September 05, 2024 | Read Online

What You Need To Know For September 5th

Private Credit Deals, plus Long-Term Capital Gain Taxes May Be Rising

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The Main Stories 🔍

Two Private Credit Giants are seeking multi-billion-dollar valuations: Sixth Street, a large credit asset manager, has bought back TPG's minority stake in the firm at a $10B valuation. Sixth Street was previously the credit arm of TPG, before spinning out back in 2020. Secondly, it was announced that HPS Investment Partners is discussing an IPO and is seeking a valuation of more than $10 Billion.

Private Credit M&A has been busy so far this week: Ares is buying LMM Direct Lender, Riverside Credit and Clearlake Capital is buying $5.1B private credit firm MV Credit from Natixis. Clearly, consolidation, M&A, and potential public offerings are on the table for several large credit shops.

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More Headlines 🍿

Vice President Harris has unveiled a plan for a 28% long-term capital gains tax rate for any household making more than $1 million a year
The Inversion is officially over - rates of the 2-yr and 10-yr bond market yield curve inversion has normalized. This either means "we did it folks" on a soft landing, or means we're nearing a recession…only more jobs and economic data will tell us which is the case
It was rumored that the DOJ has subpoenaed Nvidia in relation to their antitrust investigation…but Nvidia has denied this
Stocks are off to a rocky start this month, with the market cooling off after Tuesday's cool manufacturing data
The new NFL season expected to spur a record $35 billion in legal sports wagers, a 30% y/y growth from last year's numbers
President Biden is prepared to block Nippon Steel's purchase of US Steel. This comes shortly after VP Harris voiced her opposition to the Japanese firm making this key U.S. industrial giant
Verizon is nearing a deal that could come as soon as this week to buy Frontier Communications, a Dallas based telco that has invested heavily in new fiber builds over the past few years. Funny enough, this is a bit of a roundtrip, as previously Frontier bought Verizon's Fios business in 3 states for $10.5 Billion
Leveraged Loan Latest: The $4.8B LBO of Instructure is coming to the leveraged loans market, with a $2 Billion loan needed. Price talk is S+325-350. In more leveraged loan news, Formula 1 is coming to the loan markets with a $850mm deal to finance MotoGP
Ilya Sutskever, the OpenAI co-founder who got ousted after trying to remove Sam Altman, has raised $1B for his 'safe' AI start-up
Josh Harris, the co-founder of Apollo and founder of 26 North, has completed his first new PE deal at his new fund, buying ArchKey for over $1B
Harris also owns the Philadelphia 76ers, who are being tempted with $400 million of tax breaks to move across the river from Philly and moving to Camden, NJ
The Nordstrom Family, the owners of the retailer Nordstrom are looking to take their namesake brand private for a $3.8B valuation at $23/share. They're also getting financial support with the bid from Mexico-based retailer Liverpool
BYD is pausing potential electric vehicle factory buildout in Mexico until after the U.S. election (they want to see who wins first)
Barron Trump's college pick was revealed, as photos caught him arriving for his first day at NYU
American Transit, NYC's largest taxi insurer is pretty much insolvent, with policyholders owed more than $430 million. This could cause a lot of strain on NYC taxi drivers who would have to start paying much higher insurance premiums
Investcorp's Co-CEO has resigned, leaving the firm after three decades there

Earnings Corner 📜

Cybersecurity provider Zscaler (ZS) reported earnings that beat estimates, although the company's 2025 outlook fell short of expectations. Revenue was $592.9 million, versus expectations of $567.5 million and EPS was $0.88, beating expectations of $0.70. However, the company released current full year EPS guidance of $2.84 at the midpoint, significantly below the $3.33 estimated. This guidance comes as the company's sales team undergoes major reorganization and personnel changes, with the recent hiring of new chief revenue and marketing officers. The stock was down 18.7% on the day.

Dick's Sporting Goods (DKS) reported earnings that beat estimates. Revenue was $3.47 billion, versus $3.44 billion expected and EPS was $4.37, beating expectations of $3.83. The company's CEO attributed the 4.5% growth in comparable sales to an increase in both transactions and tickets, indicating more customers visited stores, while also making larger purchases. Dick's raised its full year outlook, with comparable sales growth of 2.5% to 3.5% now expected (vs. 2.0% to 3.0% previously), but with their EPS guide raised by only 18 cents at the midpoint. The stock was down 4.9% on the day.

Dollar Tree (DLTR) reported earnings that missed estimates, with the company revising guidance downwards across the board. EPS came in at $0.97 adjusted, versus $1.04 expected, and revenue was $7.38 billion, below the $7.49 billion number wall street expected. Full year EPS guidance was reduced from $6.75 to $5.40 at the midpoint, with the company citing pressures on middle- and high-income consumers. The stock was down 22.2% on the day.

M&A Transactions💭

Calliditas Therapeutics (STO: CALTX), a commercial-stage biopharma company, was acquired for $1.13B by Asahi Kasei (TKS: 3407).

Trident Royalties (LON: TRR), a growth-focused diversified mining royalty and streaming company, was acquired for $186.64M by Deterra Royalties (ASX: DRR). BMO, Stifel, and Tamesis Partners advised on the sale.

The European Logistics Property Portfolio of Investec Property Fund was acquired by Blackstone (NYS: BX) for $817.71M.

SRx Health Solutions, provider of clinical and pharmaceutical services, has reached a definitive agreement to be acquired for $125.0M by Better Choice (ASE: BTTR).

The Feed Ingredient Business of Aker BioMarine Antarctic (OSL AKBM) was acquired for $630.0M by American Industrial Partners and Aker Capital. Arctic Securities and Carnegie Investment Bank advised on the sale.

Orora Packaging Solutions, operator of a global packaging and visual communications company, has reached a definitive agreement to be acquired for $1.18B by Veritiv (MUN: 288).

Mattioli Woods, provider of wealth management and employee benefit services, was acquired for $559.91M by Pollen Street Capital. Canaccord Genuity and Fenchurch Advisory advised on the sale.

Kichler Lighting, manufacturer of decorative and ambiance lighting products, has entered into a definitive agreement to be acquired for $125.0M by Progress Lighting.

Meralco Powergen acquired an 11.6% stake in SP New Energy (PHS: SPNEC), a renewable energy power generation company, for $131.54M bringing Meralco Powergen's ownership up to 50.5%.

Island Hospital, provider of healthcare services, has reached a definitive agreement to be acquired for $888.08M by IHH Healthcare (KLS: 5225).

CAES, manufacturer of advanced electronics, was acquired for $1.925B by Honeywell (NAS: HON).

Private Placement Transactions💭

Sakana AI, operator of an AI-enabled information technology company, raised $137.0M of Series A venture funding led by Lux Capital, Khosla Ventures, and New Enterprise Associates at a pre-money valuation of $975.0M.

Safe Superintelligence, operator of an information technology lab, raised $1.0B of venture capital from NFDG, a16z, Sequoia, DST Global, and SV Angel.

Egenesis, developer of a gene editing and genome engineering platform, raised $191.0M of Series D venture funding led by Natco Pharma (BOM: 524816).

ArsenalBio, operator of a programmable cell therapy company, raised $325.0M of Series C venture funding led by Parker Institute for Cancer Immunotherapy, Bristol-Myers Squibb, and Hitachi Ventures.

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