PitchBook News - A glaring need for electric vehicles

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The Research Pitch

October 9, 2021

Don't miss it! On Wednesday, Oct. 13, analysts Hilary Wiek and Dylan Cox will explore findings from our recent Sustainable Investment Survey, which garnered record responses from around the globe on topics like ESG risk factors and impact investing.

More details here!

Why battery recycling is so crucial for the future of electric vehicles

The automotive industry is in the early innings of a multidecade transition from internal combustion engines to battery-electric vehicles.

As we have outlined in previous research, incumbent automakers and newer entrants alike are poised to drive a significant market expansion in EV sales, leading to a forecasted tenfold increase in lithium-ion battery demand.

Lithium-ion batteries contain valuable materials such as lithium, nickel, and cobalt that can be extracted, processed, and reused for new batteries.

Despite this, less than 5% of lithium-ion batteries are recycled today due to logistical challenges and cost considerations in getting batteries to dedicated facilities.

In addition, most traditional battery recyclers provide relatively low-value collection and shredding services that are incapable of producing batteries that can be returned to the EV supply chain.

Click to view our EV lithium-ion battery value chain.

Battery recycling provides multiple benefits, notably the environmental impact of reducing waste. It also has the potential to limit exposure to foreign supply chains, which can be unreliable during times of economic or political volatility.

As EVs rely heavily on foreign-manufactured computer chips, any opportunity to source materials locally can help reduce this risk. Recycling can also reduce the need for foreign-sourced metals, which may have been mined illegally or with unethical labor practices.

To address this opportunity, battery recycling startups are emerging with full-service solutions including collection, shredding, extraction, recovery, refining, and processing.

This full range of operations allows these companies to sell recycled materials back into the EV supply chain, providing automakers with critically needed, domestically sourced battery materials at low cost while helping achieve sustainability targets demanded by governments and investors.

Several automakers have recently announced initiatives to address the battery supply chain issue:

Ultium Cells (a joint venture by GM and LG Chem) and Li-Cycle announced a partnership to recycle battery manufacturing scrap in North America to produce new batteries.

GM has also reduced the amount of cobalt and nickel in its Ultium platform by 70%.

Ford announced a partnership with Redwood Materials to recycle and reuse raw materials from its EV battery packs. In addition, the automaker will invest $50 million into the recycler.

Ford has also joined a pilot program with UK-based blockchain startup Everledger and the US Department of Energy for the management and responsible recovery of end-of-life batteries.

Volkswagen and Tesla have launched programs to recycle and reuse battery systems and materials.

Click to read a free version of our research: Recycling EV Batteries to Recharge the Environment

PitchBook clients can access the full version here.

Feel free to reach out with any questions or feedback, or if you would like to discuss the research.

Best,

Asad Hussain
Senior Analyst, Emerging Technology

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Fitting a GP stakes allocation into an institutional portfolio

The GP stakes strategy continues to proliferate, with several deals closed in the last few months and most firms in the space in continuous fundraising mode.

Our latest analysis seeks to help LPs think through portfolio weighting and bucketing for GP stakes funds by looking at popular solutions—and a more novel approach.

In general, the GP stakes strategy presents distinct characteristics that make it somewhat difficult to determine the proper portfolio location and weighting.

The yield characteristics may be more akin to mezzanine or real estate, while the downside protection is far more secure than other buyout or growth equity strategies.

The return driver, private capital firm profits, is also unique.

Our research also dives into the strategic elements of a GP stakes fund commitment and details some added considerations for LPs to ruminate on—such as building relationships with a concentrated cohort of managers, co-investment opportunities, and more.

Please click to download the free analysis: GP Stakes in an Institutional Portfolio

As always, I am happy to discuss this topic offline should any questions or thoughts arise.

Best regards,

Wylie Fernyhough
Lead Analyst, Private Equity

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Benchmarks

The newest editions of our PitchBook Benchmarks have just gone live, with full data as of Q1 2021 and preliminary Q2 data in our global edition.

The report offers pages upon pages of fund performance metrics like IRR quantiles, pooled horizon returns, cash multiples and PMEs.

All of the following breakouts are available, as we continually work to improve the timeliness and expansiveness of our benchmarks:

Global (includes prelim Q2 data!)
North America
Europe
Private equity
Venture capital
Secondaries
Funds-of-funds

get our free benchmarks

Market Updates

The amount of dry powder in private real estate funds declined in 2020.

That hadn't happened in almost a decade.

But the world is still figuring out how people are going to live and work going forward—let alone how different property types will perform in a post-pandemic world.

One key takeaway from the data: Debt, distressed, and opportunistic funds have seen the largest declines, as those strategies called down more from prior vintages than they raised last year.

There's much more in our new report on real estate fundraising (and access the underlying data in XLS):

read the free report

Thematic Research

UK SPAC Rule Changes and Their Impact on Private Markets

New rules involving SPACs have put the UK more on par with markets in the US, Europe and Asia.

And while it's too early to tell if a listing frenzy will begin, we do expect the number of SPAC purchases of UK-headquartered companies to increase in the second half of the year over H1.

Euronext Amsterdam has been a popular destination for SPACs.

The timing for European SPACs might be favorable, as blank-check sentiment has started to cool in the US.

Another key takeaway: Sponsors looking for a pan-European acquisition may eschew London for Amsterdam or Frankfurt as both follow similar rules and regulations across the EU.

We break down Europe's SPAC data, compare listing rules around the world, and discuss all of the potential impacts on private markets:

read the free research

Webinars & Events

Why is PE investment in healthcare services lagging behind overall levels of PE activity?

How can companies navigate a tight labor market—and the subsequent burnout of their current employees?

Earlier this week, we hosted a live discussion about PE and healthcare services, featuring the insights of industry veterans from McGuireWoods, The Bloom Organization, and Bailey Southwell & Co.

Watch the replay

In the News

Our insights and data featured in the press:

Businesses are shifting their focus away from "AI-as-a-service" vendors who promise to carry out tasks straight out of the box, like magic. Where are they spending more instead? [Bloomberg]

Labor savings have played a big role in the growth of ghost kitchens. And the way restaurants have evolved means most aren't optimized for delivery. [Insider]

No major US city has had early-stage valuations spike like they have in Los Angeles. [dot.LA]

Discussing Ford's recent EV investments, how investors have rethought funding mobility startups, and the future of transportation beyond cars. [Automotive News podcast]

Rivian's electric truck gets all the attention, but its fate is tied to Amazon. "In the same way investors look to Tesla for the future of automotive, many investors look to Amazon for the future of logistics." [Bloomberg]

If you're a journalist interested in interviewing our analysts or requesting data, contact our PR team.

ICYMI

Highlights from our other research published over the past couple of months:

Market updates

Quantitative Perspectives: US Market Insights
France & Benelux Private Capital Breakdown
Sustainable Investing Survey
US PE Middle Market Report
Greater China Venture Report
- also available in simplified Chinese

Thematic research

Emerging Technology Research (free previews)

Coming next week (subject to change)

PitchBook-NVCA Venture Monitor
US PE Breakdown

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

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PitchBook News - A glaring need for electric vehicles

Older messages

Strong fund performance carries into 2021

A16z's deep crypto pockets

Assessing the UK's new SPAC rules

Real estate funds take a notable dip

Sustainability and the EV battery boom

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