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The Daily Pitch: VC

December 8, 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:

VC investment in enterprise SaaS returned to declines after a short-lived bounce back in Q2

Q&A: Why the PE world is facing more pain and consolidation

Apollo and TPG were the only top public managers to increase PE deployment from a year ago

Arctos is the latest PE firm to take interest in European soccer with an investment in Paris Saint-Germain

GP stakes have lost some momentum, but industry players foresee a bounce back in 2024

Today's Top Stories

Enterprise SaaS funding hits lowest point in 5 years

Enterprise SaaS venture investment in Q3 was weaker than our analysts expected at $6.6 billion after breaking a streak in declines in Q2 with a positive turn to $9.2 billion. The number of deals made a meaningful drop to 324 after holding steady at around 400 per quarter since Q4 2022.

Our latest Emerging Tech Research explores a new area of interest to investors: composable applications. This modular design allows a company's product to be packaged as part of a suite of software solutions, a desirable setup for customers.

read the preview

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Q&A: Liquidity logjam means pain, consolidation for PE

(Caroline Suttie/PitchBook News)

As we approach the end of 2023 there is little sign of any major improvement in the liquidity jam in private equity. PE is facing a material mismatch between the capital demands of GPs and the supply available from LPs, says Andrew Sealey, CEO of Campbell Lutyens—a leading placement agent and strategic adviser.

The result, he says, will be greater fund consolidation, increased reliance on existing GP-LP relationships and continued growth in the secondaries markets.

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A message from DealCloud, by InTapp

A compliance officer's guide to seamlessly mitigating risk

In 2023, $5 billion in fines were levied to firms who failed to meet regulatory requirements. Firms will continue to face strict regulations on employee compliance that can threaten their reputation and result in hefty fines. For many compliance officers, keeping track of the employee data is burdensome, time-consuming and manual.

Watch this video to learn how DealCloud's employee compliance software can help your firm monitor, identify, and mitigate employee trading and outside activity compliance concerns.

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New shades of GP stakes expected in 2024

(MirageC/Getty Images)

GP stakes lost some momentum in 2023, but their appeal to investors remains intact.

Deal volume saw an uptick in the first weeks of Q4, and with a pipeline bogged down with managers hoping to sell a stake and buyers looking to deploy capital, industry players remain optimistic about the market's continued growth in 2024.

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Arctos scores stake in Paris Saint-Germain soccer club

(Harry Langer/DeFodi Images/Getty Images)

US PE group Arctos Partners has bought a piece of French soccer team Paris Saint-Germain from Qatar Sports Investments.

The 12.5% stake reportedly valued PSG at more than €4 billion (about $4.3 billion).

The deal exemplifies two trends at the intersection of PE and European soccer: an increase in US and multi-cub owners.

Dallas-based Arctos owns a stake in Italian team Atalanta. The firm also backs Liverpool-owner Fenway Sports Group.

Our dashboard tracks every PE connection to Europe's top soccer clubs.

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Leading public PE firms kept their powder dry in Q3

(Mitshu/Getty Images)

Execution of buyouts and growth investments has been more difficult this year, and the big, publicly traded alternative asset managers haven't been immune to the challenges.

The group's investment in PE dropped by almost half from Q2 to Q3, according to public filings. Among them, two firms vastly boosted and slashed their PE deployment: TPG and Blackstone, respectively.

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Leveraged loan repayment wall riskier this time around

(Sashkin/Shutterstock)

The volume of leveraged loans coming due in the next two years is larger today than ever, and half of that amount is from riskier, lower-rated companies. This is prompting expectations of a spike in default rates next year as borrowers struggle to meet sharply higher debt costs.

Get weekly leveraged finance and private credit market updates in the PitchBook LCD newsletter, The Credit Pitch.

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Since yesterday, the PitchBook Platform added:

1

VC valuations

1723

People

472

Companies

23

Funds

See what our data software can do

The Daily Benchmark:
2015 Vintage Global Secondaries Funds

Median IRR

15.75%

Top Quartile IRR

24.07%

1.06x

Median DPI

Select top performers

Siguler Guff Secondary Opportunities Fund

SG/NMERB Secondary Fund I

Ion Pacific Phillion I

*IRR: net of fees

14 Funds in Benchmark »

Check out the latest version of PitchBook Benchmarks

A message from COMPLY

Are new SEC, FINRA and DOL rules impacting private investment strategies?

In 2022, PE deals with IA and Broker-Dealer involvement broke records, with $61.8 billion valued across 210 deals. That same year, firms contended with the compliance date of the SEC's New Marketing Rule.

The takeaway: Heightened pressure from increased regulatory activity has culminated in shifting M&A strategies.

During this live webinar, COMPLY and PitchBook experts will analyze market trend data, overlaying key regulatory knowledge to assess the impact of increased regulatory activity on M&A strategy.

Join the webinar Tuesday, Dec. 12 at 2 p.m. ET to learn more about:

What private investment trends reveal about industry dynamics
The implications of private investments on firms' compliance practices
An analysis of macroeconomic conditions related to regulatory schema

Register here

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VC Deals

Klook, a Singapore-based startup developing an experience and travel services platform, raised $210 million led by Bessemer Venture Partners.

UK semiconductor manufacturer Pragmatic raised £182 million in a round led by M&G Investments and UK Infrastructure Bank.

Munich-based neobroker Scalable Capital raised €60 million led by Balderton at a $1.4 billion valuation.

Pontera, which helps financial advisers manage retirement accounts, raised $60 million led by Iconiq Growth.

Bengaluru-based Sarvam AI, a full-stack large language model developer, raised $41 million across its seed round—led by Peak XV Partners and Lightspeed—and Series A, led by Lightspeed.

AI-powered enterprise productivity company Rhythms has secured $26 million in a seed round led by Greenoaks and Madrona.

Babylon, which designs security sharing protocols for the blockchain, raised $18 million led by Polychain Capital and Hack VC.

Paris-based Leeway has rebranded as Tomorro after raising an €11 million Series A led by Resonance for its contract management platform.

Hurr, which offers a fashion rental platform, raised capital from investors including Praetura Ventures and Octopus Ventures, bringing its total capital raised to $10 million.

PE Deals

Blackstone and Austin-based data center operator Digital Realty agreed to form a joint venture with an 80-20 split that will develop three hyperscale data centers in Paris, Frankfurt and Virginia for an expected $7 billion.

Bain Capital is primed to acquire Switzerland-based cloud technology provider SoftwareOne as the company's last remaining bidder, Reuters reported. In June, Bain proposed a valuation for SoftwareOne of up to $3.2 billion Swiss francs (about $3.55 billion).

London-listed energy infrastructure company Smart Metering Systems has agreed to a £1.3 billion take-private offer from KKR. The all-cash offer of 955 pence per share represents a 40% premium to the stock's closing price Wednesday.

Ares Management and Sportsology Capital Partners are in talks to acquire a 10% stake in the Texas Rangers from minority owner Janice Simpson in a deal that would value the Dallas-based MLB team at more than $2 billion, Bloomberg reported.

Hildred Capital Management is on track to acquire diaper brand Hello Bello for $65 million as no better offers emerged for the Los Angeles-based company, which was founded by actor Kristen Bell in 2019 and filed for bankruptcy protection in October.

Music investor Influence Media Partners, backed by BlackRock and Warner Music Group, acquired the rights to Latin pop singer Enrique Iglesias' recorded catalog and name, image and likeness. Influence acquired his entire catalog in a 9-figure deal, Bloomberg reported.

PE-backed healthcare data company BC Platforms has acquired Medexprim, a French company that specializes in datasets used in precision medicine.

Fundraising

Morgan Stanley Investment Management closed two funds on nearly $1.2 billion, The Wall Street Journal reported, including a $725 million growth equity fund and $275 million for the firm's first growth credit fund.

London-based Hayfin has reached a close on its Maritime Yield vehicle on around $400 million. With debt financing included, the fund will have the capacity to acquire up to $1 billion in shipping assets.

New York-based Avenir Growth Capital aims to raise $800 million for its fifth fund, according to a securities filing.

Revaia, a Paris-based female-founded VC firm, has amassed €150 million for its second fund, Bloomberg reported.

Zurich-based VC firm Collateral Good is looking to raise €100 million for a sustainable-fashion fund backed by Hugo Boss.

Rockstart has launched its second AgriFood Fund with plans to raise €50 million. The vehicle is backed by the Export and Investment Fund of Denmark.

Chart of the Day

Source: Q3 2023 France Market Snapshot

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PitchBook News - Enterprise SaaS ebbs to 5-year low

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