PitchBook News - Pensions size up PE positions

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The Daily Pitch: VC

December 27, 2022

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Our team is taking a break over the holidays, and we'd like to highlight some of our best articles and reports. The Daily Pitch will return Jan. 4.

Will public pensions stick to their PE targets in 2023?

(Madison Thompson/PitchBook News)

As limited partners consider their target allocations to private equity in 2023, public pension plans are taking varying approaches. Calpers and the Iowa Public Employees' Retirement System, for example, are expanding the asset class's position in their portfolios, while the Alaska Permanent Fund Corporation's CIO is more bearish on the value of the space.

Despite the different approaches, a core—and consequential—chunk of institutional portfolios remains dedicated to private equity.

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Charting how the unicorn baby boom turned bust in 2022

(Arina P Habich/Shutterstock)

Unicorn creation has declined sharply year-over-year, with only 308 private startups crossing the billion-dollar threshold through November, compared to 596 in total in 2021.

While this is still the second-highest annual total, the latter half of this year has seen a definitive slowdown in new unicorns being minted amid uncertain economic conditions.

Investors appear to be flocking to safety by favoring IT startups as well as North American companies.

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L.B.OMG: The deals that tested the buyout market in 2022

(Justin Sullivan/Getty Images)

Investors inked a flurry of big-ticket leveraged buyouts this year, no mean feat in a dealmaking environment that tested big banks and private lenders alike.

Facing heightened uncertainty brought on by political risks and the Fed's hawkish rate hikes, Wall Street banks encountered twists and turns on their path to syndicate some of their debt commitments.

At the same time, direct lenders encroached on the leveraged loan market and took on some of the risky—but also lucrative—pieces in the debt deal. We take a look at four high-profile buyouts that captured the drama in LBO-land this year.

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Europe take-privates slow, but UK still attracts PE buyers

(Sven Hansche/Shutterstock)

UK-listed companies continue to be the biggest draw for private capital in Europe, with eight of the top 10 take-private deals involving UK firms.

The largest of these deals was Permira's €5.5 billion (about $5.8 billion) acquisition of UK email security firm Mimecast, which was completed in May.

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Europe's 10 largest private equity funds in 2022

(Marian Weyo/Shutterstock)

The UK and Sweden dominated in a list of the largest PE funds to close in 2022, together accounting for seven of the top 10. The biggest among them was Nordic Capital's Fund XI, which hit a €9 billion close in October.

There are also a number of mega-funds still in the market at this time, the biggest of those being London-based Cinven's eighth flagship fund, which is looking to raise €10 billion for its buyout strategy.

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2023 may offer richer opportunities in distressed debt

After a grim year in the US corporate credit market, some distressed investors are licking their chops when contemplating 2023. Trading bids on leveraged loans and high-yield bonds sank, yields skyrocketed and levels of underperforming debt soared near $200 billion in 2022.

But the question for those investors is: Where will the opportunities be? LCD takes a look at default projections, the amount of upcoming maturities of speculative-grade debt, predictions of how deep or long a recession might be, and which industry segments might provide the most activity for distressed players in the year ahead.

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