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In today's Daily Pitch, you'll find: - Our latest analyst note examines the rise of GP-led secondaries as investors search for liquidity.
- US PE firms maintained a healthy dealmaking tempo in Q1—even in less than favorable market conditions.
- Blackstone execs discuss a historic opportunity for growth in private credit in the firm's latest earnings call.
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| As exit window shrinks, secondary market grows in size—and complexity | | The volume of secondary transactions per year has nearly doubled since 2020—showcasing a growing market for manager-led deals and more individualized liquidity options. Allocators, facing a depressed exit environment and subsequent drop in capital distributions, are seeking refuge in secondaries.
At a high level, there are two types of secondary transactions: GP-led and LP-led. The former have gobbled up a significant portion of business in recent years, growing to become at least half of the total secondary transaction volume. Our latest analyst note lays out the key differences between these types of deals. | | | | | | | | | Charts: PE firms perform financial feats | |  | | (Chloe Ladwig/PitchBook News) | | | For Q1 2023, US private equity firms inked more than 2,000 deals with a combined worth of $261 billion, maintaining a healthy pace of dealmaking even as they grappled with headwinds from banking turmoil, tightening credit conditions and a challenging fundraising market.
PE firms and their portfolio companies are either pursuing deals at a smaller size or looking at untraditional capital sources to manage the shortage of liquidity in the market. | | | | | | | |
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| A message from SS&C Intralinks | | |
| North American financial services M&A: dealmaking trends amid a banking crisis | | High-profile bank failures dominated headlines in early 2023, and the ripple effects continue to play out in the North American financial services industry. SS&C Intralinks' Financial Services M&A in 2023 report breaks down dealmaking trends in this shifting environment. Key takeaways include: - Deal value reached a record high of $261.1 billion in 2022, bolstered by public market turbulence as companies sought alternative exit paths.
- Capital flight from small and regional banks will contribute to further industry consolidation as big banks are viewed as more secure.
- Strategic transactions took up a greater share of total deal value compared to buyouts and LBOs. The latter category has been more severely impacted by rising interest rates due to the leverage involved.
Read the report | | | | | | | |
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| Blackstone sees a 'golden moment' in private credit after bank failures | |  | | (Casimiro PT/Shutterstock) | | | Blackstone foresees historic opportunities in private credit in the aftermath of the banking collapse earlier this year. In its Q1 2023 earnings call yesterday, the asset manager reaffirmed its position as a provider of private credit products and noted expectations about anticipated sustained growth in the asset class.
It's a "golden moment" for private credit solutions, Blackstone President and COO Jonathan Gray said on the call. | | | | | | | | | KKR's equity at risk in Envision Healthcare debt restructuring talks | |  | | (rafapress/Shutterstock) | | | Defaults are ticking up across the corporate world, and private equity-backed companies are holding much of the riskiest debt.
The debt restructuring talks for KKR's Envision Healthcare spotlight a primary risk for PE backers, whose equity may be diluted or wiped out in a potential restructuring process. The physician staffing company reportedly failed to timely disclose its quarterly financials and make an interest payment. | | | | | | | | | Opportunity funds fall from favor as VCs go back to basics | |  | | (Drew Sanders/PitchBook News) | | | A common refrain of the recent VC boom was that firms needed more capital to back their star portfolio companies, fearing the loss of seemingly limitless upside.
But like other excesses of the bull market, specialty funds used to back these best-in-class startups are on the decline. Late-stage investing and IPOs have dropped, and early-stage investors suddenly have found that fewer of their portfolio companies are on a path to receive large valuation step-ups.
The result is fewer opportunities for opportunity funds. | | | | | | | | | The venture debt hole left by SVB's collapse | | For lenders, Silicon Valley Bank's collapse has blown open a huge opportunity to take up more market share of the venture debt that the bank had made its modus operandi. But the question remains on whether equity investment may simply fill the void in early-stage lending.
Those are a few of our analysts' takeaways from the recent Venture Debt Conference in New York. The prevailing sentiment from panelists was that demand for venture debt is on the up and up. Not only does the ecosystem need lenders with high-level expertise and deep industry insights, but on the other side of the table, the selection bar for borrowers has also risen significantly. | | | | | | | | | | Cheap valuations and a stricter rulebook point toward a coming wave of bank mergers in the US. [The Economist]
UK pension funds push back against a lawmaker's idea to require investment in startups and other risky strategies. [Financial Times]
The rebirth of software-as-a-service. [Harvard Business Review] | | | | | |
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| | Since yesterday, the PitchBook Platform added: | | 437 Deals | 2486 People | 626 Companies | 24 Funds | | | | | | |
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The Daily Benchmark:
2015 Vintage Global Funds-of-Funds | | | | | | |
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CoreWeave, a cloud data provider, has raised a $221 million Series B led by Magnetar Capital and joined by Nvidia.
Biotech startup Abdera Therapeutics has raised a $142 million combined Series A and B. The first round was co-led by Versant Ventures and Amplitude Ventures, while the Series B was led by VenBio Partners.
Ransomware resilience startup Halcyon has raised a $50 million Series B led by SYN Ventures.
Memora Health, which offers a care management platform, has secured a $30 million investment led by General Catalyst with backing from Northwell Holdings, Andreessen Horowitz and Frist Cressey Ventures.
Online background check and identity verification startup Certn has raised a $30 million Series B led by Export Development Canada.
Food brand KoRo has raised €20 million in a Series B extension. Investors included HV Capital, SevenVentures and Haub Legacy Ventures.
Kate, a French maker of lightweight electric vehicles, has secured €7 million from angel investors.
Skarlett, a financial management platform for people over 60, has raised €4 million from investors including Alven, Raise for Good and Motier Ventures, Tech Funding News reported. | | | | | |
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| Don't miss our upcoming webinar | | The war in Ukraine, skyrocketing inflation and overall financial market volatility resulted in a rocky year for the European leveraged-finance primary markets in 2022. Loan volume plummeted to a 10-year low, and new high-yield bond issuance registered its lowest annual tally since the global financial crisis of 2007 to 2009.
In our upcoming webinar, LCD analysts will explore what lies ahead for leveraged financing trends in 2023. Key topics include: - What specific refinancing risks loan and bond-funded companies face.
- How the cost of capital in the loan, bond and direct lending markets is changing.
- How recent market volatility in the banking sector is impacting corporate financing and PE activity.
Register now to secure your spot. | | | | | | | |
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BC Partners-backed telecoms company United Group has agreed to sell TowerCo, its mobile tower infrastructure division in Bulgaria, Croatia and Slovenia, to Tawal for €1.22 billion.
KKR-backed Chinese alcoholic drink company ZJLD has raised 5.3 billion Hong Kong dollars (around $675 million) in an IPO, Bloomberg reported. It is the largest listing on the Hong Kong exchange so far this year, according to the report.
Oldewald plans to sell Langer & Laumann, a German smart-door maker, Unquote reported. | | | | | |
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O2 Investment Partners has closed its fourth flagship PE fund on $445 million.
Kindred Capital has closed its third fund on $130 million. The vehicle will focus on pre-seed and seed-stage investments in Europe and Israel. | | | | | |
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| Tiger Global has recorded a 20% loss on its $12.7 billion venture fund, The Information reported. The firm has written down its investments in companies including OpenSea, FTX and Helium, according to the report. | | | | | |
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| In an investigation, the UK's competition watchdog has found that Australian hearing device-maker Cochlear's planned acquisition of peer Oticon Medical, a division of Demant, could reduce competition. The deal is worth 850 million Danish kroner (about $125 million). | | | | | |
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