SEC Fee Disclosure Rules to Impact Private Markets

　　New Regulation to Enhance Fiduciary Requirements

　　A near-final version of the Securities and Exchange Commission's (SEC) impending fee disclosure rules is reportedly circulating within the agency, with a rule package expected as early as this month. This would mark the first meaningful regulatory change for hedge funds, private equity shops, and VC firms since the aftermath of the financial crisis.

　　The new regulation aims to require funds to furnish quarterly fee and expense information to all limited partners and eliminate preferential treatment for certain investors via side letters. It also seeks to enhance fiduciary requirements that funds have to their limited partners.

　　Industry Reactions

　　Private funds have expressed disapproval of the proposed rules, with some arguing that they would be a radical departure from the SEC's current approach and could stifle emerging managers. Fund representatives have been lobbying against the regulation in meetings with regulators.

　　Limited partners, on the other hand, believe that the new rules will restore some of their lost negotiating power. They argue that the overabundance of capital in recent years has made it more competitive to secure an allocation to an outperforming fund, leading to a loss of bargaining power in negotiations for terms in limited partner agreements and side letters.

　　Potential Impact on Fund Managers

　　The new rules are expected to reduce potential contention between general partners (GPs) and limited partners (LPs), as most funds already make these disclosures available to their LPs. However, critics argue that this will impose significant aggregate costs on fund managers.

　　Mark DiSalvo, whose firm Sema4 specializes in taking over troubled funds, believes that fund managers will ultimately appreciate the new rules as they will reduce potential contention between GPs and LPs. He emphasizes that the majority of funds already make these disclosures available to their LPs, and it shouldn't be troublesome for good actors.

　　Focus on Chips Manufacturing in the U.S.

　　In a separate development, a new team at the Commerce Department, comprised of private equity, venture capital investors, investment bankers, and other private market professionals, is working to allocate $39 billion in subsidies and incentives to hundreds of companies to bring chip manufacturing back onshore.

　　Venture Deals

　　Abcuro, a Newton, Mass.-based autoimmune disease and cancer treatment biotech, raised $155 million in Series B funding.Lightcast Discovery, a Cambridge, U.K.-based life science tools company, raised £38 million ($48.44 million) in Series B funding.ZetaChain, a San Francisco-based layer-one blockchain, raised $27 million in funding.Mendaera, a San Mateo, Calif.-based healthcare robotics company, raised $24 million in Series A funding.Highlight, a New York-based product testing platform, raised $18 million in Series A funding.Phasecraft, a Bristol- and London-based quantum algorithms developer, raised £13 million ($16.58 million) in Series A funding.DynamoFL, a San Francisco-based privacy and compliance-focused generative A.I. solution provider, raised $15.1 million in Series A funding.Caden, a New York-based data intelligence company, raised $15 million in Series A funding.Advanced Ionics, a Milwaukee, Wis.-based hydrogen electrolyzer developer, raised $12.5 million in Series A funding.Sapphire Technologies, a Cerritos, Calif.-based energy recovery systems developer and manufacturer, raised $10 million in Series B funding.Linera, a San Francisco-based blockchain network, raised an additional $6 million in seed funding.ElectroTempo, an Arlington, Va.-based planning and intelligence software provider for electric charging networks, raised $4 million in seed funding.Toothio, a Phoenix-based dental staffing platform, raised $4 million in seed funding.

　　Private Equity

　　Coalesce Capital recapitalized Examinetics, an Overland Park, Kan.-based occupational health screening and data management services provider. Financial terms were not disclosed.Highview Capital acquired a majority stake in Safety Marking, Bridgeport, Conn.-based highway and roadway marking company. Financial terms were not disclosed.Liftout Capital acquired a majority stake in Franchise Creator, a Miami-based franchise consultant. Financial terms were not disclosed.Maddix Capital acquired a majority stake in AK Masonry, a South Jordan, Utah-based local masonry and concrete contractor. Financial terms were not disclosed.

　　Other

　　InMobi acquired Quantcast Choice, a San Francisco-based consent management platform. Financial terms were not disclosed.SpringML, a Pleasanton, Calif.-based technology services company, merged with Egen, a Naperville, Ill.-based cloud migration, application modernization, and platform engineering provider. Financial terms were not disclosed.

　　People

　　Bernhard Capital Partners, a Baton Rouge, La.- and Brentwood, Tenn.-based private equity firm, hired Jeff Plauche as an operating partner. Formerly, he was with Boh Bros. Construction Co.