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The Daily Pitch: VC

July 15, 2021

Like our newsletter? The data comes from the PitchBook Platform — our data software for VC, PE and M&A

Today's Top Stories

Exploring a surging buyouts market

(phokin/Getty Images)

Over the past few years, private equity investors have struggled to find bargains as buyout multiples continue to rise. And a few industries in particular have seen prices skyrocket during the COVID-19 pandemic, with others taking a hit.

Our recent analyst note breaks down how pricing multiples vary by sector. Among the takeaways:

To win auctions in the IT, B2C and healthcare sectors, investors have offered buyout multiples north of 20 times. But that trend may be short-lived if interest rates eventually jump across Europe and the US due to inflationary pressures.

In the past decade, buyout multiples in the healthcare sector have jumped around 50%, with healthcare tech companies surging in value during the pandemic due to the rise of telemedicine.

IT continues to remain the most expensive industry to invest in when measured by buyout multiples, with the median EV/EBITDA multiple peaking last year at around 20x.

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EQT bets on clean energy with $5.3B deal

(Courtesy of Covanta)

EQT has agreed to acquire waste-to-energy specialist Covanta Holding Corp. in a deal valued at $5.3 billion, including debt.

The Swedish private equity giant plans to take the New Jersey-based company private at $20.25 a share, which represents a 36% premium to Covanta's closing price June 8, the day prior to initial reports of the deal.

Covanta operates more than 40 waste-to-energy facilities throughout the US, Canada and Europe. The company converts about 20 million tons of waste into sustainable electricity per year, also producing 600,000 tons of recycled metals per year.

The deal, which is being made via EQT Infrastructure V, is expected to close by year's end.

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A message from Abacus Finance Group, LLC

Healthcare and life sciences investing in a post-COVID-19 era

The healthcare and life sciences sector has proven resilient to the effects of COVID-19 as a record number of investments resulted in an increase in interest from capital providers. Diagnostic development companies were the initial beneficiaries as they addressed the need for COVID-19 detection tests, vaccine manufacturing and therapeutics. On the other hand, areas such as dental care and surgery were disrupted as elective procedures declined from stay-at-home mandates.

In 2021, the sector will continue to be an attractive space for investment as the intersection of technology and pharma expands to support different phases of drug development, manufacturing and supply chain. A shift in the "point of care" related to home procedures, a rapid adoption of telehealth, and an increase in prescription apps will further bolster growth post-COVID-19.

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Recommended Reads

A handful of powerful companies monopolize America's food market. But who's paying the price? [The Guardian]

For years, startups turned to Wall Street investment bankers for help with going public or finding a buyer. But now they're using their services for a function that's much more routine. [The Information]

Corporations around the world have been clamoring to green their businesses, but some former sustainability executives say their efforts lack impact. [Bloomberg]

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Quick Takes


	The Daily Benchmark
	2015 Vintage North American Debt Funds
	A message from RBC Capital Markets
	Why is comms infrastructure vital to the future?
	VC Deals
	M1 Finance banks $150M Series E
	Kriya Therapeutics lands $100M
	Virsec secures $100M Series C
	Ribon Therapeutics brings in $65M for cancer treatment
	Entos picks up $53M
	Exits & IPOs
	Discord to scoop up Sentropy

The Daily Benchmark

2015 Vintage North American Debt Funds

Median IRR

8.10%

Top Quartile IRR Hurdle Rate

9.52%

1.19x

Median TVPI

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Apollo Structured Credit Recovery Fund III

Silver Point Specialty Credit Fund

Almanac Realty Securities VII

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A message from RBC Capital Markets

Why is comms infrastructure vital to the future?

With burgeoning demand accelerated by pandemic-driven remote work, the communications infrastructure sector has been in the spotlight. More than ever before, it's seen as core infrastructure on a global basis, and RBC Capital Markets' global head of Communications Infrastructure Investment Banking, Madonna Park, believes it will underpin the future.

With a high level of activity in the sector, where are the growth and M&A opportunities? What impact could continuing consolidation, ESG and regulatory focus have on the sector?

See why comms infrastructure is pivotal for technology innovation moving forward, whether it's supporting 5G, AI, automated cars or the data that needs to be stored as a consequence, with insights from RBC Capital Markets' industry experts.

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VC Deals

M1 Finance banks $150M Series E

M1 Finance has raised $150 million at a $1.45 billion valuation in a round led by SoftBank's Vision Fund 2, with support from existing backers. The Chicago-based company is the creator of a wealth management platform that lets users invest in stocks and ETFs, borrow funds and track their spending. M1 Finance was valued at $805 million in March, according to PitchBook data.

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Kriya Therapeutics lands $100M

Gene therapy startup Kriya Therapeutics has closed a $100 million Series B led by Patient Square Capital, with participation from new and existing investors including Woodline Partners, Alumni Ventures, Narya Capital, Foresite Capital and JDRF T1D Fund. The funding will be used for developing Kriya's core technology, expanding the existing pipeline and advancing programs addressing metabolic disease, ophthalmology and oncology.

Select Additional Investors:

CAM Capital, Bluebird Ventures, Dexcel Pharma

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Virsec secures $100M Series C

Virsec has raised $100 million in a round led by BlueIO. The San Jose-based company is a developer of security software designed to detect and manage known and unknown cybersecurity attacks in real time.

Additional Investors:

Quantum Valley Investments, Allen & Company, Arena Holdings, Artiman Ventures, Intuitive Venture Partners, JC2 Ventures, Marker Hill Capital

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Ribon Therapeutics brings in $65M for cancer treatment

Ribon Therapeutics has raised a $65 million round co-led by Deerfield Management and US Venture Partners. Based in the Boston area, the clinical-stage company is developing therapies to target novel enzymes that contribute to cancer and inflammation. Ribon was valued at $134 million in 2019, according to PitchBook data.

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AbbVie Ventures, Euclidean Capital, GV, Monashee Investment Management, Novartis Venture Fund, Osage University Partners, Takeda Ventures

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Entos picks up $53M

Entos has raised a $53 million Series A co-led by Coatue and Catalio Capital Management. The San Diego-based company uses AI and automated synthetic development to design small-molecule therapeutics. Founded in 2019, Entos was valued at $11 million in April 2020, according to PitchBook data.

Additional Investors:

Freeflow, Nexus Venture Partners, OrbiMed, Sequoia

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Exits & IPOs

Discord to scoop up Sentropy

Discord, an online chat platform, has agreed to purchase Sentropy, an AI-powered tool for protecting digital communities from hate and harassment. Sentropy has reportedly collected some $13 million in private funding from investors including Chapter One Ventures, Horizons Ventures and Initialized Capital. Discord, meanwhile, is backed by Firstmark Capital, Index Ventures, Bessemer Venture Partners and others.

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