S&P Global Market Intelligence offers our top picks of global private equity news stories and more published throughout the week.
Blockchain technology is increasingly looking like the key that could unlock a huge new market for private equity: the global mass affluent, a group that holds about $80 trillion in investable capital, according to one oft-cited estimate by Blackstone Inc. President Jonathan Gray.
KKR & Co. Inc. in September became one of the latest and largest private equity firms to tokenize a portion of one of its funds on blockchain. Each token represents a fraction of a stake in the fund, meaning individual investors can buy in at a sliver of the typical ticket size.
The tokens offer another key advantage for retail investors: liquidity. Capital invested in a private equity fund is typically tied up for several years, but anyone who owns a tokenized portion of the KKR fund can trade their interest after a one-year lockup period.
It is still early days in private equity’s transition to the blockchain, and there are a lot of technical and regulatory wrinkles to iron out. That is especially true if the goal is not just opening private equity to wealthy individuals but truly democratizing the asset class by giving Main Street investors access to its funds.
Read more about those hurdles.
CHART OF THE WEEK: Risky bets in consumer sector
⮞ Consumer discretionary was the highest-risk sector for investment in the third quarter, according to an S&P Global Market Intelligence analysis. The analysis ranked sectors according to three risk criteria: corporate guidance, short interest and probability of default.
⮞ Risk influences company valuations, potentially creating buying opportunities in the sector for private equity.
⮞ The number of consumer discretionary sector companies that lowered corporate guidance more than doubled to 34 in the third quarter compared to the second quarter.
DEALS AND FUNDRAISING
* Funds managed by Apollo Global Management Inc. affiliates closed the acquisition of Lumen Technologies Inc.’s incumbent carrier operations and related assets in a $7.5 billion deal. Separately, funds managed by Apollo bought a roughly 5% minority stake in alternative asset manager Diameter Capital Partners LP.
* Apax Partners LLP-advised funds agreed to sell their majority stake in Boasso Global Inc. to KKR, which is making the investment through its KKR Global Infrastructure Investors IV fund. The target company provides depot, maintenance, cleaning and transportation services to the ISO tank container market in Europe and North America.
* Thoma Bravo LP closed the sale of Frontline Technologies Group LLC to Roper Technologies Inc. for about $3.73 billion in an all-cash transaction. Frontline Education provides administration software purpose-built for K-12 educators.
* KKR and The Goldman Sachs Group Inc.’s Petershill business made anchor commitments to the first fund of Atwater Capital. The capital commitments to Atwater Capital Fund I LP now total more than $100 million.
ELSEWHERE IN THE INDUSTRY
* Bayer AG sold its environmental science professional business to Cinven Ltd. for $2.6 billion. The acquired business offers solutions to control pests, disease and weeds in nonagricultural areas.
* Kinderhook Industries LLC closed the acquisition of Gulf Tanks Holdings Inc. from WillScot Mobile Mini Holdings Corp. in an approximately $323 million transaction.
* GPF Capital closed the acquisition of an 80% stake in Spanish company Lezama Demoliciones, which specializes in the demolition, recycling and rehabilitation of industrial soils.
* HgCapital LLP made a majority investment in Trustquay, a corporate services software business, marking an exit for Silverfleet Capital Partners.
FOCUS ON: ENERGY
* Funds managed by PAG closed the acquisition of First Solar Inc.’s Japanese solar operations and maintenance platform.
* TPG led a $450 million funding round for long-duration energy storage upstart Form Energy Inc. Other investors in the series E round included Singaporean sovereign wealth fund GIC Pte. Ltd. and the Canada Pension Plan Investment Board.
* Electric vehicle charging infrastructure company Loop Global Inc. raised $60 million, comprising a $40 million series A-1 round and a $20 million financing facility. The series A-1 round was co-led by Fifth Wall Climate and Agility Ventures, with participation from Keystone National Group LLC, which provided the financing facility.