PitchBook News - US PE's big bounce in exits

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The Daily Pitch: VC

July 12, 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:

US PE records its first significant jump in exit value in more than a year

Private capital is helping the healthcare industry transition to value-based care

Moonfare's CEO discusses opening up access to the private markets

UK pensions could funnel up to $97 billion into the private markets

Today's Top Stories

US PE picks up the pace of exits

With four big M&A sales and IPO listings to close out the quarter, US private equity recorded its first big bounce in exits in more than a year. Our Q2 2023 US PE Breakdown, sponsored by Stout, West Monroe and Twin Brook Capital Partners, details how PE firms kept busy buying and selling despite a tough lending environment.

Exit value surged by 66.9% quarter-over-quarter, a high point since crashing six quarters ago and a much-needed boost as funds run out of time to wind down holdings.

Debt for LBOs has dropped off noticeably in 2023. The average loan-to-value ratio has fallen to 43% this year, down from the five-year average of 52%.

Among other deal types, take-privates got smaller this year. More than half of announced deals have clocked in under $1 billion.

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Private capital holds a key to enabling value-based healthcare

As parts of the US healthcare industry transition to value-based care, patients should expect better medicine and, hopefully, lower costs. But executing that transition well requires a massive up-front investment.

One solution: Value-based care enablement, a business model that groups independent practices or health systems together and takes on the downside risk of the new billing framework. Our latest industry research delves into the public and VC- and PE-backed companies driving the shift toward better-value healthcare.

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A message from West Monroe

Special report: Preparing for the next wave of cleantech investment

West Monroe's annual survey of over 200 private equity executives and corporate development executives—released today—revealed the following:

75% of investors say recent developments in public policy and regulations around energy have amplified their appetite for M&A in the sector.
51% of respondents describe the target of their most recent cleantech transaction as a carveout from a larger organization.
33% of respondents rank the scale of ESG-related funds ready for deployment as the most important driver of increased investment in clean energy.

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Q&A: Moonfare CEO on unlocking private markets for retail investors

Steffen Pauls (Courtesy of Moonfare)

Companies that open up the private markets to a broader class of investors have proliferated in recent years. At the same time, private market managers are keen to tap new sources of capital.

We spoke to Steffen Pauls, the founder and CEO of one such company, Moonfare, about how the industry is expanding beyond traditional institutional investors.

Recommended Reads

General Mills is paying an agriculture tech startup to help make Cheerios greener. [CNBC]

Many millennial and Gen Z workers have turned away from careers in fossil fuels—making these young CEOs stand out. [Texas Monthly]

As the threat of antibiotic resistance increases, AI could widen the pipeline for new antibiotics. [Scientific American]

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People

Ryan Petersen, the founder of logistics startup Flexport who stepped down as CEO last year, has joined Founders Fund as a partner, according to reports.

JP Morgan has hired John China, the former president of SVB Capital, as co-head of its commercial banking segment targeting startups.

VC Deals

Septerna has raised a $150 million Series B led by RA Capital Management for its small-molecule medicines.

Canada's CarbonCure has received more than $80 million in funding led by Blue Earth Capital to expand its carbon removal technologies for the concrete industry.

New Zealand-based forensic traceability startup Oritain has secured a $57 million Series C led by Highland Europe.

Collective, which makes back-office software for entrepreneurs, has raised $50 million to expand its AI features. Investors included Innovius Capital, Gradient Ventures and The General Partnership.

Solaris, a Berlin-based embedded finance platform, has raised €38 million in the first close of a Series F led by existing investors.

Cybersecurity startup Savvy, which makes software to reduce risks posed by third-party apps, has emerged from stealth with a $30 million round led by Canaan.

Gene therapy manufacturing startup CoJourney has raised a $30 million Series A led by Legend Holdings.

London-based Raft has received a $30 million Series B led by Eight Roads for its digital freight-forwarding platform.

Jirav, a financial planning and analysis software startup, has secured a $20 million Series B led by Cota Capital.

Sonio, a Paris-based provider of an AI assistant for prenatal ultrasounds, has raised $14 million in a round led by Cross Border Impact Ventures and Elaia Partners.

Wing VC has led a $6 million seed investment in Outverse, a London-based community platform for SaaS companies.

Finres has secured a €4.1 million seed investment led by Speedinvest. The Paris-based company provides software to integrate climate and price risks into investment decision-making.

London-based EV charging startup Go Eve has raised £3 million from investors including The Pearl Family Office, Cur8 Capital and Automotive Ventures.

PE Deals

KKR is considering selling its 70% stake in NVC Lighting's China business, which could be valued at about $1 billion, Bloomberg reported.

The Canada Pension Plan Investment Board has acquired a majority stake in Power2X, an Amsterdam-based consultancy developing green hydrogen projects, and committed €130 million to fund the company's projects, Reuters reported.

Aurelius has acquired UK-based TM Group, which offers property search aggregation services, from Toronto-listed Dye & Durham Corp. for up to £91 million.

NordStar Capital and Postmedia have ended talks to merge the Canadian news media company with Metroland Media Group newspapers and certain assets of the Toronto Star, which NordStar owns.

Balance Point Capital Advisors has invested in Supreme Optimization, a life sciences digital marketing agency backed by Trinity Hunt Partners.

FPE Capital has led a buyout of UK specialist software companies NoBlue and Elevate2.

Exit & IPOs

Oklo, a startup developing small modular nuclear reactors, is going public through a SPAC deal with AltC Acquisition that values the company at around $850 million and will provide it with up to $500 million. OpenAI CEO Sam Altman is both the co-founder of AltC and the chairman of Oklo's board.

Fundraising

Audax Group has closed its seventh flagship PE fund on $5.25 billion and Audax Private Equity Origins Fund I, which focuses on lower-middle-market deals, on $774 million.

May River Capital has closed its third fund on $500 million. The vehicle targets investments in lower-middle-market industrial businesses.

Federated Hermes has closed its fifth PE co-investment vehicle on $486 million. The fund has already committed to 23 investments.

Aimpera Capital Partners has closed real assets-focused Aimpera Fund III and related co-investment vehicles on $475 million.

Berlin-based wealth manager Liqid has closed a €200 million PE fund-of-funds for affluent investors.

Suffolk Technologies, the VC arm of construction firm Suffolk, has raised a $110 million venture fund that will target construction tech companies from the early to growth stages.

Investors

The US Department of Justice is close to deciding whether to challenge Thoma Bravo's proposed acquisition of ForgeRock, a $2.3 billion deal announced in October, Politico reported. The agency's concerns center on the firm's ownership of Ping Identity, another cybersecurity company.

Blue Owl has made a passive, minority investment in Stonepeak, an infrastructure and real assets investor with $55 billion in AUM.

Chart of the Day

Source: PE Exit Timelines and the Impending Maturity Wall

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PitchBook News - US PE's big bounce in exits

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Venture capital builds in the dark

A glimpse into fund performance

VC's long road to recovery

Healthcare crisis puts PE to the test

Public medtechs' lukewarm 2023

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