PitchBook News - Seeking sanctuary in secondaries

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The Daily Pitch: VC

April 21, 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 latest analyst note examines the rise of GP-led secondaries as investors search for liquidity.

US PE firms maintained a healthy dealmaking tempo in Q1—even in less than favorable market conditions.

Blackstone execs discuss a historic opportunity for growth in private credit in the firm's latest earnings call.

Today's Top Stories

As exit window shrinks, secondary market grows in size—and complexity

The volume of secondary transactions per year has nearly doubled since 2020—showcasing a growing market for manager-led deals and more individualized liquidity options. Allocators, facing a depressed exit environment and subsequent drop in capital distributions, are seeking refuge in secondaries.

At a high level, there are two types of secondary transactions: GP-led and LP-led. The former have gobbled up a significant portion of business in recent years, growing to become at least half of the total secondary transaction volume. Our latest analyst note lays out the key differences between these types of deals.

read it now

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Opportunity funds fall from favor as VCs go back to basics

(Drew Sanders/PitchBook News)

A common refrain of the recent VC boom was that firms needed more capital to back their star portfolio companies, fearing the loss of seemingly limitless upside.

But like other excesses of the bull market, specialty funds used to back these best-in-class startups are on the decline. Late-stage investing and IPOs have dropped, and early-stage investors suddenly have found that fewer of their portfolio companies are on a path to receive large valuation step-ups.

The result is fewer opportunities for opportunity funds.

Recommended Reads

Cheap valuations and a stricter rulebook point toward a coming wave of bank mergers in the US. [The Economist]

UK pension funds push back against a lawmaker's idea to require investment in startups and other risky strategies. [Financial Times]

The rebirth of software-as-a-service. [Harvard Business Review]

Since yesterday, the PitchBook Platform added:

13

VC valuations

2486

People

626

Companies

24

Funds

See what our data software can do

The Daily Benchmark:
2015 Vintage Global Funds-of-Funds

Median IRR

21.44%

Top Quartile IRR

25.71%

0.62x

Median DPI

Select top performers

TrueBridge Direct Fund

TrueBridge-Kauffman Fellows Endowment Fund IV

HarbourVest Partners X-Venture

*IRR: net of fees

56 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

VC Deals

CoreWeave, a cloud data provider, has raised a $221 million Series B led by Magnetar Capital and joined by Nvidia.

Biotech startup Abdera Therapeutics has raised a $142 million combined Series A and B. The first round was co-led by Versant Ventures and Amplitude Ventures, while the Series B was led by VenBio Partners.

Ransomware resilience startup Halcyon has raised a $50 million Series B led by SYN Ventures.

Memora Health, which offers a care management platform, has secured a $30 million investment led by General Catalyst with backing from Northwell Holdings, Andreessen Horowitz and Frist Cressey Ventures.

Online background check and identity verification startup Certn has raised a $30 million Series B led by Export Development Canada.

Food brand KoRo has raised €20 million in a Series B extension. Investors included HV Capital, SevenVentures and Haub Legacy Ventures.

Kate, a French maker of lightweight electric vehicles, has secured €7 million from angel investors.

Skarlett, a financial management platform for people over 60, has raised €4 million from investors including Alven, Raise for Good and Motier Ventures, Tech Funding News reported.

Don't miss our upcoming webinar

The war in Ukraine, skyrocketing inflation and overall financial market volatility resulted in a rocky year for the European leveraged-finance primary markets in 2022. Loan volume plummeted to a 10-year low, and new high-yield bond issuance registered its lowest annual tally since the global financial crisis of 2007 to 2009.

In our upcoming webinar, LCD analysts will explore what lies ahead for leveraged financing trends in 2023. Key topics include:

What specific refinancing risks loan and bond-funded companies face.

How the cost of capital in the loan, bond and direct lending markets is changing.

How recent market volatility in the banking sector is impacting corporate financing and PE activity.

Register now to secure your spot.

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PE Deals

TPG and AmerisourceBergen have agreed to acquire OneOncology, an oncology practice network, for $2.1 billion from General Atlantic.

Apax Partners has ended talks regarding a potential £400 million bid for UK-listed Alliance Pharma, Sky News reported.

Singapore-based healthcare investment firm CBC Group and Mubadala have led a $315 million round for China's Hasten Biopharma.

Canada-based Braya Renewable Fuels has secured a $300 million preferred equity investment from Energy Capital Partners.

Empower Brands, a portfolio company of middle-market PE firm MidOcean Partners, has acquired Koala Insulation and Wallaby Windows, two home insulation companies.

Exit & IPOs

BC Partners-backed telecoms company United Group has agreed to sell TowerCo, its mobile tower infrastructure division in Bulgaria, Croatia and Slovenia, to Tawal for €1.22 billion.

KKR-backed Chinese alcoholic drink company ZJLD has raised 5.3 billion Hong Kong dollars (around $675 million) in an IPO, Bloomberg reported. It is the largest listing on the Hong Kong exchange so far this year, according to the report.

Oldewald plans to sell Langer & Laumann, a German smart-door maker, Unquote reported.

Fundraising

O2 Investment Partners has closed its fourth flagship PE fund on $445 million.

Kindred Capital has closed its third fund on $130 million. The vehicle will focus on pre-seed and seed-stage investments in Europe and Israel.

Investors

Tiger Global has recorded a 20% loss on its $12.7 billion venture fund, The Information reported. The firm has written down its investments in companies including OpenSea, FTX and Helium, according to the report.

Corporate M&A

In an investigation, the UK's competition watchdog has found that Australian hearing device-maker Cochlear's planned acquisition of peer Oticon Medical, a division of Demant, could reduce competition. The deal is worth 850 million Danish kroner (about $125 million).

Chart of the Day

Source: PitchBook's Q1 2023 European PE Breakdown

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PitchBook News - Seeking sanctuary in secondaries

Older messages

VC's M&A wave more of a drizzle

LPs sticking with climate-tech funds

Stifel lays out strategy to take SVB turf

Pressure continues to mount on VC

Hydrogen's storage dilemma

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