Clearlake-backed Alkegen to exit business unit; Enlightenment hires ex-presidential candidate McMullin

Enlightenment Capital hires former third-party presidential candidate as a principal.

Morning Hubs!

Thanks to everyone for submitting Deal of the Year candidates for top exits in 2022. We now have an extensive list to pore over and figure out, using our highly classified and sensitive methods, the best of the best. Winners will be announced in April.

What else is going on out there? Getting word that the secondary market is opening up, with a few large-scale GP-led deals on offer. More significantly, LP portfolios are for sale and are expected to drive activity in the first half. The question, as has been the case, is whether active processes will actually close. We’ll see.

Exit: Clearlake Capital-backed Alkegen agreed to sell its Thermal Acoustical Solutions business unit to California PE shop Regent. The sale removes a business line from Alkegen considered non-core to Clearlake’s growth plan, according to Colin Leonard, partner at Clearlake, and Nate Mejías, principal, who spoke with PE Hub’s Obey Martin Manayiti.

“For us, it’s not a fit with the advanced technologies we are developing, so it was a natural opportunity to sell something non-strategic to the future of the platform,” Mejías said.
Alkegen has a variety of products meant to save energy, reduce pollution, and improve safety. The company has 75 manufacturing facilities operating in 12 countries and employs more than 9,000 employees globally.

Among its innovations, Alkegen developed a Silicon Fiber Anode Battery Technology (SiFab), that makes batteries for electric vehicles and cellphones, among others, to significantly store more energy per unit size. This technology will help cut down on the number of times people need to charge their batteries, said Mejías.

“This is kind of game changing stuff,” he said. “It needs to be validated by customers and that process can take years, but if this takes off like we expect it to – it’s going to be transformational for the business.”

People move: Enlightenment Capital hired former third-party presidential candidate Evan McMullin as a principal. McMullin, who also worked as an undercover officer with the CIA, will focus on deal opportunities in the west coast and mountain west regions.
Enlightenment closed its fourth fund last year on more than $540 million, the firm said.

Cuts: This is significant, though whether it’ll become a trend is a question: Alaska Permanent Fund’s investment staff, including its CIO Marcus Frampton, is recommending slashing the system’s target from 17 to 15 percent over two years. The move is more significant considering the system’s plan was to raise its target to 19 percent over two years. We’ll see if the Permanent Fund’s board takes action on the recommendations at today’s meeting.

Frampton has emerged as one of the major LP critics of PE since last year. He has raised concerns about PE’s valuation process, arguing the industry has not taken the kind of pain in write-downs seen in the public markets. He also has expressed concern about PE due diligence in light of the November collapse of cryptocurrency broker FTX.

As well, Alaska chief risk officer Sebastian Vadakumcherry says in his presentation for today’s meeting that PE managers will face challenges managing investments amid rising interest rates and inflationary pressure.

“With more than a decade of low rates and rising asset multiples, managers on average have become less adept at improving the performance of their portfolio companies as reflected in the declining revenue and margin growth. This shift from conventional PE strategy may prove costly when costs and rates reverse trend and rise,” Vadakumcherry said.

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