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In today's Daily Pitch, you'll find: - Joining our Emerging Tech Research coverage is a new report on retail fintech—a sluggish sector in Q3 that's still showing opportunities.
- The global private markets are piping more money than ever into hydrogen-related companies.
- Chart of the Day: Private capital cash flows from our Global Private Markets Fundraising Report.
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| Retail fintech VC deals down 48%, but outlook isn't gloomy | | Retail fintech was a darling for VC investments during the COVID-19 pandemic, seeing unprecedented growth and expansion. Two years later, deal activity has declined amid macro headwinds, yet many investment opportunities remain.
In our inaugural Q3 2022 Retail Fintech Report, the newest addition to our Emerging Tech Research coverage, PitchBook analyst Rudy Yang looks at the current state of retail fintech. This report maps out segments and deal activity, along with targeting the developing areas where investments can be made. Key takeaways include: - VC deal values have declined almost 48% after a record 2021 but remain elevated compared to pre-2021 levels.
- Exit activity continues to be muted due to challenging market conditions, with VC exits down 57% year-over-year as of Q3 2022.
- Advances in underwriting technology, the rise of embedded finance and the continued proliferation of digital payments and banks continue to create key investment opportunities.
| | | | | | | | | Private investment in hydrogen breaks record | |  | | (rezoff/Shutterstock) | | | Private capital is pouring into startups and established companies tied up in the growing hydrogen economy at never-before-seen levels, PitchBook data shows.
VC and PE firms alike have deployed more capital into global companies making, moving or using hydrogen—or planning to do so—in 2022 than any prior year. And on the venture side, total deal count also broke a record this year.
Through most of 2022, PE firms spent $3.1 billion on hydrogen-related companies across 37 deals, while venture firms invested $2.6 billion in 192 startups. Since 2014, the number of annual VC hydrogen deals has more than tripled as PE deal count quadrupled. | | | | | | | |
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| Asset management industry spotlight: Valuation, dealmaking, & market trends | | Asset managers are currently navigating financial market volatility, inflation and economic uncertainty, and geopolitical tensions. As a result, asset management firms face challenges in delivering returns for their investors, resulting in tightening margins for the asset management companies.
At the same time, dealmaking innovation in the sector continues to evolve with a variety of M&A deals, PIPE transactions, and GP stakes investments. Similarly, more sophisticated valuation approaches are recommended for asset management firms to accurately capture the drivers of value. This report provides an overview of asset management firm valuations and covers the latest market trends and capital market transactions.
Download the report now | | | | | | | |
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| Global markets continue to recover amid uncertainty | | While some private market asset classes are performing in line with past trends, others have collapsed in the face of the staggering pace of federal funds rate hikes.
Leveraged loan and high-yield bond issuance for leveraged buyout activity remains strong, while bond issuance for refinancing and acquisition activity has hit once-in-a-decade lows. Entering 2023, a determinedly hawkish Fed is intent on reining in inflation despite the short-term consequences for Wall Street and Main Street.
Our latest Global Markets Snapshot breaks down one month of trends in the US inflationary environment as tracked by several macroeconomic indicators. It also addresses the pace of rate changes and the targeted terminal rate hinted at by senior Fed officials—and how these will impact LBO activity and leveraged loan and high-yield bond issuance heading into 2023. | | | | | | | | | 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.
| | | | | | | | | | Kanye West and Parler have agreed to end a deal for the rapper to purchase the social media platform. [The New York Times]
Stablecoins are used as anchors in the crypotocurrency system, but one such currency may be undermining that stability by lending, rather than selling, its coins to customers. [Wall Street Journal]
How the West's price cap on Russian oil could roil energy markets. [The Economist] | | | | | |
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| | Since yesterday, the PitchBook Platform added: | | 494 Deals | 1778 People | 577 Companies | 21 Funds | | | | | | |
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| 2014 Vintage Global Real Assets Funds | | | | | | |
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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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| Valor Ventures hires Lynne Laube as operating partner | | | | | | |
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| August Bioservices raises $65M | | | | | | | | Lumen lands $62M for weight loss tech | | | | | | | | | | Passwordless identification startup Hypr announced a $25 million Series C1 led by Advent International's global tech fund. | | | | | | | Web3 startup Fleek takes off with $25M | | | Fleek, which is creating a developer platform for Web3 protocols, has raised a $25 million Series A led by Polychain Capital. | | | | | | | | | Shield, which helps financial institutions track employee communications for compliance purposes, has raised $20 million in a Series B led by Macquarie Capital, TechCrunch reported. | | | | | | | | | | | | |
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| Don't miss our upcoming webinar | | Join us for a webinar discussing key components of the difficult market landscape, including tightening credit and liquidity conditions, slowing growth and sharp increases in short-term interest rates, and how these impact PE.
PitchBook analysts Zane Carmean and Andrew Akers will discuss how rising debt costs combined with continued pullback in financing availability will be a significant headwind moving forward. Key topics include: - The window for an economic soft landing has narrowed. Our quantitative recession model predicts that recession odds have risen sharply in recent months.
- While core inflation has slowed modestly in recent months, it has also broadened out into core services.
- Although the US is not currently in a recession, growth drivers such as consumer spending and nonresidential business investment have slowed.
Register now to secure your spot. | | | | | | | |
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| Blackstone to exit Vegas casinos JV in $5B deal | | | Blackstone has agreed to sell its stake in a joint venture that owns the MGM Grand Las Vegas and Mandalay Bay Resort to its JV partner, Vici Properties, in a deal valued at over $5 billion. The Blackstone Real Estate Investment Trust would receive $1.27 billion in cash in the deal. | | | | | | | HIG's Circle Graphics acquires Jondo | | | HIG Capital-backed Circle Graphics, which produces and sells products made from digital art, has acquired competitor Jondo in a move that expands Circle's consumer-facing division. Circle was acquired by HIG and mezzanine firm Onex Falcon in 2019. | | | | | | | Warburg to buy K2 Insurance from Lee Equity | | | | | | | | EnCap to back offshore wind services specialist | | | EnCap Investments has agreed to invest in Houston-based Bleutec Industries, which plans to build and operate vessels that can install offshore wind turbines. The company's management is investing alongside EnCap. | | | | | | | PE-backed Mercer Advisors picks up wealth manager | | | | | | |
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| Florida to divest $2B from BlackRock | | | The Florida Treasury has decided to divest $2 billion from assets managed by BlackRock, the state's CFO said, citing distrust in the asset manager's ability to deliver adequate returns amid greater attention on the firm's social impacts and ESG risk considerations. | | | | | | | NBA opens teams to institutional investors | | | The NBA's governing board has voted to allow institutional investors such as pension plans, endowments and sovereign wealth funds to acquire passive stakes in the league's teams. An average NBA team is worth $2.58 billion, according to the sports business site Sportico. | | | | | |
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"Based on conversations we've been having, the tone of those raising funds in Q4 2022 has turned extremely pessimistic as they recognize that the easy capital raises of recent years have come to an end."
Source: Q3 2022 Global Private Markets Fundraising Report | | | | | |
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