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| In today's Daily Pitch, you'll find: | | | | | |
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| Rising interest rates to test middle-market borrowers | |  | | (eamesBot/Shutterstock) | | | Rising interest rates and a weakening business environment are likely to pose significant challenges to midsized, privately owned companies that have accumulated heavy loads of debt at high multiples in recent years.
The new environment, created in part by the Federal Reserve's campaign of inflation-fighting rate increases, is a significant reversal compared to the last decade, when low rates and strong corporate growth made debt an easy and attractive financing option.
Two recent reports on the debt environment suggest that some private companies in the middle market, in particular those at the lower end of the credit spectrum, may face increased difficulties bringing in enough revenue or profit to cover rising interest expenses if the Fed keeps raising rates, as is widely expected. | | | | | | | | | Secondaries emerge as leading private market's strategy through Q1 2022 | | While more muted performance in Q1 2022 dragged on the high returns of 2021, the 27% overall private capital return was still far above the 10-year average of 14.5%. PE and VC one-year rolling IRRs faltered through Q1, and analysts find it unlikely that those metrics—or PE and VC's now-negative quarterly returns—will reverse in the latter half of the year.
Meanwhile, secondaries funds landed in the top spot for rolling one-year IRR through Q1. And unlike PE and VC, IRRs for real estate and real assets kept climbing.
Returns in the private markets, which are still at historically high levels, also maintained their outperformance of public equities through Q1.
Our latest Global Fund Performance Report uses data through Q1 2022, as well as some preliminary Q2 figures, to provide a comprehensive look at how private market strategies have held up across PE, VC, real estate, real assets, private debt, funds-of-funds and secondaries. The report also examines how strategies' median returns could obscure wide ranges of investors' results. | | | | | | | |
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| A message from DealCloud, by Intapp | | |
| ShoreView Industries modernizes deal management with DealCloud | | Prior to deploying DealCloud, professionals at ShoreView Industries, a Minneapolis-based PE Firm, managed their data using Microsoft Outlook and a generic CRM. The team recognized that an industry as complex as private equity demands purpose-built technology that can be easily configured to automate, personalize, and quickly access deal activity.
Read the case study to learn how ShoreView Industries is leveraging DealCloud's technology to meet the unique needs of modern-day dealmakers.
Download the case study | | | | | | | |
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| Brand consultant Fndr unveils first VC fund at Slush | |  | Fndr CEO James Vincent
(Esa-Pekka Mattila/Slush 2022) | | | Brand consultant Fndr has launched its maiden VC fund to back its startup clients across various sectors.
While fundraising for emerging managers has suffered, LPs are still favoring newer managers with unique strategies or established relationships. | | | | | | | | | Video: Broadhaven explains how tech will take VC mainstream | |  | Michael Sidgmore
(Piaras Ó Mídheach/Web Summit) | | | At this month's Web Summit conference in Portugal, PitchBook took some time to speak with Michael Sidgmore, partner and co-founder of Broadhaven Ventures, to talk about the fintech space and how technology is changing the private markets.
Sidgmore, whose firm has backed startups such as iCapital Network and Forge, explained how fintech innovation is allowing more and more individual investors to increase their allocation to alternatives. | | | | | | | | | | Sequoia's Doug Leone on the fallout from FTX's collapse: "We're going to dream a little less." [CNBC]
Everything in tech seems to be collapsing at once, and it all comes down to one thing: a midlife crisis. [The Atlantic]
Why venture investor Tim Draper is turning his back on China and looking toward Taiwan. [The Wall Street Journal] | | | | | |
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| | Since yesterday, the PitchBook Platform added: | | 21 Deals | 187 People | 75 Companies | | | | | | |
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| 2018 Vintage Global Funds-of-Funds | | | | | | |
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| A Message from RBC Capital Markets | | |
| How will increasing antitrust scrutiny impact M&A? | | Increasing antitrust scrutiny is extending M&A deal timelines and heightening the need to focus on certainty of closure.
How is Big Tech responding to evolving antitrust regulations? What is the impact for Private Equity? Get the latest insights from RBC's expert bankers on M&A Inflection Points, a limited series podcast. | | | | | | | |
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| Astera Labs valued at $3B+ | | | | | | | | Prosper snags $75M growth round | | | | | | | | Soft Robotics closes $26M Series C | | | Soft Robotics has raised $26 million to fund the development of its robotic grippers used in food and consumer goods processing. The Series C round was led by Tyson Ventures. | | | | | | | | | Align Ventures has led a $16 million Series A for Terzo, a provider of contract intelligence software. | | | | | | | Daylight brings home $15M | | | Daylight, which offers a digital banking platform designed for LGBTQ communities, has secured $15 million in a round led by Anthemis Group. | | | | | | | Beam raises $6M+ Series A | | | Beam has raised $6.4 million in a round led by Potencia Ventures. Governments, nonprofits and philanthropic organizations use Beam's platform to administer financial assistance programs like rental relief and public utility benefits. | | | | | |
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| OTPP eyes stake in power networks | | | The Ontario Teachers' Pension Plan is in talks to acquire a stake in SSE's electric transmission and distribution networks, Bloomberg reported. SSE announced in late 2021 that it planned to sell a 25% stake in the assets, which Bloomberg has reported could be worth £10 billion (roughly $12 billion). | | | | | | | Ara Partners leads $36M round for Continuum | | | | | | | | FIDx raises $24M+ from insurance companies | | | | | | | | Arlington Capital's Forged Solutions acquires Steel Industries | | | | | | | | Kain Capital launches hospice care platform | | | Kain Capital has acquired Hospice Care of America and launched a hospice investing platform, PERA Holdings. Kain plans to add more regional hospice companies into PERA beyond HCA, which runs centers in Colorado, Missouri, Kansas and Oklahoma. | | | | | |
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| Bluescape-backed TXO Energy files for IPO | | | Fort Worth, Texas-based oil and gas company MorningStar Partners has filed initial paperwork with the SEC for an IPO on the New York Stock Exchange, with plans to change its name to TXO Energy Partners upon listing. Bluescape Group backed the company in 2015. | | | | | |
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| Wafra's Capital Constellation closes $1.5B fund | | | Wafra has closed Constellation Generation IV, a GP stakes fund, on $1.5 billion. The vehicle is part of a series known as Capital Constellation, in which nearly a dozen institutional investors commit capital for Wafra to invest in alternative asset managers. | | | | | | | Index raises $300M seed fund | | | VC firm Index Ventures has closed a $300 million fund dubbed Origin II that will invest in seed-stage startups globally alongside other seed funds, solo GPs and angel investors. | | | | | |
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