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PitchBook News - PE playbook zeroes in on value creation

Energy transition infrastructure funding flows to specialists, a deep dive into Asia-Pacific's region's fintech ecosystems & more
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The Weekend Pitch
November 3, 2024
The Daily Pitch is powered by PitchBook’s industry-defining research and best-in-class data
(Julia Midkiff/PitchBook News)
The PE industry is placing a greater emphasis on enhancing the value of portfolio companies by improving their operations—or at least, that’s the message many GPs are trying to convey to their LPs, industry participants tell me.

The concept of value creation has taken on new importance as high interest rates and a tepid exit environment have forced many firms to reinvent the strategies they use to generate returns.

“Many of them in the past were doing great by just doing ‘buy low, sell high,’ having the right strategy for portfolio companies, placing the right management, and using financial leverage,” said Romain Bégramian, a managing partner at Paris-based advisory firm GP-Score. “But now they’re eager to improve operational value creation, or at least they are saying that to their investors.

I'm Madeline Shi, and this is The Weekend Pitch. You can reach me at madeline.shi@pitchbook.com or on X @Madelin94615831.

The strategy was spotlighted on Apollo's investor day in October, when the private equity titan lauded its ability to capture excess return in its PE investments through operational improvements at portfolio companies. That came in stark contrast to the broader PE industry's strategy for the last decade which, by and large, leaned most often on multiple expansion and topline growth for returns.

David Sambur, the co-head of equity at Apollo, quipped: “What is the purpose of investing in private equity if it’s just levered beta on steroids?”
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Trivia
Moniepoint, a fintech startup focused on providing infrastructure and payment solutions for companies based across Africa, raised $110 million in new funding, defying a broader slowdown in VC funding for fintech startups in Africa. According to PitchBook data, how much capital has been invested in African fintech startups in 2024 so far?

A) $281.4 million
B) $138.1 million
C) $651.9 million
D) $449.8 million

Find your answer at the bottom of The Weekend Pitch!
 

Energy transition infrastructure
specialists raise $215B since 2014
(Andriy Onufriyenko/Getty Images)
LPs have committed $892 billion to infrastructure funds engaging in some degree of energy transition investment since 2014, nearly a quarter of which has gone to specialist funds, PitchBook's Anikka Villegas reports in our latest analyst note.
  • Fund performance has improved over time, thanks to government support and better tech.

  • Specialist funds have proliferated as LPs seek out specific exposure, driven in part by stakeholder pressure.

  • Future returns will benefit from increased energy demand, continued government support and the low cost of operating renewable energy infrastructure.
read the report
 
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Spotlight on Asia-Pacific's
fintech ecosystems

(Constantine Johnny/Getty Images)
Rapidly expanding economies, growing middle classes and large underbanked populations seeking financial access across the Asia-Pacific region have led to the birth of several notable fintech startups.

But companies face challenges due to geopolitical tensions, regulatory shifts and market differences. Deal count and value are both down since 2018, with just $2.3 billion invested in 186 deals across the region in H1 2024.

Our latest analyst note, separated into five parts to cover each geographical sector in detail, highlights VC dealmaking and emerging opportunities across fintech companies in Japan, Southeast Asia, India, Greater China and Australia & New Zealand.
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Quote/Unquote
UK Chancellor of the Exchequer Rachel Reeves delivering the new government's first budget
(Leon Neal/Getty Images)
"Instead, we have seen a raft of measures [...] all of which will undermine the country’s attractiveness as a place to start and scale a business."

-David Ovens, joint managing partner of Archangels commenting on the newly elected UK government's first budget. The plan is drawing the ire and protests of the country's private market investors. You can read more about their reactions and about the budget here. .
 

Stay tuned
Keep an eye out for these insights and research reports coming out this week:
  • Q2 2024 PitchBook Private Capital Indexes
  • Q3 2024 Food & Beverage Report
  • Q3 2024 US VC Valuations Report
  • Q3 2024 Agtech Report
  • Q3 2024 Gaming Report
  • Q3 2024 Healthcare Services PE Update
 

Trivia
Answer: D.

$449.8 million has been invested across 89 deals in fintech startups across Africa, according to PitchBook data. It's well below 2021's peak of $1.4 billion invested. You can read more about how Moniepoint was able to raise capital and what's driving broader trends here.
 

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This edition of The Weekend Pitch was written by Madeline Shi and Jacob Robbins. It was edited by Heather West and Ron Prichard.

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