PitchBook News - Red hot: PE earnings and sports deals

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The Research Pitch

May 15, 2021

Sports franchises begin to accept private equity capital

Minority investments in sports franchises offer private equity firms a greenfield opportunity in which to deploy tens of billions of dollars.

In the last few years, the NBA, MLB and MLS have altered ownership rules to allow a select group of private equity investors to hold minority stakes in multiple teams.

The Golden State Warriors and the Boston Red Sox—through their ownership group Fenway Sports—have already sold stakes to private equity firms. We expect more deals to follow as some minority owners seek to cash out while other majority owners look to raise growth capital.

Over the last 20 years, valuation growth for NBA, MLB, and NFL teams has outpaced the S&P 500, and many LPs want access to this return stream. Looking to the next 20 years, live content is likely to command even more of a premium with more on-demand streaming.

In our latest research, we explore this bourgeoning opportunity and dive into the investment thesis and risks behind sports investments.

Furthermore, the analysis includes a look at the unique characteristics and long-term revenue drivers of seven major sports leagues, as well as a rundown of top firms in the space—Arctos Sports Partners, Dyal Capital Partners, Galatioto Sports Partners and more.

Read our analysis: "Sports Teams and Private Equity Pair Up"

If you are interested in learning more about this emerging space for PE or have additional questions, please feel free to reach out to me or our institutional research group

Best,

Wylie Fernyhough
Senior Analyst, Private Equity Lead

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Thematic Research

Analysis of Public PE Firm Earnings: Q1 2021

Building on their momentum coming out of 2020, Blackstone, KKR, Apollo, Carlyle and Ares had a very impressive Q1.

Our analysis of the latest earnings reports from these private equity giants dissects their performance and strategies—and explains how they relate to broader PE industry trends:

A year after 2020's market nadir, corporate PE fund performance came in red hot, with several firms reporting 50%+ gross annual returns.

This combined with an already favorable fundraising environment portends more and bigger mega-funds in the coming quarters.

Also of note: All five firms expect significant runway for growth in the secondaries market, though they're taking different approaches to realize that potential.

read our analysis

Emerging Tech Research

MOBILITY TECH: From tackling congestion to reducing carbon emissions, the mobility tech industry is increasingly being seen as one of the ways we can solve a host of societal problems.

Venture investors are pouring billions of dollars into mobility tech startups that have been benefiting from the SPAC boom and rising demand for low-cost and environmentally friendly transportation solutions.

In our latest ETR report on the sector, analyst Asad Hussain explores the major trends that shaped the mobility tech industry in Q1, including mounting optimism around air taxis and autonomous driving technology. Among the takeaways:

Venture funding in the space set a record in Q1, with $23.4 billion invested.

The SPAC phenomenon added upward pressure on valuations for early- and late-stage mobility startups and has accelerated funding timelines.

Electric vehicle specialists need to rethink design processes in a way that prioritizes manufacturing cost and total cost of ownership.

Micromobility providers appear to be gaining traction in emerging markets such as India and Brazil.

read a summary

ENTERPRISE HEALTH AND WELLNESS TECH: Increasing healthcare costs have pushed employers, governments and healthcare providers to demand technology that can both lower costs while also providing high quality of care.

Our Q1 report on the sector from analyst Kaia Colban gives an overview of the latest developments and opportunities in prescription tech, customer acquisition tools, clinical trial tech and operations & care management. Among the key takeaways:

VC activity in the sector reached a record level in Q1, with $4.5 billion invested across 55 deals.

The COVID-19 pandemic exposed many remote capability inefficiencies in the healthcare system, thus enabling startups with market-ready products to gain market share.

New regulations will drive opportunities in personalized health apps, real-time prescriptions and care coordination software. Additionally, Medicare and private health insurance providers' adoption of value-based care could boost interest in tech that links providers' earnings to quality of care and patient outcomes.

read a summary

Webinars & Events

If you missed our analysts' webinar on autonomous finance, the most recent episode of our In Visible Capital podcast captured the highlights.

Also, the on-demand replay of our Venture Monitor webinar, which covered trends in US VC dealmaking, exit activity and fundraising, is available now.

One more webinar for your radar:

May 19: Our EMEA analysts will discuss the latest trends in the European PE and VC markets and look at how their 2021 predictions are faring. Register here.

Deal Commentary

AI analyst Brendan Burke weighs in on this week's $80 million Series B funding for SiMa.ai:

"This Series B is the largest deal we have tracked in the Edge AI category of AI & ML semiconductors.

"SiMa.ai is developing a system-on-chip that can process machine learning algorithms with low power requirements.

"We believe that the edge AI is an emerging semiconductor market that is partly driving the major announced acquisitions of Arm by Nvidia and Xilinx by AMD.

"Compressed ML algorithms in edge devices can unlock value for common IoT use cases, including predictive maintenance, supply chain optimization, and connected healthcare.

"Lead investor Fidelity Management & Research recently achieved an outstanding VC exit for chip design startup NUVIA, demonstrating the opportunity in this space.

"We estimate the AI microprocessor market to grow at a 49.7% CAGR from 2021 to 2024, resulting in a $6.5 billion market."

Brendan Burke

Senior Emerging Technology Analyst
AI & Machine Learning

In the News

Our insights and data featured in the press:

How soon will self-driving trucks be widely deployed? How does that compare to robotaxis? Analyst Asad Hussain shared his expectations in the context of a recent SPAC deal in the mobility tech sector. [WSJ]

PitchBook data is the foundation for this look at venture capital trends to watch. [WSJ]

How can smaller VC funds compete in a market increasingly favoring mega-funds? It was the topic of discussion in our webinar this week. [Venture Capital Journal]

If you're a media member interested in interviewing our analysts, contact our PR team.

ICYMI

Highlights from our research content published over the past few months:

Market updates

Thematic research

Emerging Technology Research deep dives

Coming next week (subject to change)

Q1 Private Fund Strategies Report
2021 UK/Ireland Private Capital Breakdown
Analysis of SoftBank's latest earnings
ETR: Foodtech (sneak peek)
ETR: Insurtech

Thanks for reading! Feel free to email us any time with feedback, questions or tips!

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PitchBook News - Red hot: PE earnings and sports deals

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