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The Weekend Pitch

August 11, 2024

The Daily Pitch is powered by PitchBook’s industry-defining research and best-in-class data

(Jenna O'Malley/PitchBook News)

It looks like this could be a landmark year for the world of private debt.

I'm Leah Hodgson, and this is The Weekend Pitch. You can reach me at leah.hodgson@pitchbook.com or on X @LeahFHodgson.

Last week, Ares Management announced it had secured $34 billion for its US senior direct lending strategy. It may not be a record-breaking fund (more about this later), but it is the latest in a spate of outsized private credit fund closes.

In June, HPS Investment Partners closed another giant, securing $21.1 billion for its flagship Specialty Loan Fund VI. And in May, Bloomberg reported that Goldman Sachs, Citigroup and Wells Fargo have plans to amass more than $50 billion to capitalize on the strategy.

Overall, private debt AUM has risen to more than $1.6 trillion, according to PitchBook's 2023 Global Private Debt Report, with dry powder of over $500 billion.

Much of this private debt capital now underpins the private equity industry. Not just through deal financing, but at every layer of the PE machine, whether at the fund level or portfolio level. With debt so intertwined with the asset class, it raises the question of whether there is such a thing as being over-leveraged—particularly during periods of volatility.

Trivia

Thrive Capital founder Joshua Kushner (Photo by Edward Berthelot/Getty Images)

New York-based Thrive Capital, run by entrepreneur Joshua Kushner, this week closed its ninth flagship fund. The latest raise is bigger than Thrive’s previous two investment vehicles combined. How much did the firm manage to raise?

A) $10 billion
B) $3.89 billion
C) $5 billion
D) $8.13 billion

Find your answer at the bottom of The Weekend Pitch!

Extended slowdown forces
startups back to market

AI is artificially inflating valuation numbers across VC, with the sector capturing nearly 50% of total deal value in Q2. But flat and down rounds are at a decade high and valuation step-ups between rounds have softened, according to our Q2 2024 US VC Valuations Report.

On the public markets side, price/sales ratios are stagnating, and recently listed SaaS and consumer tech stocks haven't performed as well as expected. So as more startups that last raised during the pandemic highs come back to market, investors shouldn't bet on seeing a windfall anytime soon.

PE dealmakers see turning point
for healthcare services

Deals for healthcare services companies slipped 16.5% in Q2 from the prior quarter, but the market shows signs of turning a corner, our latest Healthcare Services Report explains.

Throughout the year, bankers have said that their pipelines are filling up. Q2 saw a handful of platform trades, and additional large deal announcements are likely to follow. GPs are feeling pressure to both return capital to LPs and deploy it, and they're increasingly confident that rate cuts are near.

We expect a gradual increase in activity as sellers bring their best assets to market and valuation expectations crystallize.

Measuring private markets'
mixed performance

(We Are/Getty Images)

PitchBook's Q1 2024 Private Capital Indexes provide insights and quarterly return benchmarks for the private markets, offering a view of how the year has gone so far.

2024 has been a bit of a mixed bag—with returns in some sectors such as real estate turning negative, while venture capital eked out a small gain after more than two years of negative returns.

The report also includes indexed returns for private equity, real assets, private debt, funds-of-funds and secondaries. It provides risk-modeling data, including adjusted volatility estimates, correlations with public indexes and peak-to-trough drawdowns over select market environments.

Quote/Unquote

"A lot of it looks very opportunistic. I just don’t see a 'there' there…Most of it looks like complete vaporware."

—Nic Carter, general partner at Castle Island Ventures, talking about the movement in crypto to bring decentralized computing to AI. PitchBook dove into the ongoing debate within the community.

Stay tuned

Keep an eye out for these insights and research reports coming out this week:

Q2 2024 Crypto Report
2024 Global Fund Performance Report
Q2 2024 Gaming Report
Q3 2024 Quant Perspectives: US Market Insights
Q2 2024 Supply Chain Tech Report

Trivia

Answer: C)

Thrive Capital raised a record $5 billion for its ninth flagship fund, the largest to date for the firm. You can read more about that fundraise and what’s going on in the broader VC landscape in this article by Rosie Bradbury.

This edition of The Weekend Pitch was written by Leah Hodgson and Jacob Robbins. It was edited by Andrew Woodman and Clarinda Simpson.

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PitchBook News - How much debt is too much?

Trivia

Extended slowdown forces
startups back to market

PE dealmakers see turning point
for healthcare services

Measuring private markets'
mixed performance

Quote/Unquote

Stay tuned

Trivia

Older messages

Valuations are worse than they look

Can crypto fix AI's computing crunch?

Running out of runway

Healthcare services heats up

AI safety rakes in term sheets

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PitchBook News - How much debt is too much?

Trivia

Extended slowdown forces startups back to market

PE dealmakers see turning point for healthcare services

Measuring private markets' mixed performance

Quote/Unquote

Stay tuned

Trivia

Older messages

You Might Also Like

Extended slowdown forces
startups back to market

PE dealmakers see turning point
for healthcare services

Measuring private markets'
mixed performance