| | | | | PE's surge of 2020 IPOs capitalizes on frothy public markets | |  | | (lo lo/Unsplash) | | | Private equity firms, which have traditionally preached the benefits of being private, are displaying a new fondness for taking companies public.
Despite a pandemic, PE firms have logged $74.5 billion in exit value so far this year across 22 IPOs of portfolio companies they acquired via buyout, the highest annual value in at least a decade, according to PitchBook data. The number of IPOs also marks a significant uptick from 2019, when there were just 15 IPOs from companies that were acquired via buyout.
What's behind the surge? | | | | | | | | | | Drug discovery and diagnostics push AI and ML funding past $10B in Q3 | | The artificial intelligence and machine learning sector raised $10.4 billion in venture funding in Q3, fueled by a breakout quarter for healthcare AI. Innovations in diagnostics and drug discovery in the face of the pandemic drove a rapid acceleration of VC activity.
COVID-19 has also created use cases in other areas of AI and machine learning, including chatbots and supply chain optimization. While AI adoption remains in the early stages for many companies, the sector as a whole is poised for tremendous growth, according to our latest installment of Emerging Tech Research. Other highlights from the report include: - AI and machine learning is projected to be a $131.5 billion market by 2023, nearly double its current value
- A wave of IPOs across AI-as-a-service, personal health and AI ops underscored that the public markets may be the best exit route for AI startups seeking to maximize value
- A convergence of trends will energize deal activity in autonomous robotics
| | | | | | | | | | | | Analyzing the present & future of private financial markets | | Throughout the 2010s, as the private markets evolved and grew immensely, the expansion-stage ecosystem came into being. Analyzed at length across the Road to Next series throughout this year, the latest edition explores the present, near-to-medium-term and longer-term prospects of private financial markets, especially at the expansion stage.
Underpinned by a variety of PitchBook datasets, the report contextualizes capital overhang, dealmaking and emergent liquidity trends such as SPACs against the maturation and potential duration of private holding tenures. In addition, the report also features insights from Deloitte leaders as to evolving diligence needs and the rapprochement between private and public markets.
Read it now | | | | | | | | | | Some unicorn workers miss IPO boom as stock options go unexercised | |  | | Silicon Valley workers are often unable to cover costs to exercise pre-IPO stock options. (Frank Schulenburg/Creative Commons) | | | Even at Silicon Valley's hottest companies, not everybody's cashing in on the great IPO boom of 2020. An estimated $4.9 billion worth of pre-IPO shares have gone unexercised, often because employees don't have enough personal liquidity to cover the costs of converting the options, according to a new analysis.
The report by financial startup Secfi shines a light on an issue often lost to the feel-good narrative about tech employees being showered with riches in blockbuster public offerings. It's not always so simple, even as stock options remain a centerpiece of startups' recruitment and retention practices. | | | | | | | | | | What's on the menu for kitchentech | | The pandemic has hammered restaurants and spurred consumers toward more home cooking, but the food industry was already looking to emerging kitchen technologies to pare labor costs and boost efficiency: The global kitchentech market is expected to be worth $42.2 billion by 2026.
Our latest analyst note lifts the lid on the space, which ranges from smart appliances to commercial kitchen technology to food robots. Among the takeaways: - Demand for contactless solutions in the restaurant industry may provide a tailwind for investment in commercial kitchen automation
- Startups focused on smart kitchen appliances could also find a market with home cooks looking to make meals faster and easier
- Extra challenges in rolling out new kitchentech hardware versus software could limit the venture investor pool
| | | | | | | | | | Robinhood to pay $65M penalty in SEC settlement | |  | Robinhood co-founder Baiju Bhatt
(Steve Jennings/Getty Images) | | | Stock-trading app developer Robinhood has agreed to pay $65 million as part of a settlement with the Securities and Exchange Commission over claims that the company misled customers about how it makes money.
Robinhood did not admit or deny the SEC's allegations, which included charges that the company had misrepresented how a large portion of its revenue came from routing its customers' stock orders to principal trading firms. The agency claimed that Robinhood's no-fee trading promise obscured the higher prices the company charged to execute customers' orders, which allegedly resulted in users paying around $34.1 million more than they would have at competing stock brokers.
"The settlement relates to historical practices that do not reflect Robinhood today," Robinhood chief legal officer Dan Gallagher said in a statement.
Robinhood was also the subject of a complaint submitted by Massachusetts securities regulators earlier this week. The complaint said the company breached its fiduciary duty and manipulated inexperienced investors with game-like features.
The legal actions close a year of growing pains for Robinhood, which experienced platform outages in March amid pandemic-related stock market turmoil. The company's platform was also the target of a recent hack that is said to have affected nearly 2,000 customers.
Robinhood raised more than $1.2 billion across two rounds earlier this year and was valued at $11.7 billion in August. It is rumored to be pursuing an IPO that could occur early next year. | | | | | | | | | | TalkTalk to go private in $1.5B deal | |  | | (Busakorn Pongparnit/Getty Images) | | | UK broadband provider TalkTalk has agreed to a £1.1 billion (about $1.5 billion) takeover by existing shareholder Toscafund and PE firm Penta.
The deal comes at a time when TalkTalk is reeling from the impact of the coronavirus pandemic. Despite adding more than 187,000 net fiber customers this year, the company revealed a pre-tax loss of £4 million in the six months to Sept. 30, compared with a £1 million profit the year before. Revenue was down 6.6% to £740 million in the same period.
The 97-pence-per-share offer represents a 16.4% premium over the company's closing price on Oct. 7, the day before the bid was made public. Toscafund, which holds a 30% stake, reportedly approached TalkTalk last year with a 135-pence-per-share offer, which was rejected on the basis that it was too low.
TalkTalk is the UK's fourth-largest broadband provider, competing with BT, Sky and Virgin Media. In May, Virgin agreed to combine its operations with O2, which would create a £31.4 billion telecom giant. The deal is currently being investigated by the UK's Competition and Markets Authority. | | | | | | | | | | Where will your firm rank in PitchBook's Global League Tables? | | More than 25,000 firms coordinate with us in order to ensure the deals they accomplish appear in the PitchBook Platform. Where will your firm end up?
Reach out to connect@pitchbook.com to get your deals properly credited, so you may feature in our industry, region and deal type rankings. | | | | | | | | | | Private equity firms have responded to the pandemic with a spree of dividend recapitalizations, locking in their own returns while driving up debt levels for portfolio companies. [The Wall Street Journal]
We all have just one life to live. And sometimes, we probably all wonder: What if it had gone a little bit differently? [The New Yorker]
GM is in the midst of a $27 billion push toward electrification. The massive bet on a greener future begins with a battery-powered Hummer pickup truck. [Bloomberg] | | | | | | | | | | | Since yesterday, the PitchBook Platform added: | | 493 Deals | 1682 People | 447 Companies | 29 Funds | | | | | | | | | | | | | | | | | | | | 2014 Vintage Global Debt Funds | | | | | | | | | | | Behrman Capital unveils promotions | | | Behrman Capital has promoted Michael Rapport to partner, Calvert Thomas to principal and Kyle Grace to vice president. Rapport has worked at the firm since 2011, with a focus on the manufacturing and distribution sectors. Thomas joined Behrman in 2018, while Grace came aboard in 2017. The private equity firm is jointly based in San Francisco and New York. | | | | | | | | | | Discord valued at $7B with new round | | | Chat platform provider Discord has seen its valuation double to $7 billion following a Series H round, according to reports. Earlier this year, the company raised $100 million at a $3.5 billion valuation, according to a PitchBook estimate. In its newest round, Discord raised another $100 million led by Greenoaks Capital. Discord expects revenue this year to top $100 million, The Wall Street Journal reported. | | | | | | | | | | | | | | | Tiger Global leads $140M round for Oscar | | | Tiger Global has led a $140 million round for Oscar, which operates a health insurance platform and provides telemedicine services. The round's other participating investors include Dragoneer Investment Group, Baillie Gifford, Coatue and Founders Fund. The New York-based company, which raised $225 million earlier this year, was valued at $3.2 billion in 2018, according to a PitchBook estimate. An earlier Axios report indicated that Oscar could go public in 2021. | | | | | | | | Healthcare startup collects $58M Series B | | | IVP and Menlo Ventures have co-led a $58 million round for H1, the developer of a healthtech platform that enables physician collaboration, helps patients find doctors, and identifies the best physicians to drive clinical trials and launch new drugs. In April, the New York-based company raised $12.9 million at a $42.9 million valuation, according to PitchBook data. | | | | | | | | | Austin-based Aceable has raised $50 million in a round led by private equity firm HGGC. Founded in 2012, the company provides a mobile-first edtech platform offering driver's education and real estate certification courses. In 2018, Aceable raised $47 million at a $117.5 million valuation, according to PitchBook data. | | | | | | | | Home insurance provider snags $40M | | | Openly has raised a $40 million Series B led by Advance Venture Partners, with participation from existing investors including Gradient Ventures and Obvious Ventures. Founded in 2017, the Boston-based company is a provider of home insurance policies. Openly was valued at $45 million in June, according to PitchBook data. | | | | | | | | | | EQT to buy Storable in $2B SBO | | | EQT has agreed to acquire Storable, a provider of software for the self-storage industry, from Cove Hill Partners. The deal values the Austin-based company at around $2 billion, Bloomberg reported. Cove Hill created Storable in 2018 by acquiring and merging Sparefoot and SiteLink, two fellow providers of self-storage technology. | | | | | | | | Blackstone deal values ISN at $2B+ | | | Blackstone has made a minority investment in ISN, a Dallas-based provider of software for managing third-party contractors and suppliers, valuing the company at more than $2 billion. Funds for the investment came from Blackstone's growth arm, which launched in early 2019 under the leadership of longtime General Atlantic investor Jon Korngold. | | | | | | | | Bertram cuts in on Levine Leichtman in SBO | | | | | | | | | Saw Mill buys RND Automation | | | Saw Mill Capital has purchased RND Automation, a Florida-based provider of automated packaging and assembly services. The company uses robotics and machine vision to automate processes for companies in the life sciences, medical devices and consumer products sectors, among others. | | | | | | | | Morgan Stanley seals $150M online data deal | | | Morgan Stanley Expansion Capital has led a $150 million investment in The Lifetime Value Co., which owns a variety of online brands focused on gathering and analyzing data. Morgan Stanley's credit arm and its tactical value unit also took part in the deal, as did Roca Partners. The company's brands include home value-focused Ownerly.com, auto sales-focused Bumper.com, and PeopleSmart.com, which is aimed at sales professionals. | | | | | | | | Summit lands Syndigo stake | | | Summit Partners has made a growth equity investment in Syndigo, a creator of product information software used by manufacturers, retailers and distributors in a variety of industries. The Jordan Company, which has owned a majority stake in the Chicago-based company since 2018, participated in the new round alongside Summit. | | | | | | | | | | Coinbase files to go public | | | Cryptocurrency exchange operator Coinbase has filed confidentially with the SEC for an IPO. Coinbase was valued at over $8 billion in 2018, according to PitchBook data. The San Francisco-based company has raised over $500 million in prior funding from investors including Andreessen Horowitz, Tiger Global and Greylock Partners. | | | | | | | | BarkBox to go public in $1.6B SPAC merger | | | BarkBox, which offers a monthly subscription service of toys, treats and other goods for dogs, has agreed to merge with a SPAC in a deal that gives the New York-based company an enterprise value of $1.6 billion. Called Northern Star Acquisition, the SPAC is led by Joanna Coles, the former editor-in-chief of both Marie Claire and Cosmopolitan. The transaction includes a $200 million PIPE investment. BarkBox has received prior funding from Lerer Hippeau, Resolute Ventures and RRE Ventures. | | | | | | | | Novartis strikes $770M neuroscience deal | | | Cadent Therapeutics, a neuroscience biopharma company, has agreed to be acquired by Switzerland's Novartis in a deal that could be worth up to $770 million. Cadent was formed in 2017 through the merger of Luc Therapeutics and Ataxion Therapeutics. The company has received prior backing from Novartis, Cowen Healthcare Investments and Clal Biotechnology, among other investors. | | | | | | | | | | Gridiron closes its largest fund yet | | | Gridiron Capital has closed its fourth flagship private equity fund on a hard cap of $1.35 billion. Based in Connecticut, Gridiron is a middle-market firm that pursues majority investments in the consumer, industrial, B2B and B2C services sectors. The firm closed its predecessor fund on $850 million in 2016. | | | | | | | | | "We also expect the pandemic to cause a resurgence of carveouts and divestitures, especially from publicly traded companies looking to generate cash—although that hasn't yet materialized in 2020. 146 mid-market carveouts have been completed through Q3, putting 2020 on track for the slowest year since 2013. While these types of transactions tend to be more common above the middle market, there are other reasons for their infrequent occurrence this year."
Source: PitchBook's Q3 2020 US PE Middle Market Report | | | | | | | | | | | | | | | Who's in the newsletter today? | | People | | | | Investors | | | | Companies | | | | | | | | | |
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