Russia sanctions felt by PE portfolio companies; bankruptcies fall in 2021

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

Private equity and venture capital investments in Russia are seeing the impact of the restrictions imposed on the country's banking system after its military invasion of Ukraine beginning Feb. 24.

New York-based global venture capital firm Starta Ventures has offices in Berlin and Moscow and has completed 17 deals in Russia since 2018, according to S&P Global Market Intelligence data. It works with technology company founders in both Ukraine and Russia that have incorporated their companies in the U.S., but many still have development teams in their home markets that may be cut off from cross-border payments, said Renat Khairullin, a program manager at Starta.

"They need to pay [development teams], they need to transfer that money, and the banking system now in Russia is under sanctions," Khairullin said.

Additionally, limited partners are announcing their intentions to divest from Russian holdings. Virginia, Georgia, Rhode Island and Colorado are among the states with investment entities that are reviewing or pulling out of Russian investments.

CHART OF THE WEEK: PE portfolio company bankruptcies fall in 2021

⮞ In 2021, 46 portfolio company filings were recorded, representing 3.78% of total bankruptcy filings, according to S&P Global Market Intelligence data.

⮞ The previous year, during the COVID-19 lockdown period, 134 portfolio companies filed, the highest number in the previous four years, representing 4.6% of total bankruptcies, the data shows.

⮞ Over the trailing 14 months, 48 North America-based private equity portfolio companies have filed for bankruptcy, and 13 of them, or about 27% of the total, are liquidating, according to Market Intelligence data. Fifteen companies out of the total are reorganizing, and the remaining 20 are operating or have operating subsidiaries.

FUNDRAISING AND DEALS

* Apollo Global Management Inc. closed its acquisition of Griffin Capital Co. LLC's wealth distribution business, which now joins Apollo Global Wealth. The private equity firm will also acquire Griffin's individual-investor-focused products and associated asset management team in a final close expected to take place in the second quarter.

* EQT AB (publ) is raising €5 billion for its newly formed EQT Active Core Infrastructure fund, which will target core infrastructure companies mainly in Europe and North America.

* A joint venture including global infrastructure funds managed by KKR & Co. Inc. and Pembina Pipeline Corp. agreed to buy a 51% stake in Energy Transfer Canada ULC from Energy Transfer LP at a valuation of $1.3 billion, including debt and preferred equity. The deal is set to be completed by the third quarter.

* Thoma Bravo LP will invest in UserZoom in a transaction that values the customer-experience software business at $800 million.

ELSEWHERE IN THE INDUSTRY

* Morgan Stanley Capital Partners collected $2 billion for North Haven Capital Partners VII LP and its related funds.

* Cornell Capital LLC secured $1.7 billion for the Cornell Capital Partners II LP fund, hitting past its initial target of $1.5 billion.

* Accel-KKR LLC raised $1.35 billion for the Accel-KKR Growth Capital Partners IV LP fund, exceeding its initial $850 million target, Dow Jones Newswires reported.

* Middle-market private equity firms Sheridan Capital Partners and Morgan Stanley Private Equity completed their majority recapitalization of SpendMend LLC. Sheridan will remain a minority shareholder in the healthcare cost cycle platform.

FOCUS ON: APPLICATION SOFTWARE

* OpenGate Capital LLC deployed new funding into customer retention and loyalty management services company Social Annex Inc., doing business as Annex Cloud.

* Summa Equity AB acquired Belgian transaction and compliance insight platform Intix through Summa Equity Fund III.

* Audax Private Equity sold Mobileum Inc. to an affiliate of H.I.G. Capital LLC's H.I.G. Technology Partners. Audax retained a minority stake in the telecom analytics solutions provider.