S&P Global Market Intelligence offers our top picks of global private equity news stories and more published throughout the week.
We will soon find out what the SEC's slate of proposed private equity reforms means for the side letter, viewed by some investors as an essential tool in their negotiations with fund managers.
The rules targeting side letters, documents used to tailor limited partnership agreements for individual private equity fund investors, raised concerns at the Institutional Limited Partners Association, or ILPA, when they were first proposed by the SEC 13 months ago. The SEC contends that side letters are used to craft sweeter deals for preferred investors and that those secret agreements can diminish returns for other investors in a fund. But ILPA and several large public pension funds told the SEC in filings in 2022 that some institutional investors would be locked out of private equity if not for side letters, which ensure the investments comply with their specific regulatory and legal obligations.
Outside of the side letter issue, ILPA mostly supports the SEC's efforts to improve the transparency of private markets. The proposed rules include enhanced quarterly reporting and auditing requirements for private equity funds in addition to bolstering investor protections.
Neal Prunier, senior director of industry affairs for ILPA, said he expected the SEC to release the rules in their final form in the spring, possibly as soon as April. In anticipation, ILPA released survey data collected from its members since 2020 that Prunier said shows general partners have a distinct and growing advantage in negotiations with investors.
Read more about the survey results released in March by ILPA.
CHART OF THE WEEK: Sovereign wealth funds draw back from PE
⮞ The value of private equity deals with sovereign wealth fund involvement declined nearly 48% year over year to $39.03 billion in 2022.
⮞ One Middle East-based sovereign wealth fund, Abu Dhabi Investment Authority, has been a player in five of the nine largest sovereign wealth fund-involved private equity deals announced in 2022.
⮞ Companies in the U.S. and Canada were the primary targets of the sovereign wealth fund-involved private equity deals, followed by companies in Europe.
TOP DEALS AND FUNDRAISING
* The Carlyle Group Inc. reached a deal to sell PrimeFlight Aviation Services Inc., which provides aircraft, passenger and security-related services to the airline industry, to Capitol Meridian Partners LP and The Sterling Group LP.
* Advent International Corp. is selling Tag Worldwide Holdings Ltd. to Dentsu Group Inc. Tag is an omnichannel marketing production company providing an end-to-end, technology-enabled marketing activation platform.
* Platinum Equity LLC-backed Solenis LLC agreed to buy Diversey Holdings Ltd. at an enterprise value of roughly $4.6 billion. As part of the all-cash deal, Bain Capital Pvt. Equity LP will contribute about 56% of its existing Diversey equity into Solenis and sell its remaining shares to Solenis.
* EQT AB (publ)'s EQT Infrastructure VI fund will purchase a 68% stake in integrated security operator SK Shieldus Co. Ltd. from SK Square Co. Ltd. and Macquarie Asset Management Inc.'s infrastructure business. SK Square will become a minority shareholder with a 32% stake. The transaction is expected to close during the third quarter.
* The Riverside Co. raised about $1.87 billion at the final close of its Riverside Micro-Cap Fund VI LP. The vehicle was larger by more than 50% than its predecessor fund.
MIDDLE-MARKET HIGHLIGHTS
* TPG Global LLC made an unsolicited nonbinding offer to acquire the remaining 83% stake it does not already own in Sydney-based InvoCare Ltd., provider of funeral, cemetery, crematoria and related services, for A$1.50 billion. The proposal offers shareholders A$12.65 per InvoCare share in cash.
* British private equity firm LDC (Managers) Ltd. invested in Horsefly, an artificial intelligence-based talent analytics platform. Mercia Asset Management PLC exited the business as part of the transaction.
* Middle-market investor Equistone Partners Europe Ltd. is selling its majority interest in Amadys to Euro Techno Com Group, or ETC Group. Amadys is a system integrator of end-to-end connectivity solutions for the telecom, infrastructure and energy markets.
* Atairos agreed to buy leadership training and employment services company LifeLabs Learning. The parties expect to close the transaction in several weeks.
FOCUS ON: APPLICATION SOFTWARE
* Rampersand and Startmate sold Australian digital advertising and marketing platform Brandcrush Pty Ltd. to Criteo SA.
* An investor group including Air Street Capital LLP, Soma Capital Management LLC, Kima Ventures SAS and Y Combinator sold imaging tool company Init ML SAS to Stability Ai Inc.
* Luminate Capital Partners bought a majority stake in Ease Inc., which provides manufacturing plant floor audit software, via a strategic growth investment.
For further private equity deals, read our latest In Play report, which looks at potential private equity-backed M&A, including rumored transactions, each week.