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Former Carlyle exec’s new firm gets investment; SEC proposes more paperwork for PE

Capital Constellation invests in Broad Sky.

Good morning, Hubsters. MK here with today’s Wire.

Reaction to the SEC’s new proposed rules for the Form PF, announced late yesterday, is top of mind this morning. The rules would increase the amount of information that private equity firms report to the agency and the speed at which they would be required to share it, including 24-hour turnarounds.

I reached out to the American Investment Council for a comment. “We have concerns that this new proposal will burden firms with unnecessary paperwork, even though private equity poses no systemic risk,” said a spokesperson for the advocacy group. “We encourage regulators to support private capital investment in small businesses and communities across America.”

As Chris writes in his story on the SEC regs, “An immediate question is whether the rising activity around GP-led deals will be curtailed by enhanced disclosure requirements of GP-led deals that could trigger an examination.” Chris also explores the one-day requirement.

“Our initial reaction is that we can see no reason for a one-business-day reporting requirement for such events, and we question whether many of these events have any bearing on systemic risk, which is the purpose Congress assigned to Form PF,” according to an alert from law firm Simpson Thacher & Bartlett.

I’d love to hear what you think about the proposed rules. Shoot me an email at mk.flynn@peimedia.com.

Deal news. Aaron got an exclusive this morning: Broad Sky, founded by former Carlyle exec Tyler Zachem, has received a strategic investment from Capital Constellation, a group of institutional investors managed by Wafra. Broad Sky has also closed its first acquisition in buying Thomas Scientific from Carlyle.

Zachem, a 29-year PE pro, who most recently served as co-head of Carlyle Global Partners and co-chair of the investment committee of CEOF, launched Broad Sky in 2014 but then joined Carlyle before getting Broad Sky up and running. He then spent more than five years at Carlyle, and now he is building up Broad Sky with partners Adam Glucksman, Jodi Kahn and Jonathan Marlow, all of whom have worked together on deals. The firm is investing in mid-market business services and consumer companies. Read the story for comments from Zachem and Wafra’s Gustavo Cardenas.

Value creation. In a contributed article, Andrew Dunn from One Equity Partners shares insights on working with portfolio companies. Before he became an investor, Dunn used to compete at the international level in the sport of rowing. “Classic private equity value creation levers like add-on acquisitions and operational improvements are like the core building blocks of athletic conditioning,” he writes. “But others have likely done the same training, so to speak, and that means digging deeper to win those extra inches: finding other, less common strategies for driving growth. Two that have been particularly effective, in my experience, are transformative combinations and research & development optimization.”

Deal of the Year: Get your nominations in now for your best exits (either full or majority) that closed in 2021. Awards are given in seven categories: overall deal of the year, large-cap, middle-market, small-cap, international, turnaround and secondaries. Deadline is Friday, Feb. 11. Send to Chris Witkowsky, private equity editor, at cwitkowsky@buyoutsinsider.com. Go here for all the rules and regs!

That’s it for today.

Until tomorrow,

MK