PitchBook News - Bankruptcies loom as oil plunges

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The Daily Pitch: VC

April 21, 2020

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Today's Top Stories

As oil plunges, bankruptcies loom for private equity portfolio companies

(anatoliy_gleb/iStock/Getty Images Plus)

Oil futures contracts for May closed below zero Monday for the first time ever, at minus $37.63 per barrel. Sellers were actually paying buyers to take the assets off their hands.

The development is expected to accelerate bankruptcies, and independent producers have the greatest risk. Private equity firms back many of these smaller players:

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UK unveils $311M Future Fund for struggling startups

The UK has authorized a support package worth £250 million (about $311 million) for tech startups impacted by COVID-19. The Future Fund consists of grants and loans; it will be used to invest up to £5 million apiece in eligible businesses throughout the country. To qualify, startups must be able to secure at least an equal amount of match funding from private investors and have raised £250,000 over the past five years.

The government has faced pressure from startups cut out of other financing alternatives, including a newly created loan program aimed at supporting PE-backed companies. Earlier this month, CEOs from some of the country's biggest VC-backed startups launched a campaign headed by Crowdcube that asked the government to provide support to tech companies. Crowdcube said in a statement that it was delighted by news of the Future Fund.

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A message from TMF Group

One-third of global carveouts fail to deliver

The COVID-19 pandemic is disrupting economies and industries worldwide, spurring a surge in carveouts as businesses look to restructure—but how much value will be realized? An independent survey, commissioned by TMF Group, found that 24% of senior executives from private equity firms with buy-side experience and 19% of corporations said that costly overruns significantly impacted deals. A staggering 16% of deal value was eroded by deal overruns of more than four months. Up to 34% of respondents said their most recent cross-border carveout failed to deliver on expectations.

This research comes at a time when the market is so complex and volatile that the stakes look set to be high for the foreseeable future, and challenges related to carveouts appear inevitable. How can executives and investors overcome them?

TMF Group's full research survey details the multiple obstacles that may be encountered and how they can be conquered. Among the key hurdles identified are the legal and regulatory issues pertaining to cross-border carveouts in particular, as well as which third parties must be contracted early in the process to deliver satisfying results for all stakeholders.

Read the research

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Send us an email at press@pitchbook.com and the news team will track down the answers you're seeking. Each week, we'll run a story that answers a reader question.

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Recommended Reads

An accelerated digital transformation and new work-life balances are just some of the takeaways from Mary Meeker's coronavirus trends report. [Axios]

"If you throw enough capital at it, you eventually figure it out" is a motto many startup founders have been living by in recent years. But what happens when a pandemic causes the go-big-or-go-home attitude to be replaced by cash conservation? [The Wall Street Journal]

A letter from Marc Andreessen on building in the wake of the coronavirus. [Andreessen Horowitz]

Twitter CEO Jack Dorsey was on the verge of being pushed out by private equity investors, but COVID-19 has given him new purpose. At least for now. [Vanity Fair]

Can climate change be fought with fungus? One college student in Nebraska thinks so. [NBC]

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Today's Headlines


	The Daily Benchmark
	2010 Vintage US PE Funds
	VC Deals
	Aledade picks up $64M
	French health insurance startup raises new funding
	Exits
	Oric Pharmaceuticals sets IPO terms
	Portfolio Companies
	Blockchain startup lays off part of its staff

The Daily Benchmark

2010 Vintage US PE Funds

Median IRR

11.99%

Top Quartile IRR Hurdle Rate

19.22%

1.59x

Median TVPI

Select top performers

NYLIM Mezzanine Partners III

Ticonderoga KI

Lone Star Fund VII

*IRR: net of fees

36 Funds in Benchmark »

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VC Deals

Aledade picks up $64M

Aledade has raised a $64 million Series C led by OMERS, with participation from investors including GV and Meritech Capital. Founded in 2014, the company offers a platform for doctors to manage data and workflow; it was valued at $336 million in January 2019, according to PitchBook data.

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View 5 competitors »

French health insurance startup raises new funding

Paris-based digital health insurance provider Alan has raised €50 million (around $54 million) in a Series C led by Singapore's Temasek and existing investors including Index Ventures. The company has raised a total of €125 million since its founding in 2016. Alan provides health insurance plans to businesses and individuals and is in the process of opening two new offices in Spain and Belgium.

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View 19 competitors »

Exits

Oric Pharmaceuticals sets IPO terms

Oric Pharmaceuticals, a clinical-stage developer of cancer treatments, has established an expected price range of $14 to $16 apiece for its upcoming offering of 5 million shares, according to an SEC filing. A midpoint pricing would raise $75 million and give the company an initial market cap of about $394 million. Oric is backed by The Column Group (22.39% pre-IPO stake), Topspin Fund (15.56%) and OrbiMed (11.67%), among others. It plans to trade on the Nasdaq under the symbol ORIC.

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Portfolio Companies

Blockchain startup lays off part of its staff

ConsenSys is shedding around 14% of its employees in response to the coronavirus pandemic, according to CoinDesk. Founded in 2014, the New York-based company is the developer of Ethereum blockchain software for enterprise and government applications.

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View 28 competitors »