sam Altman a 7 percent equity stake as part of its transition from non-profit to for-profit status; the startup is also dealing with a number of departures across senior research and leadership teams this week, hoping to limit any impact to its ongoing efforts to raise up to $6.5 billion in new funding.

• Distribusion, a B2B ground transportation marketplace, raised $80 million in Series C funding led by TQ Ventures, with participation from Lightrock.

• UJET, a cloud contact center, raised $76 million in Series D funding led by Sapphire Ventures, with participation from KeyCorp, IonPacific, GV, Kleiner Perkins, Citi Ventures, DCM, and Ericsson Ventures.

• Crisp, a supply chain data platform for CPG brands, raised $72 million in Series B funding led by Wellington Management, with participation from Toshiba, DNX, Cox, Prologis, FirstMark Capital, Spring Capital, Blue Cloud Ventures, and 3L.

• Dinii, a Tokyo-based restaurant management platform, raised $48 million in Series B funding co-led by Bessemer Venture Partners and Hillhouse Investment Management, with participation from Eclectic, Flight Deck Capital, ANRI, and Coral Capital.

• Prepared, an AI platform for emergency communications, raised $27 million in Series B funding led by Andreessen Horowitz, with participation from First Round Capital, M13, and NewView Capital.

• Convergence, a startup developing AI agents with long-term memory, raised $12 million in pre-seed funding led by Balderton Capital, with participation from Salesforce Ventures and Shopify Ventures.

• DeepOpinion, a developer of enterprise agentic process automation, raised €11 million in Series A funding co-led by Red River West and AIpha Intelligence Capital, with participation from Lunar Ventures and Stride VC.

• Findable, an Oslo-based real estate documentation startup, raised €9 million in Series A funding led by Point Nine, with participation from KOMPAS VC, Construct Venture, Malling & Co Venture, and LakeEight.

• DefectDojo, a scalable application security platform, raised $7 million in funding led by Iolar Ventures and Aspenwood Ventures.

Fintech

• K1x, a provider of AI-powered K-1 reporting solutions, raised $20 million in new funding led by Edison Partners.

• Dotfile, a French RegTech startup for financial institutions, raised €6 million in new funding led by Seaya Ventures, with participation from Serena and Hexa.

Healthcare

• Zing Health, a Medicare Advantage insurer, raised $140 million in new funding from Health 2047 Capital Partners, CRG, First Trust Capital Partners, Newlight Partners, Town Hall Ventures, Health 2047, and Leavitt Equity Partners.

• Qure.ai, an AI-enabled diagnostics platform, raised $65 million in Series D funding led by Lightspeed and 360 ONE Asset, with participation from Merck Global Health Innovation Fund, Kae Capital, Novo Holdings, HealthQuad, and TeamFund.

• Mirai Bio, an AI-driven platform for genetic medicines, raised $50 million in initial funding from Flagship Pioneering.

• Mediwhale, a startup using retina scans to predict cardiovascular disease risk, raised $12 million in Series A2 funding led by Korea Development Bank, with participation from Woori Venture Partners, IMM Investment, and Mirae Asset Securities.

• Surgar, a developer of AR surgery solutions, raised €11 million in Series A funding led by Mutuelles Impact, with participation from Elaia Partners.

• AminoChain, a decentralized biobank platform, raised $5 million in seed funding led by Andreessen Horowitz, with participation from Cercano.

Industrials, Greentech, & Other

• Marvel Fusion, a German nuclear fusion startup, raised €62.8 million in Series B funding led by HV Capital, with participation from b2venture, Bayern Kapital, Deutsche Telekom, Earlybird, SPRIND, and Tengelmann Ventures.

• Utility Global, a Houston-based off-gas-to-value company, raised $53 million in Series C funding led by OPG Pension Plan, with participation from ArcelorMittal's XCarb Innovation Fund, Ara Partners, and Aramco Ventures.

• Bot Auto, a Houston-based autonomous vehicle startup, raised $20 million in new funding from Brightway Future Capital, Cherubic Ventures, EnvisionX Capital, First Star Ventures, Linear Capital, M31 Capital, Taihill Venture, Uphonest Capital, and Welight Capital.

• ÄIO, an Estonian startup developing sustainable oils, raised €6.1 million in new funding led by Voima Ventures and 2C Ventures, with participation from SmartCap and Nordic Foodtech VC.

• Citigroup and Apollo Global Management launched a $25 billion direct lending program, with participation from Mubadala Investment Company and Apollo's subsidiary Athene.

• StepStone Group raised $7.4 billion for its fifth private equity secondaries fund, more than double the size of its predecessor.

• ARCH Venture Partners raised $3 billion for its thirteenth fund focused on early-stage biotech.

• Asabys Partners, a Barcelona-based life sciences investor, raised €180 million for its second venture fund.

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