Tuesday, March 30, 2021

Exploring a frothy buyouts market

Carlyle bets $2.3B+ on private air travel; Brex rival Ramp hits $1.6B valuation; Vista strikes pact with adtech specialist; Cerberus pulls in $2.8B
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March 30, 2021
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Today's Top Stories
Tracking a frothy buyouts market
(Paper Boat Creative/Getty Images)
For the first time in over a decade, the US and Europe are seeing a significant gulf in buyout multiples. In a new research note, PitchBook analysts explore what's driving the valuation differentials, which have big consequences for GP returns across the private equity industry. Key takeaways include:
  • US buyout prices during the pandemic have surged to record highs while Europe's declined, a sign of each market's comparative resilience.

  • A record percentage of US deals priced between 15 times and 19.9 times, but European prices are expected to rise over the next 12 months.
  • Buyout valuations in Europe's biggest markets have come closer in line with each other, as the UK's buyout multiples dropped while those in France and Germany increased.
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Deliveroo cuts IPO range amid investor concerns
(Jack Taylor/Getty Images)
Deliveroo will price its upcoming IPO toward the bottom of its intended price range, blaming volatile market conditions.
  • The news comes at a time when many high-profile investors are stepping away from the offering, citing concerns over how workers are paid and the planned dual-class share structure.

  • A number of the UK's largest investors, including Legal & General Investment Management, Aviva Investors, Aberdeen Asset Management and M&G, said that they will not participate in the offering, the Financial Times reported.

  • Gig worker compensation has been under greater scrutiny since the UK's Supreme Court ruled that Uber drivers must be treated as workers rather than as self-employed individuals. A study by the Bureau of Investigative Journalism found that, on an hourly basis, one in three Deliveroo riders earned less than the national minimum wage.
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A message from Bridge Bank
Austin's VC ecosystem tops $2 billion in value for third year running
Although volume dipped 10.5% year-over-year in 2020, the Austin VC ecosystem still secured a record $2.3 billion in aggregate value thanks in no small part to its resilient enterprise tech sector.

In this installment of Bridge Bank's Markets to Watch series, the key top-level trends that defined VC dealmaking in Austin last year are situated within the developments in fundraising activity and financing events that took shape over the past decade. Additionally, the report contains analysis of Austin's banner year for exit value creation.

Read the report
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Carlyle makes $2.3B+ bet on private air travel
The Carlyle Group has agreed to take Fly Leasing private after a year in which demand for air travel took a hit.
(Justin Sullivan/Getty Images)
The Carlyle Group has tapped its aviation investing division to buy a struggling aircraft financier, marking the latest example of an investor betting that air travel will bounce back in 2021.
  • The firm has agreed to acquire Fly Leasing in a deal that values the aircraft leasing company at more than $2.3 billion, including debt. Carlyle paid $17.05 per share in cash for the Ireland-based company, marking a roughly 29% premium to the company's Friday closing price and a 43% premium to its average share price over the past 30 trading days.

  • Funds for the investment will come via Carlyle Aviation Partners, which has grown to more than $6 billion in assets under management since Carlyle launched the unit in 2002. The firm raised around $900 million for the unit's latest flagship fund, according to a Buyouts report.

  • The deal caps an active few weeks for aircraft deals. Earlier this month, General Electric sold its aircraft leasing business to rival AerCap for roughly $30 billion.

  • Of the latest deal, Fly Leasing CEO Colm Barrington said in a statement: "This transaction represents strong value for Fly shareholders at a time when airlines are facing an extremely difficult environment and smaller aircraft lessors are disadvantaged in the debt markets."
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Recommended Reads
Complaints about working conditions at investment banks are raising some questions about the sustainability of the industry's profit surge. [The Wall Street Journal]

An overwhelming demand for therapists has created a growing field of companies that promise mental-health care via smartphone. But are they promising a service they can't possibly provide? [The Cut]

Remote work is here to stay, and Manhattan may never be the same. [The New York Times]
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Quick Takes
  The Daily Benchmark  
  2018 Vintage Global Funds-of-Funds  
  VC Deals  
  Brex rival Ramp's valuation rises to $1.6B  
  Cityblock Health collects $192M  
  Crossover Health banks $168M Series D  
  Qihan secures new funding  
  Substack deal sets sights on $650M valuation  
  PE Deals  
  Shore Capital reveals IPC investment  
  Odyssey partners with insurance alliance  
  Vista strikes pact with adtech specialist  
  Exits & IPOs  
  VC-backed Cazoo to go public in $7B SPAC deal  
  SomaLogic to go public in SPAC deal  
  Fundraising  
  BBG Ventures announces $50M fund  
  Cerberus pulls in $2.8B for fifth real estate-focused fund  
 
 
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2018 Vintage Global Funds-of-Funds
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VC Deals
Brex rival Ramp's valuation rises to $1.6B
Fintech startup Ramp, a Brex competitor that provides corporate credit cards and a spend management platform, is close to wrapping up a pair of funding rounds, one of which would value the company at $1.6 billion, as first reported by The Information. The deals reportedly include a $65 million round led by D1 Capital Partners and a second $50 million funding led by payments giant Stripe, which is also co-investing in the other round.
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Cityblock Health collects $192M
Cityblock Health, a healthcare provider for Medicaid and lower-income Medicare beneficiaries, has raised $192 million in a Series C extension led by new investor Tiger Global, with support from existing backers Kinnevik, Maverick Ventures and Redpoint Ventures. The company was valued at $1.28 billion in December, according to PitchBook data. Cityblock currently operates across New York, Connecticut, Massachusetts and Washington, DC.
Additional Investors:
General Catalyst, Echo Health Ventures, 8VC, Thrive Capital, Wellington Management, Imprint Capital Advisors
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Crossover Health banks $168M Series D
Crossover Health has raised $168 million in a round led by Deerfield Management, with participation from investors including Perceptive Advisors, OrbiMed Advisors and Foresite Capital. The company helps self-insured employers manage employees' health plans, including primary care and mental health services. Crossover Health was valued at $184 million in 2016, according to PitchBook data.
Select Additional Investors:
Avidity Partners, Irving Investors
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Qihan secures new funding
Qihan Biotechnology has added $67 million to its Series A round. Investors including Lilly Asia Ventures, Matrix Partners China, Sequoia and CMB International supported the funding. Based in Hangzhou, China, the company is using genome editing technology to develop cell therapies and organs for transplantation.
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Substack deal sets sights on $650M valuation
Substack is reportedly seeking to raise $65 million in a venture capital deal that would value the newsletter-publishing platform at around $650 million. The company was valued at just over $48 million in a deal in July 2019, according to PitchBook data. Axios reported the new round is being led by existing investor Andreessen Horowitz.
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PE Deals
Shore Capital reveals IPC investment
Shore Capital Partners has announced an investment in Innovative Packaging Company, a Vancouver, Wash.-based provider of custom packaging solutions. Founded in 2012, IPC specializes in packaging procurement, supply chain management, warehousing and more. Based in Chicago, Shore Capital is a PE firm that typically invests in the healthcare, food and beverage, and business services industries.
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Odyssey partners with insurance alliance
Odyssey Investment Partners has acquired Strategic Insurance Agency Alliance, a Hampton, N.H.-based association of independent insurance agencies. SIAA chairman and founder Jim Masiello will step away from his roles at the company and Matt Masiello will continue as SIAA's CEO. Odyssey is a middle-market investor that targets companies in North America.
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Vista strikes pact with adtech specialist
Vista Equity Partners has acquired a majority stake in TripleLift, a provider of media advertising products, in a deal reportedly worth some $1.4 billion. TripleLift CEO Eric Berry will retain his role and remain on the company's board of directors. The company previously received around $16.5 million in venture funding, with Edison Partners most recently leading a $10.5 million Series B in 2015.
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Exits & IPOs
VC-backed Cazoo to go public in $7B SPAC deal
UK-based online used car retailer Cazoo has agreed to go public on the NYSE by merging with blank-check company Ajax I in a deal worth $7 billion. The deal will raise around $1.6 billion in proceeds for the company, including $805 million cash in trust and an $800 million PIPE led by Ajax sponsors and existing backer D1 Capital Partners. Cazoo has previously been backed by investors such as General Catalyst and BlackRock.
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SomaLogic to go public in SPAC deal
Biotech specialist SomaLogic plans to combine with blank-check company CM Life Sciences II in a deal that gives it a pre-money valuation of about $1.23 billion. The Boulder, Colo.-based business expects to receive $651 million from the deal, including a $375 million PIPE round from Casdin Capital, Corvex Management, Janus Henderson, SoftBank and others. SomaLogic's proteomics technology is used by other biotech companies for drug discovery.
Additional Investors:
ARK Investment Management, Morgan Stanley, Farallon Capital Management, Illumina, Novartis, Perceptive Advisors, T. Rowe Price
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Fundraising
BBG Ventures announces $50M fund
New York-based BBG Ventures has raised $50 million for its latest namesake vehicle, which will be used to lead seed and pre-seed rounds for consumer startups addressing health, climate-friendly products, education and overlooked communities. The firm focuses on backing female-led startups, and a third of its portfolio companies have a Black or Latinx founder.
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View 73 investments »
 
Cerberus pulls in $2.8B for fifth real estate-focused fund
Cerberus Capital Management has closed its fifth institutional real estate fund on $2.8 billion, surpassing an initial target of $2 billion. The strategy will be used to invest in direct assets, real estate companies, real estate-related debt and entities with significant real estate exposure. The New York-based PE firm manages around $26 billion in real estate-related assets across US, Europe, Asia, South America and Australia. Cerberus raised $1.8 billion for its fourth fund in the series in 2017.
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Chart of the Day
Source: PitchBook's H2 2020 Global Real Estate Report
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