S&P Global Market Intelligence offers our top picks of global private equity (PE) news stories and more published throughout the week.
It is a new year, and private equity trends that defined the industry in 2023 — slow fundraising, elevated interest rates, a macroeconomic outlook clouded by conflict and geopolitical tension — are expected to persist in 2024.
Exits appeared to be on the rebound in 2023 after falling sharply the year prior, a shift that bodes well for fundraising. But as of November, the number of entries were tracking for their lowest annual total since at least 2019, and the tough deal environment will not disappear with the flip of a calendar page even though $2.59 trillion in record dry powder is waiting to be invested.
Last year revealed that private equity operated in a distinctly different environment from the boom period, fueled by cheap debt that preceded it, and a decade-plus stretch that began in the wake of the global financial crisis and culminated with record annual deal totals in 2021.
Advisers to the industry predict the firms that excel in 2024 will be those that most quickly adapt to the new normal. Both Dechert and PwC, in their 2024 private equity outlook reports, suggested that creative deal structures and a relentless focus on value creation in PE portfolios are critical in the year ahead.
Review the most-read private equity stories of 2023.
CHART OF THE WEEK: Monitoring US public sector risk
⮞ The consumer discretionary sector led all other sectors on average short interest over shares outstanding on US exchanges in the fourth quarter of 2023, according to S&P Global Market Intelligence data, signaling bearish sentiment among investors and alerting private equity investors to a level of risk in the sector that could pull down valuations and create attractive entry points.
⮞ Corporate guidance issued in the fourth quarter also pointed to risk in the consumer discretionary sector, with updated guidance in the quarter just as likely to lower performance expectations as raise them.
⮞ A third measure of risk — probability of default — pointed to a different sector in the fourth quarter: healthcare, the same US sector that led all others in private equity portfolio company bankruptcies in the first half of 2023.
TOP DEALS AND FUNDRAISING
– KKR & Co. Inc. completed the acquisition of the remaining 37% stake it does not own in Global Atlantic Financial Group. The private equity giant bought a majority stake in the insurance company in 2021.
– Banner Ridge Partners LP raised $2.15 billion in total commitments at the close of its oversubscribed Banner Ridge Secondary Fund V.
– Ardian and renewable energy company Solarpack Corporacion Tecnologica SA dissolved their solar joint venture. Ardian now fully owns three solar plants in northern Chile and one solar plant in southern Peru.
MIDDLE-MARKET HIGHLIGHTS
– Firelight Capital Partners acquired Fromm International Inc., a company in the beauty industry, from the Simon-Johnson family. Terms of the deal were not disclosed.
– Avathon Capital sold early childhood education provider Big Blue Marble Academy LLC to Leeds Equity Advisors Inc. Terms of the transaction were not disclosed.
– Renovus Capital Partners invested in Behavioral Framework LLC, a provider of applied behavior analysis therapy.
FOCUS ON: BIOTECHNOLOGY
– Immunotherapy company ImmunityBio Inc. secured up to $320 million in royalty financing and equity investment from Oberland Capital Management LLC.
– Remix Therapeutics Inc. raised $60 million in a financing round led by The Column Group Management LP.
– Radionetics Oncology Inc. secured $52.5 million in a series A round led by Frazier Life Sciences Management LP, 5AM Venture Management LLC and DCVC's DCVC Bio LP fund.
For more private equity deals, read our latest "In Play" report, which looks at potential private equity-backed M&A, including rumored transactions, each week.
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S&P Global Market Intelligence has launched its seventh annual private equity and venture capital outlook survey to gauge private markets sentiment in 2024. Take the survey here.