PE hangs in the balance

Research links ESG, PE fund performance; Motive Partners dives deeper into VC; Morgan Stanley PE platform targets emissions; PayZen banks $220M
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The Daily Pitch: VC, PE and M&A
November 23, 2022
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Today's Top Stories  
PE hangs in the balance as recession odds grow
Slower growth, higher short-term interest rates, tight labor markets—as one economic indicator after another points to an increasingly likely recession in late 2023 or early 2024, the rate of PE dealmaking hasn't shown such signs of weakness. But tougher financing conditions might finally slow down deal activity in coming quarters.

Our Q4 2022 Quantitative Perspectives Report breaks down the deteriorating macro backdrop and explores how those dynamics could affect the PE market next year. Key takeaways include:
  • A soft landing is becoming less and less likely, and the odds of a recession have risen to 65% in recent months, our model predicts.

  • The leveraged loan market, which has fueled the buyout engine for years, has nearly shut down as new debt issuance fell to the lowest volume in more than two years.

  • Lags between public and private market reporting mean that many LPs' portfolios are likely overweight to private investments. That could make fundraising a greater challenge for GPs, especially those with unproven strategies.
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Research: ESG disclosures linked to stronger PE fund performance
(Avigator Fortuner/Shutterstock)
PE firms have been increasing their ESG disclosures, and the trend is associated with stronger fund performance, according to a London Business School research paper. The research, which uses word counts of ESG-related terms on PE firms' websites to gauge disclosure rates, found that from 2000 to 2020, these word counts grew 200%. This increase in ESG disclosure was also associated with a 4.9% increase in the net IRR of a fund.

With increasing regulatory and media attention on ESG issues, LPs are more inclined to require ESG disclosures from all funds in which they invest, including privately managed vehicles. PE firms have stepped up voluntary disclosures to remain competitive with public firms.
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A message from PitchBook Media  
PitchBook's 2023 Media Kit released
Year to date, PitchBook's newsletters have over 161 million impressions and over 744,000 report downloads. Partnering with PitchBook Media is a way to feature your firm's insights in one of the most popular venues for timely and relevant PE and VC articles, news, asset class reports and custom white label reports.

The brand-new 2023 Media Kit contains all the details to help your firm position itself in front of a VC or PE audience.

Click here to download it today or to speak to someone on the media team.
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Motive Partners dives deeper into VC with Embedded/capital buy
(Dilok Klaisataporn/Shutterstock)
Fintech-focused PE firm Motive Partners is boosting its early-stage investment capabilities and has agreed to buy German VC Embedded/capital.

In recent years, PE firms have been increasing their participation in venture deals as they seek to diversify their activities.
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Video: Siam Capital shares insights on VC investing in sustainability
Sita Chantramonklasri, founder and general partner of Siam Capital (Lukas Schulze/Web Summit)
At the recent Web Summit tech conference, PitchBook caught up with Sita Chantramonklasri, founder and general partner of Siam Capital, a New York-based VC that invests in the consumer technology and sustainability sectors.

Chantramonklasri explained how sustainable investment is generating more opportunities for wealth creation due to growing consumer demand for products tackling the world's environmental and economic crises.
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Ukraine war sparks slowdown in Central, Eastern Europe PE fundraising
(evan_huang/Shutterstock)
Central and Eastern Europe have always accounted for a much smaller share of overall European PE activity. But after a few years of consistent PE fundraising, 2022 has seen a marked decline due to Russia's invasion of Ukraine.

We look at some of the largest fund closes since 2016 and the top LPs committing capital to the region.
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Recommended Reads
While it can be expensive to refurbish old buildings, many of London's landlords will need to embrace energy-efficient offices before they see any interest from corporate tenants. [The Wall Street Journal]

One writer's thoughts on why FTX's collapse illustrates the fallout that can come with placing too much confidence in tech leaders. [Financial Times]

Where do most of the world's soccer balls come from? [Bloomberg]
 
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Quick Takes  
  The Daily Benchmark  
  2020 Vintage North American VC Funds  
  VC Deals  
  PayZen raises $220M in equity and debt  
  Swell Energy takes home $120M  
  WorkJam lands $50M  
  Aura scores $26M in equity and debt  
  Taktile brings home $20M  
  Niron Magnetics secures $17M+ grant  
  PE Deals  
  Care.ai raises $27M from Crescent Cove  
  Stonepeak, Spirit Super to acquire Australian port  
  Exits & IPOs  
  Palm Beach exits safety equipment maker Cadre  
  Fundraising  
  HC9 Ventures raises $83M fund  
  Investors  
  Morgan Stanley launches emissions-focused PE platform  
 
 
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The Daily Benchmark  
2020 Vintage North American VC Funds
Median IRR
35.40%
Top Quartile IRR
62.52%
1.24x
Median TVPI
Select top performers
Lightspeed Venture Partners XIII
Imaginary Venture Capital Partners II
RRE Leaders II
*IRR: net of fees
61 Funds in Benchmark »
Check out the latest version of PitchBook Benchmarks
 
VC Deals  
PayZen raises $220M in equity and debt
Fintech company PayZen has taken in $20 million in equity led by 7wireVentures and secured a $200 million credit facility from Viola Credit. The funding will be used to expand the company's healthcare financing service.
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View 17 competitors »
 
Swell Energy takes home $120M
Virtual power plant startup Swell Energy has raised $120 million led by SoftBank Vision Fund 2 and Greenbacker.
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View 2 competitors »
 
WorkJam lands $50M
Canadian workplace software maker WorkJam has raised $50 million in Series D funding led by Fonds de solidarité FTQ and Inovia Capital.
View round
 
View 39 competitors »
 
Aura scores $26M in equity and debt
Digital picture frame startup Aura has raised $26 million in equity and debt led by Lago Innovation Fund, TechCrunch reported.
View round
 
View 1 competitors »
 
Taktile brings home $20M
Taktile has raised a $20 million Series A co-led by Index Ventures and Tiger Global. The company, which is based in Berlin and New York City, helps businesses to leverage data in decision-making.
View round
 
View similar company »
 
Niron Magnetics secures $17M+ grant
Niron Magnetics has secured a $17.5 million grant from the US Department of Energy to commercialize its rare earth-free magnets. Niron has raised funding from backers including Anzu Partners and Volvo Cars Tech Fund.
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View 1 competitors »
 
 
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PE Deals  
Care.ai raises $27M from Crescent Cove
Crescent Cove Advisors has invested $27 million in Care.ai, which uses AI to monitor patients in hospitals and nursing homes. Care.ai plans to use the funding to deploy its technology beyond its existing 1,500-facility customer base.
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Stonepeak, Spirit Super to acquire Australian port
Stonepeak and Spirit Super have agreed to purchase 70% and 30% stakes, respectively, in GeelongPort, the second-largest port in Victoria, Australia. The port's current owners, SAS Trustee Corp. and Brookfield-backed Linx Cargo Care Group, each hold 50% of GeelongPort.
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View similar company »
 
 
Exits & IPOs  
Palm Beach exits safety equipment maker Cadre
Palm Beach Capital has fully exited its investment in Cadre Holdings 10 years after first backing the safety equipment designer and manufacturer alongside Kanders & Company. Cadre held its IPO on the New York Stock Exchange in 2021.
View details
 
View 1 competitors »
 
 
Fundraising  
HC9 Ventures raises $83M fund
HC9 Ventures has closed an $83 million fund to back seed- and early-stage healthcare software and services startups. The firm has invested in mental health companies Forge Health and Psych Hub.
View fund
 
View 3 investments »
 
 
Investors  
Morgan Stanley launches emissions-focused PE platform
Morgan Stanley Investment Management has created a growth-equity platform dubbed 1GT that is intended to invest in companies that would collectively avoid or remove one gigaton of carbon dioxide or equivalent emissions from the atmosphere by 2050. So far, the platform has deployed $600 million.
View details
 
View 81 investments »
 
 
Chart of the Day  
Source: 2022 All In: Female Founders in the US VC Ecosystem
 
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