Private equity is facing a wave of portfolio company bankruptcies, due to rising interest rates and slowing economic growth.

What to know: The situation looks worse than it really is, at least in the short term.

• There are echoes to the Great Financial Crisis era, when covenant-lite loan terms enabled private equity owners to "amend and extend." Despite all the hand-wringing, cov-lite persisted through the subsequent boom times and can again be leveraged.
• Yes, there were several large buyout bankruptcies back then, including Linens 'n Things, but the vast majority of PE-backed problem children restructured and lived to fight another day.

Zoom out: An obvious difference between 2008 and 2023 is the direction of interest rates.

• The upward arrow, perhaps further sharpened by Friday's hot jobs report, could lead to more difficult restructuring negotiations with lenders.
• But, on the other hand, today's economic slowdown is much more modest than the 2008 version, and PE portfolio companies tend to have less existing leverage. Moreover, lots of PE-backed companies took advantage of loose credit conditions in late 2020 and 2021 to push back their debt maturities.

What they're saying: "I think today people are relatively complacent," said KKR global private equity co-head Pete Stavros during our Milken Global Conference panel. "The question about, 'Are we going to have a bunch of bankruptcies?' kind of depends on how long rates stay high."

By the numbers: S&P Global Market Intelligence reported that 16 PE-backed U.S. companies filed for bankruptcy protection during the first 75 days of 2023.

• If that pace were maintained, 2023 would be the top year for PE-backed bankruptcies since 2010.
• At the same time, however, it's worth noting that those 16 companies represented just 11% of total U.S. bankruptcy filings, and that the raw number of PE portfolio companies is much higher today than in 2010.

The bottom line: Private equity believes it can jump the bankruptcy wave, and keep its fingers crossed that there are calmer waters ahead.

Qualcomm (Nasdaq: QCOM) agreed to buy Autotalks, an Israeli maker of "vehicle-to-everything" communications chips, with a focus on preventing crashes.

Why it's the BFD: This reflects how big chipmakers continue to view vehicles as a key growth area, given increased automation and complexity. For Qualcomm, that's reflected in a 33% revenue increase for its auto segment between fiscal 2021 and fiscal 2022, and a September announcement that its auto "pipeline" had ballooned to $30 billion.

ROI: No financial terms were disclosed, but TechCrunch reports a sale price of between $350 million and $400 million.

• Autotalks had raised around $110 million in VC funding from firms like Samsung, Toyota, Magenta Venture Partners, Vintage Investment Partners, Gemini Israel Ventures, Global Investment Group and Liberty Ventures.

The bottom line: "Autotalks' tech is used in sensors that help vehicles (which can be bikes, cars or another form of mobility) and their drivers detect road hazards such as oncoming vehicles in a driver's blind spots; it also communicates with other vehicles using compatible tech to improve responsiveness." — Ingrid Lunden, TechCrunch

• Ace Turtle, an Indian order management platform for e-commerce, raised $34m in Series B funding from Vertex Growth, SBI Investment, Farglory, Lesing Nine, Stride Ventures, Tuscan Ventures, Trifecta Capital and insiders Vertex Southeast Asia & India and InnoVen Capital. https://axios.link/3nED7XP

• Liquido, a payments infrastructure startup focused on Latin America, raised $26m from Index Ventures. https://axios.link/3NMN93H

• Instruqt, a Dutch virtual IT lab, raised €15m in Series A funding from Blossom Capital. https://axios.link/3B6yqJi

• PermitFlow, a San Jose, Calif.-based construction permitting automation startup, raised $5.5m in seed funding led by Initialized Capital. https://axios.link/3M329JE

🚑 MultiOmic Health, a London-based drug discovery startup, raised £5m in seed extension funding. Hoxton Ventures led, and was joined by Ada Ventures, MMC Ventures and Verve Ventures. https://axios.link/3LEkCe9

• Artifact Labs, an NFT spinoff from Hong Kong newspaper publisher SCMP, raised $3.25m. Blue Pool Capital led, and was joined by Animoca. https://axios.link/3NJXUnz

• Invesco marked down its investment in Indian food delivery giant Swiggy by 48.6%, after leading an investment last year at a $10.7b valuation. https://axios.link/3VLda5p

⚡ Adnoc and Apollo Global Management offered up to $7.6b to acquire listed Brazilian petrochemicals maker Braskem, per Bloomberg. https://axios.link/42ipk8n

🚑 Advent International and Warburg Pincus have partnered to bid on the biopharma business of Baxter International (NYSE: BAX), in a deal that could top $4b, per Reuters. https://axios.link/3LK82Ka

• Canlak Coatings, a North Brunswick, N.J.-based portfolio company of SK Capital, acquired Ceramic Industrial Coatings, an Osseo, Minn.-based maker of wood coating systems. www.calanakcoatings.com

🚑 DWK Life Sciences, a German portfolio company of One Equity Partners, acquired Assem-Pak, a Vineland, N.J.-based maker of rubber stoppers and aluminum seals for the life sciences market. www.dwk.com

• Five Arrows acquired n2y, a Huron, Ohio-based provider of special education software, from The Riverside Company. www.n2y.com

• Sun Capital Partners acquired MegaGroup, a Dutch wholesaler of water technic solutions. www.megagrouptrade.com

• Temasek is in talks to invest $100m for around a 20% stake in Indian jeweler BlueStone, whose existing backers include Accel, per Reuters. https://axios.link/44zPO6W

• TPG is in talks to buy credit and real estate investment firm Angelo Gordon for more than $2b, per Bloomberg. https://axios.link/3M5lLNl

• Vista Equity Partners invested in Resilinc, a Milpitas, Calif.-based provider of supply chain mapping, disruption sensing and resiliency analytics. www.resilinc.com

• AIG (NYSE: AIG) postponed a secondary share sale that would have cut its 77% stake in Corebridge Financial (NYSE: CRBG), citing market volatility. https://axios.link/3nCPWlk

• Allrites, a Singaporean film and TV rights marketplace, agreed to go public at an implied $92m enterprise value via Aura Fat Projects Acquisition Corp. (Nasdaq: AFAR), per Bloomberg. Allrites was seeded by firms like Artesian Capital Management. https://axios.link/3nHzuk0

• Amazon (Nasdaq: AMZN) late last year quietly acquired Snackable AI, an audio content discovery startup that had been seeded by Greycroft, Amplify and Tera Ventures. https://axios.link/3nBhgAr

• Brookfield Infrastructure Partners is seeking to sell more than a 10% stake in Summit DigiTel, an Indian telecom tower business, per Bloomberg. https://axios.link/3B94kos

• Go1, an Australian professional learning company valued by VCs at over US$2b, acquired Blinkist, a Berlin-based condensed reading platform for non-fiction books. Blinkist had raised around $38m from firms like Insight Partners, Left Lane Capital, HDS Capital and e.ventures. https://axios.link/42dqF0f

• Assa Abloy (STO: ASSA) settled with the U.S. Justice Department over its proposed $4.3b takeover of the door hardware unit of Spectrum Brands (NYSE: SPB), which DOJ had sued to block. Per the agreement, Assa Abloy will sell its Emtek and Smart Residential business in the U.S. and Canada to Fortune Brands (NYSE: FBIN) for $800m. https://axios.link/44AP9SI

• Accordion, a private equity-focused financial and technology consultancy, agreed to buy Merilytics, an Indian provider of analytics, data management and business intelligence reporting solutions. www.accordion.com

• HSBC agreed to buy out its Chinese fund management joint venture partner, Shanxi Trust, per Reuters. https://axios.link/3LAgDza

🚑 Recursion (Nasdaq: RXRX) acquired Canadian AI drug discovery companies Cyclica and Valence. www.recursion.com

• 3one4 Capital, an Indian VC firm, raised $200m for its fourth flagship fund. https://axios.link/3pjmH7K

• Bain Capital is raising $4b for a global special situations fund, per Reuters. https://axios.link/3LGkQ4w

⚡ Lime Rock is raising its sixth Lime Rock Resources fund, which buys and operates producing oil and gas properties, per an SEC filing. Its fifth Resources fund closed on $538m in 2022.

• Silver Lake so far has secured more than $19b of commitments for its seventh flagship fund, per an SEC filing.

• South Loop Ventures, an Houston-based VC firm led by Zach Ellis (ex-Rev1 Ventures), is raising $50m for its debut fund, per an SEC filing.

• Ulu Ventures, a Palo Alto, Calif.-based VC firm, is raising up to $250m for its fourth fund, per an SEC filing.

🌎 Matthew Goldstein (ex-Trinity Ventures, M12), and Lydia Guett (Cambridge Associates) joined London-based climate tech VC firm Systemiq Capital as a general partner and head of growth, respectively. www.systemiqcapital.earth