Private debt's eroding link to bankruptcy; PE's pivot from waste management

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

Bankruptcy filings by US companies rose sharply in 2023, and among those seeking court protection from creditors were 26 private companies that had recently secured loans in the private debt market — more than triple the total from the year before.

Those 26 companies represented 4.3% of all US private company bankruptcies in 2023, according to S&P Global Market Intelligence data. That was a big jump over the 1.7% average of the prior four-year period.

Still, the totals are small: just 26 instances of nonbank loan recipients filing for bankruptcy protection out of the more than 600 US private companies that initiated a court-supervised restructuring in 2023. The data appears to bolster private lenders' reputation for flexibility, a willingness to proactively work with loan recipients and restructure loan agreements before they reach the precipice of default.

Bankruptcies are just part of a bigger picture and, anecdotally, at least, out-of-court restructurings appear to be on the rise recently in private credit markets, several sources told S&P Global Market Intelligence. That is important to institutional investors, who in recent years have been shifting more of their portfolios toward private credit funds.

Read more about the fading correlation between private debt and bankruptcy among US private companies.

CHART OF THE WEEK: PE shifts focus from waste management to waste reduction

⮞ Private equity and venture capital investment in the global waste management sector appears set for a third straight annual decline.

⮞ Deal value for the sector this year through Sept. 15 totaled just $247.2 million, which is less than 10% of the 2023 full-year total of $3.62 billion, according to Market Intelligence data.

⮞ The decline may reflect a shift in investor focus toward waste reduction and recycling strategies, said Tazia Smith, COO of Closed Loop Partners LLC, a venture firm targeting circular economy startups.

TOP DEALS AND FUNDRAISING

– Partners Group Holding AG will sell its majority stake in Techem GmbH to TPG Capital LP and GIC Pte. Ltd. in a deal valuing the German energy services provider at about €6.7 billion.

– TPG made a substantial minority investment in wealth management firm Creative Planning LLC. Days before the deal was disclosed, Reuters reported, citing people familiar with the matter, that the firm emerged as the frontrunner to buy the stake valued at $2 billion.

– OceanSound Partners LP raised $1.49 billion in capital commitments for OceanSound Partners Fund II LP at final close. The firm invests in technology and tech-enabled services companies.

– Morgan Stanley Investment Management raised $750 million for its 1GT climate private equity fund at final close. The vehicle will invest in companies based in North America and Europe that seek to avoid or remove 1 gigaton of CO2 equivalent carbon emissions.

– Gallant Capital Partners LLC secured $406 million at the final close of Gallant Capital Partners II LP. The fund will invest in the technology, industrial and business services sectors.

– Prospect Partners LLC held the final close for Prospect Partners V LP, which reached its $225 million hard cap. The vehicle will invest in pre-lower-middle-market businesses.

MIDDLE-MARKET HIGHLIGHTS

– HIG Capital LLC acquired radiation therapy solutions company SkinCure Oncology LLC. As part of the deal, SkinCure's executive team will remain significant stockholders of the company.

– NewSpring Capital LLC's NewSpring Franchise strategy completed an investment in fast-casual bakery and café concept Great Harvest.

– Renovus Capital Partners sold digital advisory firm LeapPoint LLC in a deal with buyer Omnicom Precision Marketing Group LLC, a unit of Omnicom Group Inc.

FOCUS ON: HEALTHCARE TECHNOLOGY

– PSG Equity LLC led a $47 million growth investment in medical coding technology provider Nym Health Inc.

– Oncology care intelligence platform VieCure Inc. raised $45 million in a financing round led by Northpond Ventures LLC.

– Waud Capital Partners LLC acquired life sciences procurement and supplier management software provider Science Exchange Inc. The seller was an investor group including NVP Associates LLC, Union Square Ventures LLC, O'Reilly AlphaTech Ventures LLC, Collaborative Fund, Windham Venture Management LLC and Maverick Ventures.

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For further private equity deals, read our latest In Play report, which looks at potential private equity-backed M&A, including rumored transactions, each week.

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