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In today's Daily Pitch, you'll find:
- Preliminary data for Q3 2022 shows PE and VC dragging down private capital returns—with strategies like secondaries keeping the overall figure in the positive.
- Private market prices are still far from catching up to the steep drops of their public equity counterparts.
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Secondaries, real estate buoy private capital through Q2 2022
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While the S&P 500 plummeted in the first three quarters of 2022, a handful of private markets strategies surprised investors with their resilience. Asset classes like secondaries and real estate buoyed overall private capital returns through Q2 2022 while PE and VC headed into negative territory.
While no one likes poor performance, some investors struggling with the denominator effect may be letting out a sigh of relief as the private markets finally start to realign with public market performance.
Our latest Global Fund Performance Report uses data through Q2 2022, as well as some preliminary Q3 figures, to provide a comprehensive look at how private market strategies have held up across PE, VC, real estate, real assets, private debt, funds-of-funds and secondaries. |
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Why VC valuations look too high to LPs
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| (Drew Sanders/PitchBook News) |
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Private company valuations generally lag behind public equity prices. But so far into the economic downturn, VC markdowns have been lower than expected.
LPs expect VC firms to make substantive value adjustments in anticipation of a year-end audit review, but it may take several years for venture valuations to fully correct. |
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What's driving middle-market growth in 2023?
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As shown in the Citizens 2023 M&A Outlook, its annual survey of decision-makers across 400 US middle-market businesses and PE firms, nearly two-thirds of companies expect M&A will be their primary growth engine this year. And while economic uncertainties are grabbing headlines, over 90% of companies say their 2023 performance will exceed or match their 2022 results.
Access the 2023 M&A Outlook to discover:
- Which sectors enjoy the brightest outlooks
- Where companies and PE firms' views diverge
- Buyers' top reasons for making an acquisition in 2023
Explore the Citizens 2023 M&A Outlook |
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Inflexion exits Scott Dunn as Europe's travel industry pursues recovery
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| (Friends Stock/Shutterstock) |
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Inflexion has agreed to sell UK luxury travel agency Scott Dunn to Flight Centre for £121 million (about $149 million).
PE deals fell as the sector was pummeled by the pandemic, and the deal may signal that recovery will continue for leisure and hospitality in Europe. |
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3 ways institutional portfolios could find balance this year
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| (Chloe Ladwig/PitchBook News) |
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Like a yogi's inversion, the act of portfolio balancing requires years of experience and strategy to look effortless and produce the intended result. Amid inflation, rising interest rates, geopolitical turmoil and the buzzy denominator effect, this balancing act requires even more fortitude to avoid a hard landing, especially if asset values tumble in the new year.
In 2022, steep losses in the public markets shrank the value of the public portion of institutional portfolios, and as private markets continued to see strong returns, private market allocations suddenly comprised a much larger piece of the pie.
In the wake of these threats to institutional portfolio balance, some investors are turning to the secondaries market to steady the teetering through LP-led transactions. Institutions are crawling back into equilibrium, and there are infinite ways this could play out.
We explore three ways LPs could find their balance. |
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More than 60% of private capital firms added staff in 2022, but there are early signs that hiring efforts could pause this year. [Institutional Investor]
Fewer employers are feeling the need to lure talent with remote positions in the latest shift of power dynamics between employers and employees. [The Wall Street Journal]
One writer's thoughts on how the social and racial homogeneity of the VC industry may be destroying value. [The Information] |
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Since yesterday, the PitchBook Platform added:
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14
VC valuations
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2051
People
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636
Companies
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36
Funds
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2019 Vintage Global PE Funds
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Shein to name former SoftBank exec head of LatAm
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| Fashion giant Shein plans to name former SoftBank executive Marcelo Claure as the new head of its Latin America business, The Wall Street Journal reported. |
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Thrive Capital is leading a multibillion-dollar investment in Stripe that would value the ecommerce startup between $55 billion and $60 billion, The New York Times reported.
Colossal Biosciences has raised a $150 million Series B led by United States Innovative Technology Fund. The genetics startup aims to restore extinct species.
Dutch smartphone-maker Fairphone has raised about $53 million in a round led by Invest-NL, ABN AMRO and Quadia, TechCrunch reported.
LuxWall, which makes insulated windows, has raised a $33 million Series A led by 2150, Axios reported.
Pharmaceutical company Ratio Therapeutics has secured a $20 million Series A led by Duquesne Capital and Schusterman Family Investments.
Cloud-security startup Sentra has raised a $30 million Series A led by Standard Investments.
Israel's Pigmentum has raised $6 million in a seed round. Investors included Kibbutz Yotvata, Tnuva and Arkin Holdings.
Workplace management startup Fibery has secured a $5.2 million Series A led by Tal Ventures.
Entocycle, an insect farming company, has raised a $5 million Series A led by Climentum Capital.
Baobab, a Berlin-based cyber insurance specialist, has raised €3 million in a round led by Augmentum.
Phinxt Robotics, a warehouse management software company, has raised $750,000 in a pre-seed round led by Fuel Ventures. |
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PitchBook webinar: Fueling success in the Medicare Advantage market
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Private equity firms have become leading consolidators of primary care practices focused on Medicare Advantage. However, the market is extremely competitive, so firms must enable providers to improve patient outcomes and lower costs while also partnering effectively with payers.
In our upcoming webinar, PitchBook's lead healthcare analyst, Rebecca Springer, and senior Optum strategists will explore how PE firms can evaluate opportunities, navigate risk and win in the Medicare Advantage market. Key topics include:
- How payer competition and macro trends are shaping unique geographic markets.
- An actuary's perspective on financial risks and opportunities.
- A model for provider success in progressively more sophisticated value-based contracts within a typical PE investment cycle.
Register now to secure your spot. |
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GI Partners has agreed to purchase Atlas Technical Consultants in an all-cash deal valued at $1.05 billion.
Platinum Equity has acquired Imerys' High Temperature Solutions unit, rebranded as Calderys, for roughly $1.01 billion.
Digital identity specialist Saviynt has raised $205 million in growth financing from AB Private Credit Investors, under AllianceBernstein.
Elevate Renewable Energy has received a $150 million commitment from ArcLight Capital Partners, which established Elevate to develop utility-scale battery storage projects.
EIV Capital has agreed to invest in Intensity Infrastructure Partners, a midstream oil and gas acquirer and developer.
LLR Partners-backed Magaya, a supply chain and logistics software provider, has received recapitalization funds from Apax Partners' growth equity arm, Apax Digital.
Trivest Partners has acquired a stake in Perricone Juices, which produces fresh-squeezed citrus juice through facilities in California and Florida.
Eureka Equity Partners has acquired Synergi, an engineering and construction firm that specializes in feature staircases. Lafayette Square provided debt financing for the deal.
The Curators, a UK snack company backed by Yeo Valley Associates, has acquired Cheesies. |
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North Hudson launches $275M oil and gas credit fund
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| Energy investment firm North Hudson Resource Partners has launched its inaugural credit fund with $275 million. The vehicle will provide senior secured loans to middle-market, onshore oil and gas companies in the US. |
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Embedded Ventures kicks off first fund
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| Embedded Ventures has launched its first fund, CNBC reported. The $100 million vehicle will make investments in the space-tech and security industries. |
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Brookfield, DWS swap PE business
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| Asset manager DWS has sold its Private Equity Solutions business to Brookfield Asset Management. Formed in 2017, the division focuses on growth equity, add-ons and M&A. |
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KKR sets aside $250M for testing platform
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KKR has committed up to $250 million to a new platform that will invest in companies in the testing, inspection and certification industry. |
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Ardian to open office in Abu Dhabi
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| French private equity firm Ardian is opening an office in Abu Dhabi. The firm is forming a $2.1 billion private equity partnership with Mubadala Capital, the Abu Dhabi sovereign wealth fund's asset management division. |
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US DFC to support Ukrainian companies
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Tesco moves to buy Paperchase
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| UK supermarket chain Tesco is looking to acquire stationary seller Paperchase, Sky News reported. Tesco is reportedly in advanced talks to take over Paperchase's name and other intellectual property as part of a pre-packaged deal. |
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