S&P Global Market Intelligence offers our top picks of global private equity news stories and more published throughout the week.
As private equity fundraising flags, investor commitments are increasingly flowing to another class of alternative asset: private credit, also known as private debt. Even so, fundraising in one corner of the private credit world has been curiously quiet.
Real estate debt funds are pacing for their lowest annual fundraising total in at least a decade, judging from the $7.68 billion committed by investors in the 24 fund closings Preqin recorded between Jan. 1 and July 24. The slow pace of fundraising is, on the surface, surprising, since banks' new caution around lending to the troubled commercial real estate (CRE) market — combined with a looming, multi-trillion-dollar wave of CRE loan maturities — is opening a massive opportunity for real estate debt funds to deploy capital.
At least part of the explanation is that institutional investors are still trying to rebalance their investment portfolios after stock market declines in 2022 shrank the value of their public holdings relative to their alternative investments, a scenario known as the denominator effect that has hampered those investors' ability to make new fund commitments.
Also, CRE transaction volume is down significantly in 2023. This means there just has not been much need for real estate debt funds, loaded with $71 billion in dry powder, to call previous commitments from investors. That is not necessarily a bad thing, said Elizabeth Bell, a principal on the Hamilton Lane real assets team.
"We're OK with our managers being patient right now. We don't want them deploying capital at values that just don't make sense," Bell said.
Read more about what some are describing as a once-in-a-decade opportunity for real estate debt funds.
CHART OF THE WEEK: PE investment in movies and entertainment plummets
⮞ The value of private equity and venture capital investment in movies and entertainment companies globally in 2023 is on track for its lowest annual total since at least 2019, according to S&P Global Market Intelligence data.
⮞ With just $1.48 billion of private equity investments in movies and entertainment companies announced between Jan. 1 and Aug. 8, the industry is lagging far behind the pace set in 2022, when investments in the sector hit a full-year total of $10.27 billion.
⮞ Deal value in the second quarter fell 83.8% year over year to $1.02 billion.
TOP DEALS AND FUNDRAISING
– Funds managed by Apollo Global Management Inc. acquired a majority stake in Composite Advanced Technologies, a manufacturer of transportation and storage solutions for hydrogen and renewable and compressed natural gas.
– Francisco Partners Management LP signed a deal to buy the assets of The Weather Co. LLC from International Business Machines Corp. Upon deal closing, the weather data provider will become a stand-alone company.
– Blackstone Inc. pulled in a record $5.2 billion at the final close of Blackstone Tactical Opportunities Fund IV, its fourth flagship commingled fund. The vehicle surpassed its predecessor fund, Blackstone Tactical Opportunities Fund III LP (BTO III), which raised $4.2 billion.
– Hayfin Capital Management LLP has secured capital commitments totaling more than the €6 billion target for Hayfin Direct Lending Fund IV. The fundraising included the commingled Fund IV, which held a final close, and related investment vehicles.
MIDDLE-MARKET HIGHLIGHTS
– Shareholders of Stellar Value Chain Solutions Pvt. Ltd., including an affiliate of Warburg Pincus LLC, agreed to sell a 96% stake in the India-based logistics company to Ceva Logistics.
– Vesey Street Capital Partners LLC sold its stake in QualityMetric Inc. LLC, a healthcare services business focused on patient-reported outcomes data.
– Trive Capital Management LLC added Hypergiant LLC, an AI-based decision-making software platform for the defense, space and critical infrastructure markets, to its portfolio.
– General Atlantic Service Co. LP made a strategic investment in Flint Group US LLC, which provides heating, ventilation, air conditioning, plumbing and electrical services to residential customers.
FOCUS ON: ELECTRIC VEHICLE CHARGING
– LMK Ventures AB and Quinary Investment AB agreed to sell Sweden-based Charge Amps AB (publ) to NaaS Technology Inc. The transaction values the electric vehicle charging solutions provider at about 724 million Swedish kronor in equity.
– Siemens AG agreed to purchase Dutch EV charging company Heliox BV from Waterland Private Equity Investments BV and an entity owned by a group of employees and individual shareholders.
For further private equity deals, read our latest In Play report, which looks at potential private equity-backed M&A, including rumored transactions, each week.