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PE-backed SPACs slow to trickle in Q1; Blackstone closes in on $5B Advarra deal

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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.

Just three special purpose acquisition companies with private equity backing went public in the U.S. in the first quarter as the wider SPAC market cratered after a record year in 2021.

Forty-two private equity-backed SPACs held IPOs on a U.S. exchange in the first quarter of 2021, or 14 times as many as the same period this year. The shift is part of a broader fall-off in SPAC activity.

Several factors may be at play in the turnaround from 2021, including stricter SPAC rules proposed in March by the SEC and recently published research that suggests close to two-thirds of recent SPAC mergers fell short of revenue projections. SPACs are considered an alternative to traditional IPOs, but the latter is also behind the pace set last year due at least in part to increased market volatility.

Expiration dates loom for some U.S. private equity-backed SPACs, which typically must dissolve if they cannot find a company to merge with within two years.

Read more on U.S. private equity-backed SPACs.

CHART OF THE WEEK: IPOs for PE-backed SPACs dwindle

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⮞ The first quarter’s 93% year-over-year decline in U.S. private equity-backed special purpose acquisition company IPOs mirrored a broader slowdown in SPAC activity.

⮞ Add in the SPACs without significant private equity involvement, and the total was 53 IPOs in the first quarter, a decline of 77% from the 227 recorded the same quarter a year ago.

⮞ The record for SPAC IPOs was set in 2021, when there were 769 globally, according to S&P Global Market Intelligence data.

FUNDRAISING AND DEALS

* Blackstone Inc. is close to striking a deal to acquire drug-research services company Advarra Inc. from Genstar Capital LLC for about $5 billion, Bloomberg News reported, citing people with knowledge of the matter.

* Blackstone is also looking to increase the assets in its Asia-Pacific private credit business to at least $5 billion by targeting large-scale deals in sectors such as life sciences and technology, according to Bloomberg.

* German chemical company Lanxess AG and Advent International Corp. will buy Royal DSM NV‘s engineering materials subsidiary for about 3.7 billion, Dow Jones Newswires reported. It will be combined with Lanxess’ high-performance materials business under a joint venture, in which Advent will own at least a 60% stake and Lanxess will own a 40% stake.

* Affiliates of Clayton Dubilier & Rice LLC agreed to buy a majority stake in Roper Technologies Inc.’s process-technologies segment and its industrial businesses for about $2.6 billion, Dow Jones reported. Roper will retain a 49% stake in the standalone business.

ELSEWHERE IN THE INDUSTRY

* Good Growth Capital secured over $100 million for its third fund, which will continue the firm’s strategy of investing in early-stage companies across biomedical and health sciences, green technology, data sciences and related sectors.

* Corsair Capital LLC acquired a majority stake in HungerRush LLC from The CapStreet Group LLC. CapStreet will retain a minority stake in the cloud-based software provider serving the restaurant sector.

* ArchiMed SAS and Caisse de dépôt et placement du Québec infused fresh capital into Corealis Pharma Inc.

* Insurance brokerage Acrisure LLC collected $725 million in a series B-2 preferred equity funding round led by a unit of Abu Dhabi Investment Authority. Guggenheim Investments and Oak Hill Advisors LP also participated in the round.

FOCUS ON: NETWORK SECURITY

* Advent and Brighton Park Capital Management LP co-led a series D funding round that pulled in $142 million for Coralogix Ltd., an observability and streaming analytics provider.

* Cybersecurity training platform HoxHunt Oy secured $40 million in a series B financing round led by Level Equity Management LLC, with participation from Icebreaker.

* Seemplicity Security Ltd., a risk reduction and productivity platform, raised $26 million in a series A financing round led by Glilot Capital Partners through its Glilot Plus fund. NTT Venture Capital and Atlantic Bridge Services Ltd. were among the other investors.

* Tikehau Capital’s Ace Capital Partners, Auriga Partners and Bpifrance Participations SA participated in a funding round for cybersecurity company Vade Secure SASU, which collected €28 million.

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