Arm preps Nasdaq IPO; GSAM invests in insurance; Climate Investment makes carbon capture play

Goldman Sachs bets on insurance.

Good morning Hubsters, Craig McGlashan here with the Tuesday Wire.

We’re starting with exits this morning as we look at microchip designer Arm’s decision to list on the Nasdaq. How well the sale of the Softbank-owned company goes will give some indication of whether the IPO market will fully reopen as an exit route for private equity firms.

In terms of confirmed deals, we’ve got an eclectic bunch this morning. Goldman Sachs Asset Management has agreed to invest in an insurance brokerage; Climate Investment has taken a stake in a carbon capture and sequestration development platform; and Cressey & Company has acquired a clinical services organization from Capital Double Impact.

The private equity industry will be eagerly watching the IPO of microchip designer Arm to see whether public listings are likely to reopen as an exit route.

Cambridge, UK-headquartered Arm announced yesterday that it had filed a filed a registration statement with the SEC for an IPO of American depositary shares on the Nasdaq Global Select Market.

Arm’s owner Softbank acquired the company for $32 billion in 2016 but earlier this month valued the company at $64 billion in an internal transaction between it and its Vision Fund.

IPOs are down on the heady days of 2021. There were 63 IPOs in the US in the first half of 2023, gathering proceeds of $10.1 billion, according to a report in July from EY. While those figures were up on the comparative period in 2022, this year will have some way to go to catch up with 2021’s total figures, when $155.8 billion was raised across 416 listings. This year is also off the pace compared to the total figures for 2020 ($68.2 billion across 224 deals) and 2019 ($50.7 billion across 168 deals).

Deal hungry
Sticking with potential deals for a moment, and Roark Capital is closing in on a $9.6 billion deal to buy sandwich chain Subway, according to a report in the Wall Street Journal.

Confirmed deals-wise, Goldman Sachs Asset Management has agreed to make an investment in Iselin, New Jersey-based World Insurance Associates, an insurance brokerage.

World’s existing backer is Charlesbank Capital Partners, which first invested in World in April 2020.

In addition to its equity investment alongside Charlesbank, Goldman Sachs is leading a subordinated debt financing whose aim is to support World’s acquisition strategy and organic expansion. Across both investments, Goldman Sachs will be investing more than $1 billion in World, which has a total enterprise valuation of approximately $3.4 billion.
World’s management team and employee shareholders will remain major investors alongside Charlesbank and Goldman Sachs.

The transaction is expected to close in the fourth quarter of 2023.

Carbon capture
Climate Investment has invested in Houston-based Trace Carbon Solutions, a carbon capture and sequestration development platform.

Following the CI investment, Trace will have over $420 million of equity capital commitments from Quantum Capital Group, CI, and Trace management.
Climate Investment is focused on accelerating capital-efficient decarbonization of heavy-emitting sectors.

Long-term care
Cressey & Company has acquired HealthDrive, a Framingham, Massachusetts-based multi-specialty clinical services organization that serves patients in long-term care (LTC) facilities. The seller was Bain Capital Double Impact.

HealthDrive’s more than 500 clinicians provide primary care, podiatry, vision, dental, behavioral health, and audiology clinical services to more than 150,000 LTC residents each year across more than 3,800 LTC facilities spanning 20 states.

“We see a great opportunity for HealthDrive to continue expanding access to its comprehensive offering of complementary clinical services that improves residents’ quality of life and creating opportunities for innovation in partnership with facilities,” said Steve Dildine, a partner at Cressey in a statement.

OK that’s all from me today – Rafael Canton will be on Wire Wednesday duty tomorrow as

Chris Witkowsky takes a break.