Real estate funds feel public market woes

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The Daily Pitch: VC

March 23, 2023

The Daily Pitch is powered by PitchBook’s industry-defining research and best-in-class data

In today's Daily Pitch, you'll find:

Our Global Real Estate Report provides clarity and insights on the opaque investing strategy.

The banking crisis is threatening to have long-term implications for PE, which is facing a stricter lending environment.

Opportunities abound for startups that want to explore autonomous systems for the global construction industry.

Today's Top Stories

Public real estate's woes start to hit private investors

Private real estate investors have a lot less capital to work with today. Real estate funds raised just over $128 billion in 2022, the lowest figure since 2013, and did so through the fewest vehicles since 2009. Dry powder is down, too, having fallen 13% year-over-year.

That's despite the private real estate world's dogged outperformance of publicly traded REITs, whose assets are more vulnerable to fluctuations in value. Some observers have questioned how long private real estate can soar above the rest.

Our latest Global Real Estate Report provides clarity on the opaque investing strategy, with details on fundraising and challenges in various sub-strategies.

read the report

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Banking crisis puts pressure on PE money supply

(John Blottman/Shutterstock)

Private equity is typically insulated from volatility in public markets, but the current banking crisis is threatening to have long-term implications for the asset class as it further hinders firms' abilities to secure leverage.

Firms have been struggling with a stricter lending environment since the Federal Reserve's rapid tightening brought the bank-led leveraged loan market to a halt in the latter half of 2022. To cope with this, GPs are looking for new and creative ways to finance deals and focusing on smaller businesses.

Recommended Reads

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Asset manager Aperture Investors tried out a performance-based fee model. Five years in, Aperture's CEO says it's a success. [Institutional Investor]

Data shows that recessions are often preceded by a cyclical low in the unemployment rate, perhaps a sign that the economy has peaked. [Visual Capitalist]

Since yesterday, the PitchBook Platform added:

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Companies

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Funds

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2017 Vintage Global Debt Funds

Median IRR

10.08%

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VC Deals

Precision oncology biotech startup Flare Therapeutics has raised a $123 million Series B led by GordonMD Global Investments and Pfizer Ventures.

Cognito Therapeutics, a clinical-stage neurotechnology company, has raised a $73 million Series B led by FoundersX Ventures.

Icelandic video game developer CCP Games has raised $40 million in a round led by Andreessen Horowitz.

Cybersecurity startup Dope.security has raised a $16 million Series A led by GV.

Direct-to-consumer home insurance company Kin has secured an additional $15 million for its Series D from Geodesic Capital, QED Investors and others, bringing the round's total to $109 million.

HT Materials Science, a developer of smart heat transfer fluids, has secured a $15 million Series A from investors including Aramco Ventures and CDP Venture Capital.

Endeit Capital has led a €10 million Series A for IPRally Technologies. The startup's tech allows intellectual property and research and development professionals to find, analyze and classify patent information.

Piclo, a marketplace for energy flexibility services, has secured an £8.3 million Series B led by Future Energy Ventures and Clean Growth Fund.

Windfall Bio, which converts methane into fertilizer products, has raised a $9 million seed round led by Mayfield and Untitled.

Ampere.cloud, which offers a renewable energy management platform, has raised a €5 million Series A led by Point Nine Capital.

Skincare brand True Botanicals has raised a Series B investment from NextWorld Evergreen, a growth-equity firm focused on ethical consumer brands.

PE Deals

Nasdaq-listed satellite company Virgin Orbit is nearing a $200 million deal with Texas-based VC investor Matthew Brown through a private share placement, Reuters reported.

Symphony Technology Group, a data and software analytics-focused PE firm, has invested in laboratory SaaS company Accelerated Technology Laboratories.

Impact Partners has invested in UK financial inclusion training provider We Are Digital. The company's platform is used by local governments, housing associations and businesses.

CVC Capital Partners is among several investors interested in buying German conglomerate Thyssenkrupp's steel business, according to reports.

CVC Capital Partners-backed TMF Group has acquired fund administrator PartnersAdmin, bringing TMF's AUM to more than $215 billion.

Exit & IPOs

Inflexion is selling London-based social media marketing company The Goat to advertising agency WPP. Inflexion first invested in the company in 2021.

JP Morgan has agreed to acquire VC-backed investment analytics company Aumni. The bank will pay a sum roughly equal to the startup's 2021 valuation of $232 million, CNBC reported.

Fundraising

Sverica Capital has closed its Fund VI on a hard cap of $750 million. The PE fund's focus will be on middle-market companies with valuations under $250 million.

Paris-based venture investor Emblem has secured €50 million for its seed fund, TechCrunch reported. The vehicle, which will target startups in France, Denmark and Sweden, is expected to raise as much as €75 million by the end of the year.

Carya Venture Partners has raised a $20 million micro-fund to invest in AI, deep-tech and B2B startups.

Corporate M&A

Japanese power company Jera has agreed to buy Belgian offshore wind platform Parkwind for roughly €1.55 billion from Virya Energy.

Chart of the Day

Source: PitchBook's 2022 Annual Global M&A Report

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Real estate funds feel public market woes

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