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In today's Daily Pitch, you'll find: - Our latest Quantitative Perspectives Report delves into the key elements of a new, inflation-fueled regime that could impact the US private equity market.
- Public PE firms struck a cautious tone in their first-quarter earnings reports, reflecting a more challenging economic environment.
- Climate tech startups had a strong start to the year and could draw sustained interest as the ongoing energy crisis spurs investment in green technologies.
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| How a new regime could impact the US PE market | | If recent market movements and economic data are any indication, a shift in the underlying investment environment means private equity is in for some significant changes.
The asset class is entering a new regime, highlighted by high inflation, that has put policymakers in a difficult position and will likely result in less support of economic growth and financial markets. PE dealmaking will be bolstered in the short term by near-record amounts of dry powder and a strong funding market, but investors will face challenges such as rising interest rates and decreased liquidity for exits.
Our Q2 2022 Quantitative Perspectives Report delves into the key elements of this new regime and how it could affect the PE market, exploring everything from valuations to recession and inflation risks. Highlights include: - Based on data through the end of May, our economic modeling indicates only a 19% chance of a recession in the next 18 months.
- Deal activity decreased in Q1 but remained well above short- and long-term trends. Meanwhile, exit activity slowed dramatically, with deal value hitting just $66.7 billion for the quarter.
- After a modest decline in Q2 2020, PE fund returns were exceptionally strong, driven mainly by unrealized gains that may not materialize given the market's reassessment of asset valuations.
- During the last six years, PE managers have moved away from commodity-focused businesses and turned their focus to the tech sector.
| | | | | | | | | Ongoing energy crisis fuels strong 2022 for climate tech companies | |  | | (Norbert Hentges/Getty Images) | | | Global climate tech startups have already raised $13.7 billion so far this year and could draw sustained VC interest as the ongoing energy crisis spurs investment in green technologies.
VC investors are broadening their scope beyond EV and battery makers to encompass companies that offer carbon capture tech, lithium mining and indoor vertical farms. | | | | | | | |
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| Public PE firms strike a more cautious tone in Q1 | | Publicly traded private equity firms shifted to a different mood in their first-quarter earnings reports compared with 2021. Inflation and higher interest rates were discussed at length on many of the calls, as analysts attempted to gauge the impact on each manager and business line, from fund performance to fundraising.
Our latest analyst note explores the more challenging economic climate that PE firms faced in Q1. Among the takeaways: - The PE fundraising environment is perhaps the most crowded it has been, with myriad managers returning to LPs for re-ups—many far sooner than anticipated.
- Fundraising from retail investors remains a key pillar for nearly all firms. Blue Owl is bringing in a significant proportion of fundraising through the channel, but Blackstone leads the overall figures—amassing $4 billion to $5 billion in capital per month from retail.
- Strategy expansion remains an important growth engine for all public managers, especially with some firms seeing smaller step-ups in their flagship funds as sizes crest the $25 billion mark.
| | | | | | | | | European edtech gets a boost with Multiverse's Series D | |  | | (SEAN GLADWELL/Getty Images) | | | Online apprenticeship platform Multiverse has joined Europe's unicorn club with a $220 million Series D.
The investment comes amid an increase in edtech funding. This year, European startups have already collected more than half the amount raised in 2021. | | | | | | | | | | TSMC chair Mark Liu on how the world's largest chipmaker is reimagining the semiconductor industry. [Fortune]
Why private credit may not be the best choice for short-term investors. [Institutional Investor]
The SEC's proposed changes to US stock trading rules are facing criticism from Wall Street. [The Wall Street Journal] | | | | | |
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| | Since yesterday, the PitchBook Platform added: | | 414 Deals | 1787 People | 568 Companies | 24 Funds | | | | | | |
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| 2018 Vintage Global Real Estate Funds | | | | | | |
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| Sarah Guo leaves Greylock to start own fund | | | | | | |
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| Insurtech startup Branch lands $147M | | | Branch has raised a $147 million Series C led by Weatherford Capital, valuing the company at $1.05 billion. Launched in 2019 and based in Ohio, Branch is a provider of home and auto insurance products. | | | | | | | | | CareBridge has raised $140 million in a round led by Oak HC/FT. Based in Nashville, the company is a provider of value-based healthcare services for individuals receiving home and community-based care. | | | | | | | Immuta nabs $100M in Series E funding | | | Boston-based Immuta has raised $100 million in a round led by NightDragon. Founded in 2015, the data automation company helps organizations discover, protect and monitor sensitive information. Immuta has now raised around $267 million in total private funding. | | | | | | | London's Codat snags $100M | | | Codat has raised a $100 million Series C led by JP Morgan Growth Equity Partners, with support from investors including Canapi Ventures and Plaid. The company's API enables software providers and financial institutions to build integrated products for small and medium-sized businesses. | | | | | | | LibLab secures $42M in Insight Partners-led round | | | LibLab has raised a $42 million Series A led by Insight Partners. The company offers developer tools intended to automate the development, production and maintenance of software development kits. | | | | | | | Thrive Capital leads $40M round for Nava Benefits | | | Nava Benefits has raised a $40M Series B led by Thrive Capital. The benefits brokerage helps employers compare health plans from more than 600 providers. | | | | | | | | | Encamp has raised a $30 million Series C led by Drive Capital. Based in Indianapolis, the company offers an environmental compliance and reporting platform. | | | | | | | | | | | | |
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| GI Partners picks up Boston life science and data center building | | | GI Partners has acquired 451 D Street in Boston, a 479,000-square-foot life science, data center and creative office asset that has previously leased space to biotech firms and data center operators. GI Partners invests in sectors like healthcare, IT infrastructure, real estate and software. | | | | | | | GTCR's Corza Medical acquires Barron Precision Instruments | | | Corza Medical, a surgical technologies manufacturer backed by GTCR, has acquired Barron Precision Instruments, a medical device company. Founded in 1948, BPI specializes in ophthalmic products used in corneal surgeries. | | | | | | | PE-backed StatLab lands CellPath | | | | | | | | Rainier Partners backs Pet Food Express | | | Rainier Partners has invested in Pet Food Express, an omnichannel pet food retailer. Pet Food Express sells goods from more than 60 locations throughout California. | | | | | |
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| Biospring Partners closes inaugural fund on $245M | | | Biospring Partners has closed its debut fund on more than $245 million. Biospring focuses on investments in the B2B life sciences technology sector. | | | | | | | Vale launches $100M mining tech fund | | | Brazilian mining giant Vale has launched a VC arm with $100 million. Vale Ventures will invest in startups that reduce waste and carbon emissions in the mining process, as well as those working to increase the supply of metals needed for energy transition. | | | | | |
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| EY to grow its PE business with $1B, new leader | | | EY has announced it will invest $1 billion over four years to expand its PE business capabilities. The firm has appointed Bridget Walsh as EY Global Private Equity Leader. Walsh has over two decades of private equity experience. | | | | | |
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| Walmart heir, family to buy Denver Broncos for $4.65B | | | | | | |
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