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Carlyle, HGGC invest $500m in PCF Insurance; plus, a slew of wealth management deals

Good morning dealmakers, thank goodness it’s Friday!

It’s Obey Martin Manayiti here with the newsletter, and as usual, we are capping off the week with a trend that caught my attention recently.

Today we’re rounding up recent deals in the wealth management space, and insights on what’s driving these investments.

I’ll also share highlights of my conversation with Sarah McLean, partner at Shearman & Sterling, who is head of the firm’s private equity practice, about how the energy deal landscape is shaping up against the backdrop of bumper oil profits. 

But first, let’s take a look at a big financial services deal announced this morning:

Carlyle's Global Credit platform and private equity firm HGGC are investing $500 million in PCF Insurance Services, a Lehi, Utah-headquartered company that is ranked among the top 20 insurance brokage firms in the US. HGGC is based in Palo Alto, California, and Carlyle is headquartered in Washington DC.

PCF Insurance is a risk management, benefits design, and insurance brokerage services company serving more than 415,000 clients.

HGGC is an existing minority investor in PCF. Owl Rock, a division of Blue Owl, and Crescent Capital, both of which have existing minority equity stakes in the business, are also participating in the new investment.

The deal values the company at $4.7 billion.

Wealth management: I’ve noted a flurry of deals in the wealth management space since the beginning of year. It’s an interesting trend, especially at a time when the macroeconomic environment remains tight, wealth managers said. For some firms, the economic turbulence offers an opportunity for growth through acquisitions, while for smaller firms, it’s time to find a bigger and more resourced home that might be in a better position to weather the financial storm.

Here are some of the deals that caught my eye:

Cetera Financial Group, a portfolio company of the San Francisco based-Genstar Capital, made a minority investment in Prosperity Advisors, a wealth management firm headquartered in Kansas City.

Prosperity Advisors’ Paul Ewing described the deal as an opportunity for his firm’s growth. “This expanded partnership with Cetera activates our potential to reach new heights, better serve clients and expand our services in new ways for years to come,” Ewing said.

Power up: Some private equity firms have slowly been shifting away from hydrocarbons for a number of reasons, such as ESG concerns and unstable oil prices. With the tight energy squeeze experienced last year due in part to Russia’s war with Ukraine, the pendulum has swung. Oil producers had a big haul in profits recently. To that end, I spoke to Sarah McLean, partner at Shearman & Sterling during the week to talk about PE trends in the oil and gas sector.

What trends are you seeing in the oil and gas sector so far this year?

In the past, we saw some private equity firms say that they were getting out of the oil and gas sector because it's too dirty and that it doesn't support their baseline mission. They had decided to focus their energy spend instead on investments in energy transition. Returns in traditional oil and gas are pretty good and many view natural gas as clean energy, so we still see a lot of private equity supporting oil and gas.

Wind Power: My colleague Nina Lindholm in the UK wrote this week on PE Hub Europe that Oslo-headquartered private equity firms FSN Capital Partners and Verdane invested approximately €135 million in Polytech, a global firm providing rotor-blade technical products for wind turbines, in mid-January.

Polytech, headquartered in Bramming, Denmark, has been part of Verdane’s portfolio since 2016, and in early 2021, Verdane established a continuation vehicle, into which Polytech was transferred.

Decarbonization, a trend that the invasion of Ukraine added a geopolitical dimension to, is driving the installation of tons of wind turbines and solar, according to Bjarne Kveim Lie, Verdane’s co-founder and managing partner.

That’s it for me today.

MK Flynn will be back on Monday with an abbreviated President’s Day edition of the Wire.

Have a good weekend.

Cheers,

Obey

Read the full wire commentary on PE Hub ...

Also of note (may require subscriptions)

Just under one-third of investors expect to invest in fewer emerging managers in the next 12 months compared with the past year, according to Infrastructure Investor’s LP Perspectives 2023 Study. Meanwhile, only 7 percent anticipate increasing their emerging manager activity. Indeed, after a dismal period for first-time fundraising during the pandemic, the situation appears little improved.

Braemont Capital, founded by RedBird Capital Partners veteran Robert Covington, secured $502 million in the close of a debut growth equity fund. (Buyouts)

Alaska Permanent Fund will likely commit $1 billion to private equity in the coming year, roughly half of what it has placed with managers in recent years. (Buyouts)

Listed manager Bridge Investment Group is eyeing further secondaries strategy growth, particularly when it comes to its own area of focus: real estate. (Secondaries Investor)

Despite the EU’s complaints to the World Trade Organization that the Inflation Reduction Act is anticompetitive, some investors believe they are well positioned to reap the benefits of the bill due to their longer-standing renewables expertise. (Infrastructure Investor)

Jersey Finance has launched a new LLC structure to attract US alternatives managers looking to establish European-focused funds. (Private Funds CFO)

"An arm of Santander, the Spanish banking giant, is in talks to swoop on the £14bn private equity unit of abrdn, the British fund manager." (Sky News)

The U.S. Government Accountability Office "called for greater federal oversight of ethics boards that sign off on scientific studies, finding that for-profit companies have taken an outsize role in approving certain research and questioning whether financial motivations could put human subjects at risk." (Washington Post)