Private equity's Australian cash infusion

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

• A look at AustralianSuper’s plans for international expansion

• The deal sheet, plus the latest on asset-based finance

Pension fund AustralianSuper has big plans to expand its overseas presence, including a desire to double its private equity exposure.

With nearly A$300 billion of assets, the fund is Australia’s largest and among the top 20 global pension funds—and the expectation is that assets will hit more than A$700 billion within the next few years.

That’s a lot of money for a relatively small domestic market to soak up, prompting the fund to target more than 70 percent of its future deployments to assets outside Australia. As it works to build an investment infrastructure that can support the strategy, AustralianSuper has accelerated its international footprint over the last 24 months, including meaningful headcount growth in its London, New York, and Beijing offices.

New York, in particular, is central to the fund’s plans: This week, AustralianSuper opened a new Manhattan office in an event attended by New York’s mayor and representatives from several U.S.-based managers, including TPG, Churchill Capital, and New Mountain Capital.

“If you can’t be good at finance in New York, you can’t be good at finance,” Chief Executive Officer Paul Schroder told Bloomberg at the event. The office is expected to grow to around 130 employees over the next three years.

Private Equity: Big Dollars for a Small Group of Managers

The aggressive expansion is also based, in part, on a desire to capitalize on a current market environment that may be more attractive for new cash than the heights of 2021 and 2022. At the same New York event, Chief Investment Officer Mark Delaney noted that he believes the most attractive fund vintages are those immediately after “tough times.”

Per Axios, the fund’s U.S. private equity strategy is targeting around one-third of its deployments to be investments in funds, another third in syndicated co-investments, and the remainder in co-underwriting opportunities alongside GPs.

Historically, AustralianSuper’s typical fund commitments range from $200 to $500 million, with a preference for more concentrated positions at the higher end of the range—the fund is currently invested with just 10 U.S. private equity managers.

In addition to New Mountain and TPG, other commitments include Leonard Green, Platinum Equity, Roark, Silver Lake, T.H. Lee, and Vista Equity Partners.

Allocations to co-investment opportunities range between $50 to $500 million, and the fund has flexibility for co-underwriting check sizes that can reach north of $1 billion. Notably, the fund plans to avoid making any direct investments itself.

Private Credit Falls Out of Favor

In 2022, AustralianSuper committed an additional A$7 billion to global credit, and, in December of 2023, highlighted its plan to triple this exposure via a mix of its in-house direct lending and new partnerships with outside managers.

Those comments came in conjunction with the announcement of a renewed commitment to Churchill Asset Management, Nuveen’s private credit arm, growing in size from $250 million to $1.5 billion. At the time, AustralianSuper Head of Private Credit Nick Ward underlined his bullishness on the asset class: "From a private market perspective, we think it beats infrastructure and property."

Whether the fund’s attitude has since changed, or internal strategy hasn’t quite aligned, Chief Investment Officer Mark Delaney appeared less enthusiastic this week.

“There’s no doubt that private credit’s attractive. The spreads are substantial, with double-digit returns,” he said. “But you’re getting double-digit returns because interest rates are higher, and you are assuming there’s going to be very low defaults. And both those things may not be sustainable in the long run.”

Either way, AustralianSuper is “open for business,” says Schroder. “We’ve got the ability to write big checks.”

• GI Partners and TA Associates are preparing to exit Netsmart, a provider of electronic health records and patient management software, hiring Goldman Sachs and William Blair to lead a process that could hit a valuation above $5 billion.

• Bain Capital is preparing to sell Zellis, a provider of payroll and HR software solutions, in a deal that could be worth around £2 billion, per Bloomberg.

• Arcline Investment Management agreed to acquire Kaman Corporation (NYSE: KAMN), an aerospace and industrial distribution company, for around $1.8 billion.

• Blackstone agreed to acquire Tricon Residential, a Canadian single-family rental REIT, for around $3.5 billion.

• Sekisui House, a Japanese homebuilder, has agreed to acquire MDC Holdings, a Denver-based competitor, for around $4.9 billion.

• Miter Brands agreed to acquire PGT Innovations, a manufacturer of impact-resistant windows and doors, for $3.1 billion. PGT is turning down a prior $3 billion agreement with Masonite International (NYSE: DOOR) and will pay an $84 million termination fee.

• Charlesbank Capital Partners invested in Searchlight Cyber, a UK-based provider of cybersecurity solutions.

• Welsh, Carson agreed to acquire a majority stake in EquiLend, a provider of data and analytics solutions securities industry.

• Convergence Partners acquired Datacentrix, a South African technology solutions provider, from Altice Portugal.

• CVC Capital Partners and CEZ Group are bidding for a 55 percent stake in GasNet, a natural gas distribution network owned by Macquarie and the Australian Retirement Trust.

• Global Infrastructure Partners is in talks to acquire a minority stake in MMC Port Holdings, a Malaysian port operator, at a valuation of around $6.4 billion.

• Hidden Harbor Capital Partners acquired R.L. James, a concrete restoration services company.

• Pyx Health, backed by TT Capital Partners, has acquired InquisitHealth, a social health and wellness platform.

• NewMarket Corporation (NYSE: NEU) acquired American Pacific Corporation, a specialty chemicals manufacturer, from AE Industrial Partners for around $700 million.

• Bowmark Capital is preparing to sell Focus Group, a UK-based provider of professional services, with Houlihan Lokey advising on the process.

• LiveRamp (NYSE: RAMP) has agreed to acquire Habu, a data collaboration platform, for $200 million.

• Red Ventures, backed by General Atlantic and Silver Lake, is preparing to sell product reviews site CNET for north of $250 million, per Axios.

• ZF Friedrichshafen, a German auto supplier, is considering a sale or IPO of its airbag unit.

• Edgewater Equity Partners acquired Ascent Technologies, a provider of regulatory compliance software.

• Empower Aesthetic, a Shore Capital Partners portfolio company, acquired DermaTouch RN and AW Skin, two providers of aesthetic medical services.

• Meaningful Partners has made a minority investment in Om Mushroom Superfood, a functional mushroom beverage and supplement company.

• Opta Group, backed by Speyside Equity Advisers, acquired Anker Industries, a provider of metallurgical additives to the steel industry, from Continuim Equity Partners.

• Pavion, a portfolio company of Wind Point Partners, acquired Integrated Service Corporation, a provider enterprise security solutions.

• Southern Home Services, a Gryphon Investors portfolio company, has acquired ACE Solves It All, a provider of HVAC, plumbing, and electrical services.

• CMA CGM, a global shipping and logistics group, has agreed to acquire Wincanton, a UK-based supermarket logistics company, for around $700 million.

• The Italian government is planning to sell a 2 percent stake in Eni, an Italian oil and gas producer, for around $2.2 billion.

• Chinese regulators launched a review of Shein’s cybersecurity and data handling processes, which could impact the fast fashion retailer’s planned U.S. IPO.

• Reddit, last valued at $10 billion in a 2021 round, is preparing to launch its IPO process in March.

• BBB Foods, a Mexican discount grocery chain, filed for a $300 million IPO with plans to list on the NYSE.

Tech, Vertical SaaS, & Misc. Enterprise

• Cohere, an enterprise-focused genAI platform, is seeking up to $1 billion in new funding, per the FT.

• Everphone, a Berlin-based B2B device leasing platform, raised €270 million in Series D funding. Citigroup led the round, with participation from KfW, Capnorr, and Signals Venture Capital.

• e2Companies, a provider of cloud-based energy management solutions, raised $100 million in new funding from Global Emerging Markets.

• Vicarius, a cybersecurity company focused on vulnerability management, raised $30 million in Series B funding. Bright Pixel led, with participation from JVP, AllegisCyber Capital, AlleyCorp, and Strait.

• CloudTalk, a provider of an AI-enabled calling solution, raised $28 million in Series B funding. KPN Ventures and Lead Ventures co-led.

• TrusTrace, a provider of supply chain management software, raised $24 million in growth funding led by Circularity Capital, with participation from Industrifonden and Fairpoint.

• Prismatic, a provider of an embedded integration platform (iPaaS) for B2B SaaS companies, raised $22 million in Series B funding led by existing backer Five Elms Capital.

• Recraft, a provider of AI-powered graphic design generation and editing software, raised $12 million in Series A funding co-led by Khosla Ventures and Nat Friedman, with participation from RTP Global, Abstract VC, Elad Gil, and Basis Set Ventures.

• Overmoon, a vacation rental management platform, raised $10 million in new funding co-led by NFX and Khosla Ventures.

• Briq, an AI-powered financial automation platform for the construction industry, raised $8 million at a $150 million valuation. Tiger Global Management led, with participation from MetaProp, Blackhorn, Eniac, and Nemetschek.

• PredictAP, a real estate accounts payable software, raised $8 million in Series A funding. RET Ventures led, with participation from Wise Ventures.

• Kusari, a supply chain security company focused on software, raised $8 million in combined Pre-Seed and Seed funding. J2 Ventures and Glasswing led, with participation from Unusual Ventures.

• Sky Engine AI, a UK-based developer of synthetic data solutions for computer vision applications, raised $7 million in Series A funding led by Cogito Capital Partners.

• Harbiz, a Madrid-based technology platform for fitness professionals, raised €5 million from Octopus Ventures.

• PredictAP, a provider of AI-enabled software for real estate accounts payable, raised $8 million in Series A funding led by RET Ventures and Wise Ventures.

• Lative, a sales performance, efficiency, and planning startup, raised $3 million in seed funding round led by Elkstone Ventures, with participation from Enterprise Ireland, Handshake Ventures, and WestWave Capital.

Fintech

• DailyPay, a provider of on-demand pay solutions, raised $75 million in new equity funding, along with $100 million in secured credit.

• Digital Onboarding, a financial services customer onboarding platform, raised $58 million in growth funding from Volition Capital.

• Flowdesk, a French crypto market-making and OTC trading platform, raised $50 million in Series B funding at a $250 million valuation. Cathay Innovation led, with Cathay Ledger Fund, Eurazeo, ISAI, Speedinvest, Ripple, and Bpifrance participating.

• Pomelo, a payments infrastructure startup, raised $40 million in Series B funding. Kaszek led, with participation from Monashees, Index Ventures, Insight Partners, Endeavor Catalyst, S32, TQ Ventures, and Alter Global.

• Kashable, a workplace lending and financial wellness provider, raised $25.6 million in Series B funding. Revolution Ventures and Moneta Ventures co-led, with participation from EJF Capital and Krillion Ventures.

• Kiln, a crypto infrastructure platform providing liquidity solutions to digital asset protocols, raised $17 million in Series A funding. 1kx led, with participation from Crypto.com, IOSG, Wintermute Ventures, KXVC, and LBank.

• Woo X, a cryptocurrency exchange, raised $9 million in new funding from Wintermute, Selini Capital, Time Research, Presto Labs, Pulsar, AlphaLab Capital, Efficient Frontier, Amber, and Riverside Hedge, among others.

• Alphathena, an AI-powered direct indexing platform for investment advisors, raised $4 million from ETFS Capital and Hyde Park Angels.

Consumer & Media

• Myrealtrip, a travel tech startup, raised $56.7 million in Series F funding co-led by BlueRun Ventures Korea and IMM Investment, with participation from Korelya Capital and Vanderbilt University’s endowment fund.

• Mediterranean Food Lab, a developer of solid-state fermentation tech for plant-based flavors, raised $17 million in Series A funding. Gullspång Re:food led, with participation from PeakBridge, Arancia International, and FoodBridge.

• Eastside Golf, a lifestyle golf brand targeting youth and non-golfers, raised $3.4 million in seed funding. EP Golf Ventures led the round.

Healthcare & Life Sciences

• Cleveland Diagnostics, a developer of cancer detection tests, raised $75 million of growth-stage financing led by Novo Holdings.

• Ratio Therapeutics, a developer of oncology-focused radiopharmaceuticals, raised $50 million in Series B funding led by Schusterman, with participation from Duquesne, and Bristol Myers Squibb.

• SmartLabs, a biopharma-focused lab and manufacturing services provider, raised $48 million in Series C funding from ArrowMark Partners, Winslow Capital Management, and Conversion Venture Capital.

• Prota Therapeutics, a biotech focused on oral immunotherapy treatments for food allergies, raised $21 million in new funding led by Sprim Global.

Industrials, Greentech, & Other

• International Battery Company, a developer of lithium-ion battery cells for EVs, raised $35 million in pre-Series A funding led by RTP Global, with participation from Beenext, and Veda VC.

• Lightship, a manufacturer of electric RVs, raised $34 million in Series B funding. Obvious Ventures and Prelude Ventures co-led the round.

• ZymoChem, a biomanufacturing company focused on creating renewable, carbon-efficient polymers, raised $21 million in Series A funding. Breakout Ventures led, with participation from Lululemon, Toyota Ventures, GS Futures, KdT Ventures, and Cavallo Ventures.

• SeeTree, an AI-enabled tree health monitoring platform, raised $17.5 million in Series C funding. HSBC Asset Management led the round, with participation from existing investors Hamaya Holdings and International Financial Corporation.

• Element Zero, an Australian green materials developer, raised US$10 million in seed funding led by Playground Global.

• Farm-ng, developing AI-enabled robotics for farming, raised $10 million in Series A funding. Acre Venture Partners led, with participation from Xplorer Capital and HawkTower.

• Alt Mobility, an electric vehicle leasing and lifecycle management platform, raised $6 million. The round was co-led by Shell Ventures, Eurazeo, EV2 Ventures, and Twynam.

• Land Moto, an electric motorcycle and battery producer, raised $3 million in funding from Nunc Coepi Ventures.

• Jain Capital made a downward revision to its fundraising target, now aiming for up to $6 billion after previously seeking as much as $10 billion.

• Aramco has allocated an additional $4 billion to its global venture capital arm, Aramco Ventures, providing $7 billion in total to its venture strategy.

• Wynnchurch Capital raised $3.5 billion for its sixth buyout fund.

• LuminArx Capital launched Cinergy, a $2 billion vehicle offering a range of private credit solutions to Citi’s global client base.

• Windjammer raised $1.3 billion for its latest buyout fund.

• Bain Capital raised more than $1 billion for a new middle market credit fund.

• Reven Office REIT is seeking $1 billion in new capital for its distressed office space lending strategy.

• Act One Ventures raised $73 million for its third fund.

1. The outlook for asset-based finance

• KKR’s Daniel Pietrzak, Global Head of Private Credit, and Varun Khanna, Co-Head of Asset-Based Finance, outline the year ahead for ABF. — Beyond Corporate Credit: Exploring Asset-Based Finance for 2024, KKR

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