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PitchBook News - The PE opportunity in Cava's IPO

Plus: Credit crunch comes after PE, our new Private Capital Indexes, infosec opportunities abound & more
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The Weekend Pitch
June 25, 2023
Presented by Masterworks
(Jenna O'Malley/PitchBook News)
Cava's IPO is a glimmer of hope for one of private equity's diminished exit avenues.

Last week, VC-backed Mediterranean restaurant chain Cava Group listed on the New York Stock Exchange, ending the day as the most successful debut since July 2022 for a company listed on a US exchange. For private equity firms reluctant to exit their investments into a challenging market, the listing signals an opportunity to go public with their own falafel-in-the-rough.

With assets reaching maturity and valued at prices lower than expected, PE firms are opting to hold off on selling until market conditions become more favorable. According to PitchBook's Q1 2023 US PE Breakdown, the asset class's investment-exit ratio dropped steeply over the course of 2022 and into the first part of 2023, and total PE exit value dropped by more than $500 billion from 2021 to 2022—the product of an amalgamation of headwinds including the decline in public equity valuations in 2022 and the Federal Reserve's series of interest rate hikes.

But the hummus-slinging ticker's climb marked a bright spot in the otherwise bleak exit environment in both public and private markets and triggered murmurings about the long-awaited resurgence of the IPO window—a sign of hope PE firms are apt to closely watch. The question at the root of the hype—at least for private market professionals—is, when will the headwinds subside? And is the Cava IPO an indicator of brighter days ahead?

This is the Weekend Pitch, and I'm Jessica Hamlin. You can reach me at jessica.hamlin@pitchbook.com or on Twitter @jessicaAhamlin.
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Trivia
Foodtech, a vertical that operates at the intersection of commerce, food and technology, celebrated some major deals and investments this past quarter.

This is despite a continuing decline in VC deal activity over the past few quarters, with Q1 2023 hitting the lowest levels of funding and deals since 2017. How many deals were tracked by PitchBook in Q1 2023 for foodtech?

A) 197 deals
B) 62 deals
C) 145 deals
D) 224 deals

Find the answer at the bottom of The Weekend Pitch!
 

Cementing foundations for portfolio construction

(phil_berry/Shutterstock)
Crafting a well-balanced portfolio across the private asset classes can be a tricky business.

Our inaugural Q4 2022 Private Capital Indexes, a companion to our Benchmarks and Global Fund Performance reports, offer new data to allocators doing just that, capturing a cross-section of the private capital markets across geographies, sub-classes and quartile rankings.
 

Exploring the world of infosec

Investors searching for opportunities within the information security vertical need look no further.

PitchBook's 2023 Information Security Overview dives into the six most promising segments, laying out key trends, deals and details for each. Considering that infosec software is set to grow into a $190.3 billion market in 2026, there are plenty of investment options.
 

Credit crunch comes for PE dealmakers

In 2022, even as debt became harder to access and interest rates climbed, the pace of PE deals held relatively steady. That's changed: New analysis from our quantitative analysts found a slight slowdown in Q4 2022 ramped to a material drop in Q1 2023. The picture is even starker for PE exits, which are tracking $60 billion lower in value than would be expected.

Our latest Quantitative Perspectives report has a curated collection of the data that best tells the story of PE's recent struggles and key context from the macroeconomic backdrop.
 

Quote/Unquote
Masayoshi Son
(NurPhoto/Shutterstock)
"In the past few years, we focused on being [on] 'defense.' Three years ago, we didn't have a lot of cash on hand. But because we have been in defense mode, we have built our cash on hand to 5 trillion yen. We are ready to shift to offense mode. I am excited about that."

—SoftBank CEO Masayoshi Son told investors about the firm's shifting strategy after a series of reported losses in its Vision Funds.
 

Recommended Reads
Can new CEO Dan Clancy make Twitch profitable without alienating creators? [The Information]

Inside the race to create the world's first antifungal vaccine. [Inverse]

Here's how Huawei got caught spying and lost a $200 million 5G contract. [Bloomberg]
 

Stay tuned
Keep an eye out for these fresh insights and research reports coming out this week.
  • Q1 2023 Mobility Tech Report
  • Q1 2023 E-commerce Report
  • Q2 2023 VC Financial Benchmarks
  • Q1 2023 AI & ML Report
 

Trivia
Answer: A)

In Q1 2023, foodtech startups raised $2.3 billion across 197 deals. You can read more about the vertical's previous quarter in PitchBook's Q1 2023 Foodtech Report.

This edition of The Weekend Pitch was written by Jessica Hamlin, Rosie Bradbury, Emily Burleson and Jacob Robbins. It was edited by Heather West and Laural Hobbes.

Were you forwarded The Weekend Pitch? Sign up at pitchbook.com/subscribe.
 
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Key phrases

New York Stock Exchange new Private Capital Indexes total PE exit value The Weekend Pitch Interest rate hikes private market professionals private equity firms public equity valuations

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