News: Fund performance's glimmer of hope

Thursday, August 3, 2023

Fund performance's glimmer of hope

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The Daily Pitch: VC, PE and M&A

August 3, 2023

The Daily Pitch is powered by PitchBook's industry-defining research and best-in-class data

In today's Daily Pitch, you'll find:

After a difficult 2022, fund performance is showing some signs of improvement

Investors are betting big on the startups supporting video game development

Private debt has largely defied a fundraising drought that dampened other strategies

Why are private market investors backing European football clubs?

European PE fund closes are taking longer as capital gravitates to established firms

Today's Top Stories

Fund performance shows signs of improvement after a rough 2022

Save for real estate and real assets, fund performance across the private markets was well below historical norms last year. Through Q4 2022 and into Q1 2023, five of the seven fund strategies PitchBook tracks generated a rolling one-year horizon IRR below 5%, a stark shift from 2021, when every one of the strategies posted results greater than 15%.

Our latest Global Fund Performance Report explores what's driving each asset class, explains why most strategies showed weakened performance, and outlines a glimmer of hope for valuations this year.

read the report

Who is leading the private debt fundraising race in 2023?

(Michael H/Getty Images)

Private debt's total capital raised increased 10% to $122 billion as of July 28, compared to the same period last year.

Established managers are in the lead when it comes to clinching large funds. The 20 largest private debt funds accounted for the bulk of the capital raised. HPS Investment Partners earned the top spot, wrapping up two private debt funds in Q2 with more than $19 billion combined.

A message from RBC Capital Markets

Innovation and growth: key ingredients to healthcare M&A

Despite a subdued start to 2023, M&A volumes in the US healthcare sector are beginning to stabilize. Compressed valuations, heightened boardroom CEO confidence across various sub-sectors, and the need to accelerate top-line growth and scale are all indicative of an upcoming wave of deal activity. What's next for healthcare? Listen to Strategic Alternatives, the RBC M&A podcast.

Inworld AI brings generative AI to gaming at $500M+ valuation

Game development is projected to grow by $100 billion within the next four years, and investors are betting big on what tools will support that growth, already pouring about $1 billion into the segment this year.

Inworld AI, whose latest round brings its valuation to over $500 million, is one of the latest upstarts hoping to bring generative AI to game development.

Europe sees bonanza of private market football deals

Over a third of European football clubs in the "Big Five" leagues have private capital backing, thanks to the region's plethora of dealmaking.

Last year saw €4.9 billion worth of deals for Europe's five largest football leagues, up from just €66.7 million in 2018. Financial distress caused by COVID-19 and the growing AUM of PE firms has increased deal appetite for football ownership, notably from US investors.

Our latest analyst note delves into the rationale behind the boom in European football dealmaking and its complex ownership structures.

read it now

European PE funds take longer to close as LPs narrow focus

(InnaVlasova/Getty Images)

The median time European PE funds are taking to reach a final close is growing as more capital gravitates toward large, well-established firms.

There's also clear evidence of LPs focusing on these mega-funds at the expense of smaller funds managed by emerging managers.

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VC Deals

Hong Kong-based Micro Connect has raised a $458 million Series C. The company, which offers a global exchange platform connecting institutional investors to small businesses, is now valued at $1.7 billion, Bloomberg reported.

CG Oncology, which develops therapeutics for patients with bladder cancer, has raised $105 million in a round led by Foresite Capital and TCGX.

Healthmap Solutions, a population health management company focused on kidney disease, has raised $100 million led by WindRose Health Investors.

Lightforce Orthodontics, which manufactures 3D-printed braces, has raised an $80 million Series D led by Ally Bridge Group, Transformation Capital and CareCapital.

Clean power company Equilibrium Energy has emerged from stealth with $33 million from investors including Breakthrough Energy Ventures, Global Founders Capital and NJP Ventures.

German industrial biotech startup Bind-X has secured €10 million in a Series B from investors including HG Ventures, Saxovent and K&K 1.

Berlin's Likeminded, which operates a mental health platform for corporate employees, has secured €5.9 million from investors including Heartcore Capital and Holtzbrinck Digital.

PE Deals

As Fujitsu looks to sell its 50% controlling stake in Shinko Electric, Apollo Global Management, Bain Capital and KKR are the short-listed bidders, Bloomberg reported. Japan Investment Corp. could team up with Dai Nippon Printing or Mitsui Chemicals for a separate bid.

Lion Equity Partners has completed its acquisition of Country Life, a US health supplements manufacturer, from Kikkoman Corporation.

Bowmark Capital has agreed to sell its stake in UK-based Lawyers on Demand to Consilio, a legal technology firm.

Snaidero Group, an Italian manufacturer of luxury kitchens, will receive more than €15 million in growth capital from majority shareholder DeA Capital and minority shareholder AMCO.

Wavecrest Growth Partners and MassMutual Ventures have led a growth financing round for Rapid Applications Group, which provides software for the heavy construction equipment services industry.

MGG Investment Group has acquired Spring Mountain Vineyard in California's Napa Valley and made an additional capital investment in the 845-acre wine estate.

KKR has agreed to acquire a majority stake in LEAP India, a VC-backed pallet pooling platform that serves customers in the ecommerce, consumer goods and automotive industries, among others.

Exit & IPOs

SoftBank-backed semiconductor giant Arm is targeting a September IPO at a valuation up to $70 billion, Bloomberg reported.

Storage startup Clutter is selling itself to Iron Mountain at a steep discount, having depleted its cash runway, The Information reported.

Fundraising

Brookfield Asset Management and Sequoia Heritage are each investing $250 million in a new firm, Pinegrove Capital Partners, that will aim to raise over $2 billion for a secondaries fund, the Financial Times reported.

Kimmeridge has held the final close of Kimmeridge Fund VI on more than $1 billion, 25% larger than its 2019 predecessor. The fund targets investments in upstream oil and gas development.

SK Capital Partners has closed its Catalyst Fund II on $800 million, with the firm investing an additional $50 million above the lower-middle-market buyout fund's $750 million hard cap.

Golding Capital Partners has raised €172 million for Golding Secondaries 2022. The fund targets investments in shares of PE funds managed by European GPs.