PE HUB Wire Highlights, 5.17.18


(L-R) Eric Zinterhofer and Luisa Beltran and Jonathan Marino of peHUB. Photo by Marcus Kaiser for Buyouts Texas. Copyright: Thomson Reuters
(L-R) Eric Zinterhofer and Luisa Beltran and Jonathan Marino of peHUB. Photo by Marcus Kaiser for Buyouts Texas. Copyright: Thomson Reuters

Golub Capital looks to sell minority stake; Pamplona healthcare exec Gelber leaves firm: Vista Equity, Thoma Bravo compete to raise flagships

Happy Thursday, Hubsters. I’ll be shamelessly watching the royal wedding this weekend. I didn’t see the last one but this one interests me for various reasons (plus, I watch “Suits”). On Saturday, I’ll be the Queen of big hats, of “noshing” on crumpets and tea, and gossiping about who was there for Meghan. And who wasn’t.

Minority stake sale: One of the biggest stories from Intergrowth 2017 — the conference in Las Vegas — never got published. At that time, I kept hearing rumors about Golub Capital and how the middle market lender was in talks to sell. Everyone seemed to be discussing this deal but nothing ever materialized. Until today. Golub, one of the biggest middle market lenders, is considering selling a minority to an outside investor. Find out more about the proposed deal here.

PE firms selling slices of themselves to outside capital is the one of the hottest trends right now. Dyal Capital is leading the charge to buy but don’t count out Goldman’s Petershill Private Equity or even Blackstone. And what about Affiliated Managers Group? AMG has been buying up stakes in hedge funds and PE firms for years.

What happened? Yesterday, the SEC announced it had filed fraud charges against three former executives of Constellation Healthcare Technologies Inc. The SEC claims that Constellation executives allegedly orchestrated a scheme to induce a family office to acquire a majority of the company for $309.4 million in January 2017. The defendants made material misrepresentations about Constellation’s historical and expected future revenues and EBITDA, including the revenues and EBITDA of three fictitious subsidiaries that didn’t exist, the regulator said. Defendants “brazenly fabricated and falsified” scores of documents to induce a family office to invest, including providing sham acquisition agreements, financial statements, customer agreements and due-diligence materials. Constellation filed for Chapter 11 bankruptcy protection in March.

Now this story seems standard fare as far as fraud allegations go, except when you realize who was the buyer. Constellation, of Houston, is a healthcare services organization that was sold to CC Capital in late 2016. CC Capital is the family office from Chinh Chu, the veteran dealmaker who left Blackstone Group in 2015 after about a quarter century. CHT was Chin’s first solo acquisition, the Financial Times said.  The SEC complaint mentions CC Capital only once and refers to the family office as “Investor-1” repeatedly throughout the filing. What are you hearing about this, hubsters? Email me at [email protected] See the SEC’s lawsuit here.

I’ve reached out to Constellation for comment.

Deals and funds: Can it be? NHK is reporting that China regulatory authorities have approved Toshiba’s $18 billion sale of its chip unit to a Bain Capital-led consortium…

 

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