Monitor
Private Capital Monitor 08/12
08th December 2023
WORTH A READ
United States
Senators from Rhode Island and Iowa have launched an investigation into private equity’s involvement in health care, CNBC writes. The bipartisan effort will examine documents and information from two hospital systems to assess the profits generated by PE ownership arrangements as well as impacts on patients and caregivers.
PE and venture capital funds are beginning to look increasingly alike, as VC firms are enacting continuation fund-type structures to allow investors to roll over or extend the terms of investments that have not yet provided the returns they seek. Achieving returns for VC funds has become difficult as the post-pandemic tech slump has kept many startups from going public.
Even in a tough year for capital raising, most limited partners remain optimistic about PE’s performance, according to PitchBook data. PE fundraising comprised nearly half of all private capital raised as of September, giving it a larger portion of the total private capital pie than last year.
Bloomberg Opinion Columnist Paul J. Davies discusses why he doesn’t believe private credit is leading to the financial crisis some are predicting. He highlights that private credit being backed by long-term-committed institutional investors will prevent a sudden ‘run on the banks’ style demand for cash withdrawals. Also, the fact private credit managers also have the advantage of setting prices and keeping the loans themselves, as opposed to relying on a stable bond market, will reduce the chances of any failures becoming systemic.
Europe
FT Adviser reveals the top performing investment company sector in 2023 was private equity, according to data from the Association of Investment Companies. Despite macro headwinds, private equity produced a return of 43% in the 11 months to the end of November 2023, compared with the average investment company which returned 3% over the same period.
Citywire explores the potential of listed private equity funds beyond the pure financial engineering abilities for which they are sometimes only credited. NB Private Equity is cited as a specific example, standing out with an impressive annualised investment return of 14.8% over the past decade. The article highlights the importance of funds like this in light of the UK government encouraging pension funds to support unlisted companies.
The Times questions the state of the London Stock Exchange, highlighting a lack of initial public offerings and growing number of delistings due to private equity take-privates , and suggesting it doesn’t have the energy it once did. Alistair Osborne suggests LSE CEO David Schwimmer’s focus on data and analytics may not be aligned with the exchange’s role, and a change in ownership could address market challenges.
WALL OF MONEY
Brookfield raises $28bn for largest infra fund to date
With $30 billion allotted for the strategy, Brookfield Infrastructure Fund V has allocated $28 billion for the fund itself and $2 billion for associated co-investment vehicles. The fund has already invested around 40% of its capital across six investments so far, deploying into sectors like renewables, transport, data centres, and telecom towers.
RJR Capital targets $2bn for Asian private credit
The Singapore-based firm has already received $500 million from North American pension funds ahead of its launch in January 2024. The fund will invest in businesses in Southeast Asia, India and Australia.
Star Mountain closes fourth direct lending fund at $1.2bn
Value-Added Direct Lending Fund IV closed $750m above its LP capital target and will provide strategic financing to businesses seeking organic and inorganic growth.
Revaia Growth II first institutional close at €150m
Just after marking its 5th anniversary, Revaia reached the initial institutional close of its second fund, Revaia Growth II, securing €150m. With investments already placed in Mews, Coralogix, and Kaiko, the firm plans to invest in 12 more companies at Series B rounds and beyond with this fund.
DEAL CHART
| Acquisition Target | Buyer | Seller | Value | Date | Region | Sector |
| Focus Telecom | MCI Group | – | €15.8m | 7/Dec | Poland | Telecoms |
| Cerevel Therapeutics Holdings | AbbVie Inc | – | $8.7bn | 7/Dec | United States | Biotech |
| Ten Entertainment | Trive Capital | – | – | 7/Dec | UK | Leisure |
| Samskip | Eurazeo | – | – | 7/Dec | Netherlands | Transportation solutions |
| Connexta | Frenman Captial | Aurelius | – | 6/Dec | Germany | IT services |
| Power Grid Components | Blackstone | Shorehill Capital | – | 6/Dec | United States | Manufacturing |
| Sogelink | CVC | Co-invest with Keensight | – | 5/Dec | France | Software |
| Valant | Resurgens Technology Partners | Gemspring Capital | – | 5/Dec | United States | Software |
| Sanborn | Oriens | Genesis Capital | – | 5/Dec | Czech Republic | Manufacturing |
| Kooi European Mobile Security Solutions B.V. | IK Partners, along with the founder Pieter Kooi and the management team | Bencis Capital | – | 4/Dec | Netherlands | Security systems |
| Fera Science | Bridgepoint | Capita | – | 4/Dec | UK | Science solutions |
| BearCom | Siris Capital Group | Bertram Capital | – | 2/Dec | United States | Telecoms |
MEDIA OF THE WEEK
Family-owned businesses could be an investing opportunity in 2024, says Blackstone’s Joseph Baratta.
MOVERS AND SHAKERS
- Adams Street Partners has hired Ex-Goldman Sachs global operations COO Michael Kurlander as its new partner and chief financial officer.
- AllianceBernstein has appointed Dupe Adeyemo and Sara Casey to run its new NAV lending strategy.
HORSE’S MOUTH
“This year’s top-performing sectors reflect the market and economic conditions in 2023. It’s important to remember that investment is about the long term. Rather than focusing on today’s winners, it’s important to build a balanced portfolio of investments which suits your needs.” – Annabel Brodie-Smith, AIC communications director.
“It’s a good time for this kind of structure [continuation funds]. During the next year, if the IPO market doesn’t function and M&A is light, the only way for VC firms to [distribute funds back to investors] is secondaries.” – Hans Swildens, founder of VC firm Industry Ventures.
“Dare to begin! He who postpones the hour of living rightly is like the rustic who waits for the river to run out before he crosses.” – Horace, the leading Roman poet during the time of Augustus, born on this day in 65 BC.
