Cardiology defies healthcare services slump

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The Daily Pitch: VC

May 10, 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:

In a dimming healthcare services market, cardiology platforms still resonate with PE investors.

As banks rein in lending, some private debt firms are eager to step in to fill the void.

Lightrock CEO Pal Erik Sjatil discusses opportunities in sustainable investing.

Today's Top Stories

As PE healthcare deals slow, cardiology attracts buzz

PE dealmaking in healthcare services slowed for a fifth quarter as firms dealt with lower valuation multiples, harder-to-access leverage and rising debt services costs. But the 200 deals struck in Q1 still marked a 20% increase on the average quarter in 2018 and 2019.

Cardiology is gaining attention from PE investors, who see potential returns in migrating some practices into an outpatient setting and billing insurance under value-based care schemes. Our Q1 2023 Healthcare Services Report lays out how deals are getting closed—more seller earnouts, for example—and how still-looming recession risk could influence activity this year.

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Tighter bank lending opens the way for private debt firms

(christianthiel.net/Shutterstock)

Corporate borrowers are facing more scrutiny from banks that have tightened lending standards to defend their liquidity positions in recent months, according to a Federal Reserve survey released Monday.

This pullback in bank lending has been a drag on demand for new loans and has strengthened the hand of private debt firms looking to grow market share in segments typically dominated by banks.

Recommended Reads

Across the US, wireless carriers are tearing out Chinese telecom equipment—but the process isn't cheap. [The New York Times]

How does today's spate of interest rate hikes compare to other cycles of inflation fighting over the past 35 years? [Visual Capitalist]

As institutional buyers hold on to dry powder, rich families are hunting for bargains in New York's real estate markets. [Bloomberg]

Since yesterday, the PitchBook Platform added:

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580

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40

Funds

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The Daily Benchmark:
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Oaktree Special Situations Fund II

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VC Deals

8fig, which offers funding and financial management tools to ecommerce businesses, has raised a $40 million Series B led by Koch Disruptive Technologies and a $100 million credit facility from Silicon Valley Bank, Axios reported.

UVeye, which develops automated vehicle inspection systems, has raised a $100 million Series D led by Hanaco VC and joined by GM Ventures and CarMax, among others.

Prewave, which offers a supply chain risk intelligence platform, has secured $20 million from investors including Creandum, Speedinvest and Ventech.

Crypto-focused news outlet Blockworks has secured $12 million at a $135 million valuation in a round led by 10T Holdings.

Climate-tech startup Improvin' has secured €3.5 million in a seed round led by Pale Blue Dot and Dynamo Ventures.

Tenon, an enterprise SaaS startup, has raised a $3 million seed round led by High Alpha and ServiceNow Ventures.

PE Deals

KKR and Macquarie are among those bidding for SembWaste, the waste and recycling management division of Singapore's energy group Sembcorp. The deal is said to be worth $500 million.

Advertising firm Stagwell is buying back 23.3 million shares worth nearly $150 million from The Carlyle Group-backed private equity firm AlpInvest Partners, Bloomberg reported.

Vista Equity has made a strategic investment in Resilinc, a logistics software company that maps and logs supply chains and disruptions.

Nexa Equity has made a majority growth investment in grocery store software provider Storewise.

Eagle Merchant Partners has made an investment in Impact Home Services, a franchise operator of Neighborly that serves Georgia.

Exit & IPOs

Mubadala and Bpifrance are set to exit French leisure park operator Looping Group after PAI Partners made a binding offer. The company has a presence in eight European countries.

Fundraising

RX3 Growth Partners, a private equity firm founded by NFL quarterback Aaron Rodgers, has closed its second fund on $150 million, the Wall Street Journal reported. The fund will invest in consumer brands.

Ivy Ventures, a new VC firm based in Indianapolis, has launched with $20 million. The firm will invest in early-stage startups.

Palatine has launched a growth credit strategy with a new fund to back B2B tech and software companies in the UK. The fund will target maturing companies.

Investors

Actis has launched a $500 million Japanese renewables platform dubbed Nozomi Energy. The initiative will target 1.1 gigawatts of power generated from onshore wind and solar by 2027.

Apollo Global Management reported that its adjusted net income in Q1 fell 8% year-over-year, following a trend of lower results for PE giants as asset sales have dried up.

Corporate M&A

Tempur Sealey has agreed to acquire Mattress Firm, a mattress retailer giant, for around $4 billion in cash and stock.

Chart of the Day

"For the first time in more than a decade, quarterly returns for VC funds have been negative for three consecutive quarters, with the preliminary Q4 return of -0.8% indicating a fourth."

Source: 2022 Global Fund Performance Report (as of Q3 2022 with preliminary Q4 2022 data)

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Cardiology defies healthcare services slump

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