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An ‘essential tool for LPs’ at risk; PE deal value ticks up in April

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S&P Global Market Intelligence offers our top picks of global private equity news stories and more published throughout the week.

A tool used to tailor limited partner agreements for private equity investors may be at risk if the SEC adopts a set of rules for the industry it first proposed in February.

The regulator’s plan to put new guidelines around the use of side letters could discourage private equity fund managers from putting some currently common terms into the documents or even from offering side letters at all, industry participants said in their written responses to the SEC’s proposal. The Institutional Ltd. Partners Association, or ILPA, describes side letters as an “essential tool for LPs.”

Side letters are widely used to reward cornerstone investors who make large, early commitments to private equity funds. They can also be used to accommodate the specific regulatory, legal or policy concerns of individual investors.

Other investors, through what is known as the most favored nation process, may get the opportunity to see what terms have been negotiated in side letters and even the opportunity to opt into those terms at the final close of a fund, according to ILPA.

The SEC’s proposal to circulate side letter details among both current and prospective investors in a fund would upend that process, ILPA cautioned in its submission to the SEC. Another aspect of the regulator’s proposal a prohibition on side letter terms that have a “material, negative effect” on other investors raises unanswered questions about where exactly the SEC will draw the line, ILPA added.

Read more on the reaction to the proposal here.

Private equity, venture capital entries tick up in April

⮞ Private equity and venture capital firms announced $98.81 billion in entries globally in April, a close to 6% increase over the $93.28 billion in entries global private equity and venture capital firms reported for the same month in 2021.

⮞ Firms were most active in the technology sector, which accounted for about 40% of entries in April. That is about the same as the sector’s share of entry activity in April 2021.

⮞ The number of announced transactions totaled 1,611 for the month, a year-over-year decline of 22.2% from April 2021.

FUNDRAISING AND DEALS

* The Carlyle Group Inc. signed a deal to buy defense contractor ManTech International Corp. in a cash deal worth $4.2 billion, Dow Jones Newswires reported. The private equity giant will pay $96 per outstanding ManTech share.

* KKR & Co. Inc. made a significant majority investment in customer experience company Widgix LLC, now known as Alchemer.

* Apollo Global Management Inc. will buy a minority stake in European life sciences venture capital firm Sofinnova Partners SAS. Apollo will commit up to €1 billion of managed capital to Sofinnova’s investment funds.

* CVC Capital Partners Ltd. is in early-stage negotiations to buy Brambles Ltd., a wooden pallet supplier for moving goods, The Wall Street Journal reported. Brambles has a market value of about $11.4 billion.

ELSEWHERE IN THE INDUSTRY

* Lightrock LLP secured $300 million for its growth equity fund focused on Latin America. The fund intends to offer coinvestment opportunities for its limited partners, boosting total deployment to approximately $400 million.

* An affiliate of Gemspring Capital LLC bought GoldenSource Corp., which provides data management solutions to financial services companies.

* OMERS Infrastructure and APG are joining forces to acquire Netherlands-based energy transition platform Groendus. The deal with seller NPM Capital NV is scheduled to close in the third quarter.

* Deutsche Beteiligungs AG will invest in MTW Holding SpA, an Italian manufacturer of metal and plastic accessories, with the company’s management team retaining a minority stake.

FOCUS ON: RENEWABLE ENERGY

* KKR & Co. Inc. is purchasing power generation group ContourGlobal PLC for $2.14 billion, Dow Jones reported.

* Funds managed by alternative investment firm PAG’s real assets arm agreed to purchase a 293-MWdc utility-scale solar project development platform and a solar operations and maintenance platform with 665-MWdc under management in Japan from First Solar Inc.

* Funds managed by Ares Management Corp.’s infrastructure opportunities strategy will sell the 121-MW Ford County wind project in Illinois to Ørsted A/S.

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