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Emerging managers face off: Mill Rock sues Stellex Capital alleging IP theft, Future of dealmaking in the age of coronavirus, NJ pension private equity head to retire

KKR raises $4 billion for pandemic dislocation opportunities and it's litigation time for two PE firms.

Morning!

Lawsuit: Two emerging managers are involved in a legal fight even as one of them is trying to raise its second fund.
Mill Rock Capital, launched by Christopher Whalen and Adi Pekmezovic, is suing Stellex Capital Management for allegedly stealing its intellectual property, according to the lawsuit. Whalen and Pekmezovic claim they created trademarks for Mill Rock Capital and a legal entity called Great Mill Rock while negotiating with Stellex to launch a credit strategy at the firm.

After Stellex abandoned the credit strategy, the firm moved to take ownership of the trademarks and Great Mill Rock, the lawsuit said.

Stellex argues it already owns the trademarks and legal entity because the two executives were employed by the firm at the time of creation. Stellex asked a judge Thursday to dismiss the lawsuit. Stellex is in market with its second fund targeting $1.25 billion.

Mill Rock, which invests on a deal-by-deal basis, said it “spun out of” Stellex last summer. The Mill Rock partners claim Stellex is interfering with its business, according to its lawsuit.

The Mill Rock partners argue they were not employed by Stellex, but were working under a “non-binding” memorandum of understanding, and an oral interim arrangement that set out their responsibilities, the lawsuit said. They agreed to these arrangement while finalizing the terms of their jobs at Stellex, the lawsuit said.
Read my story here on Buyouts.

Quick: KKR announced Thursday it raised $4 billion for credit investments into the pandemic-fueled market dislocation in eight weeks. The total includes $2.8 billion in a Dislocation Opportunities fund, and more than $1.1 billion across separate accounts slated for the same type of investments.

The $4 billion includes 20 new investors to KKR and 40 new investors to KKR’s credit strategy, the firm said in an announcement. The capital will be invested in private and public credit opportunities over an initial 18-month investment period, the firm said. It will focus on “attractively-priced credit risk in the secondary markets” and providing liquidity to high-quality borrowers managing through the crisis.

The strategy is led by Co-Portfolio Managers Jennifer Box and Blaine MacDougald. Box joined KKR last year after more than 10 years at Oaktree Capital Group, where she was co-portfolio manager of Oaktree Value Opportunities Fund and led distressed investments on behalf of Oaktree Distressed Opportunities Fund.

MacDougald joined KKR in 2011 is co-head of European Special Situations. Prior to KKR, MacDougald was vice president with the credit opportunities group at D.E. Shaw. Read our news brief here.

Top Scoops
One focus of dealmaking and GPs will be on the supply chain, the vulnerabilities of which were exposed by the pandemic and the trade battles with China, according to panelists at a recent roundtable call, writes Karishma Vanjani on PE Hub.

Until portfolio companies transform their supply chains, providers and suppliers will continue to be flexible and work together to meet long-term demand, according to Kristin DeClark, managing director, co-head US equity capital markets, Barclays. Read Karishma’s story here on PE Hub.

Robin Clifford, head of private equity at the New Jersey Division of Investment, is leaving her post, writes Justin Mitchell on Buyouts. She is leaving to pursue a new opportunity, Justin writes. Read more.

That’s it! Have a great weekend. Hit me up as always with tips n’ gossip, feedback or just to chat at cwitkowsky@buyoutsinsider.com, on Twitter or find me on LinkedIn.