Category Archives: WEEKLY SPIN

Powder puff

Buyout groups find themselves at a crossroads. Even though M&A deal volume is strong, deal value is falling.Purchase price multiples have fallen 20% from their 2021 peak. And as GPs consider where to put their record amount of dry powder to work, high interest rates mean that a greater frequency of smaller deals are being completed: causing a divergence between deal value and deal count. Year-to-date, the dollar value of M&A activity is down a third. Shopping around for cheaper transactions is likely to be a temporary fashion trend, as buyout partners come under increasing pressure from LPs to put more of their dry power to work. For now though, it seems bargains rather than trophy assets are the preferred option.

inspired by Pitchbook

Summit to Plummet

Europe’s venture capital market has been in somewhat of a freefall this year, with deal value 60% lower than the first half of 2022 and 34% lower than the second half of 2022, according to Pitchbook’s Q2 2023 European Venture Report.Small deals, up to EUR1 million in size, have effectively entered a cryogenic chamber, signaling bad news for companies searching for seed and pre-seed capital, as VC managers focus more on supporting existing investee companies. This has contributed to a slower pace of dealmaking, as the teeth of a higher interest-rate economy begin to bite. Exits too have all but dropped off a cliff, totaling a mere EUR3.5 billion for the first six months of the year. It is enough to give VC managers and their investors a dose of the blues.

inspired by Silicon Canals

Out of credit

Deal-making might be about to get a little harder for PE firms using Citigroup, with news that it is curbing its subscription credit facilities.Not ideal for those who use credit lines to do deals to avoid issuing capital calls to LPs. The bank has decided that PE funds that are not taking advantage of its wider range of products and services will have the credit tap turned off. Could this become a wider trend as US banks assess the profitability of PE funds? It might be a stretch to call this a credit crunch, but it could place some GPs in an awkward position if they wake up to find that their subscription has been canceled.

inspired by Yahoo Finance Australia

PE-arl of the Orient

All roads are leading to Asia Pacific, as mid-market PE firms seek to expand their LP base.Fund-of-fund investors such as Asia Heritage are joining forces with GP stakes investors including Bonaccord Capital to help some of its mid-market managers develop new relationships with Asian LPs. Could this be a feast in the East, or just a flash in the pan? Asian investors including UHNW individuals are looking to tap in to alternative investments in the West. Given that the region is home to more than 67,000 of them, it could well present a kingdom of riches for US firms to tap in to over the coming years. US managers will doubtless be hoping that it becomes the PE-arl of the Orient, as they expand their fundraising efforts.

inspired by Pitchbook

Lean. Green. PE machine.

Private equity is the most useful investment vehicle to achieve meaningful impact.. According to research by Pensions for Purpose, sponsored by Columbia Threadneedle Investments, 43% of those surveyed were allocating to impact funds in the PE space but 60% of those who currently do not, believe it is the best way to achieve positive impact. As such, there would seem to be a lot of spare horsepower to fire the PE engine over the coming months and years. PE managers who are thinking about adding impact funds to the stable of vehicles should consider that investors do not wish to compromise on performance. A solid risk/return profile was the second most cited reason by survey respondents (25%), underscoring the fact that pension funds do not believe impact investing should necessarily mean hitting the brakes on performance.

inspired by Investment & Pensions Europe (IPE)