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It’s a good time to be investing in supply chains. Just ask Red Arts Capital.
Last December, the young supply chain-focused private equity firm lined up its first exit, agreeing to sell a shipping business called Midwest Motor Express for $150 million—good for a nearly 8x return. Now, Red Arts cofounders Nicholas Antoine and Chad Strader are seeking to raise $225 million for their first institutional fund.
Chad Strader (left) and Nicholas Antoine (right).
Red Arts Capital
Previously, the pair had been raising capital on a deal-by-deal basis from a network of high-powered backers that includes John W. Rogers Jr., founder of Ariel Investments, the oldest Black-owned mutual fund firm in the country. Fresh out of college, Antoine worked as chief of staff to Rogers and made a lasting impression on his boss. “He has great, great judgment,” the famed value investor says of his protégé.
Rogers helped fund Antoine and Strader’s early deals and showed them the ropes of professional investing. He also set a model for how to help the next generation of Black investors—an example the Red Arts cofounders now hope to follow at their own firm.
How are Antoine and Strader navigating their way into the private equity big leagues? And what does Warren Buffett have to do with it? Check out my full story on Red Arts for the answers.
Guild grabs more funding
Traditionally, when the economy takes a turn for the worse and big corporations are forced to cut costs, investment in employee training can be one of the first things to go. But Rachel Romer Carlson thinks things will be different this time.
Carlson is the CEO and cofounder of Guild Education, a startup that works with the likes of Walmart and Disney to help connect employees with higher-education programs. And she isn’t the only one confident that Guild’s model can still thrive amid the current environment. Oprah Winfrey’s a believer, too.
Guild Education is part of Oprah Winfrey’s startup portfolio.
Getty Images
Guild has raised $175 million in Series F funding at a $4.4 billion valuation, with Wellington Management leading a round that also drew participation from Winfrey and a list of other backers. My colleague Jena McGregor has the scoop on this one—check out her story on what Carlson and Guild plan to do next.
The whiff of a mega-deal
The biggest deal announced so far this week is an aromatic one. Dutch chemicals giant Royal DSM has agreed to merge with Swiss fragrance and flavor specialist Firmenich, valuing DSM at €25.3 billion ($27.2 billion) and Firmenich at €19.3 billion.
In a separate deal, DSM also agreed to sell its engineering materials business for nearly €3.9 billion to Advent International and Lanxess. Those two plan to combine the unit with Lanxess’ existing high-performance materials unit. Taken together, the two moves represent a significant pivot for DSM, moving away from manufacturing plastics and toward producing scents for perfumes and flavorings for food and beverages.
As of Thursday, DSM’s share price in Amsterdam was up about 7% since the deal was announced, taking its market cap to €27 billion. This is the biggest transaction in the business of scents and tastes since 2019, when International Flavor & Fragrances paid $26.2 billion for DuPont’s nutrition business.
SPACs untracked
SeatGeek called off its planned $1.35 billion SPAC merger on Wednesday, citing unfavorable market conditions that are “particularly impacting growth technology companies.” The ticket-selling startup had agreed in October to merge with RedBall Acquisition, a blank-check vehicle backed by frequent sports investor RedBird Capital, former Oakland Athletics general manager Billy Beane and basketball star Kevin Durant.
SeatGeek helped transform the ticket market. The SPAC market proved tougher to navigate.
getty
Elsewhere on Wednesday, Forbes also called off its planned SPAC merger, a $630 million deal with Magnum Opus Acquisition that was announced in August. In February, Binance had agreed to invest $200 million in my employer as part of the SPAC combination; the cryptocurrency exchange told the Block that it is “continuing to review all possible options” regarding a potential investment.
The two deals were called off the same week that Sen. Elizabeth Warren revealed plans to propose a new bill cracking down on blank-check deals. Even without any legislation, though, the SPAC market continues to cool off.
THL’s automation ambitions
Thomas H. Lee Partners invests in a little bit of everything: Healthcare. Enterprise software. Financial services. Insurance brokerages. Lately, though, the Boston-based buyout firm has been turning more and more of its attention to automation.
That includes the THL Automation Fund, a specialized vehicle that closed in late 2020 with $900 million in commitments. It also includes the recent $3 billion acquisition of Brooks Automation’s semiconductor automation. My colleague Amy Feldman spoke to a pair of investors at THL about why they’re chasing this particular market opportunity.
“Automation is penetrating all end markets,” says THL managing director Jim Carlisle, who leads the automation fund. “That’s why it’s such a powerful technology trend in which to invest.”
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