S&P Global Market Intelligence offers our top picks of global private equity news stories and more published throughout the week.
As anticipated, private equity deals got off to a slow start in 2023. Higher interest rates, tighter bank lending standards and uncertainty around the path of the global economy all factor in the slowdown.
Global private equity deal value in the first quarter totaled just $122.81 billion, down by nearly half from the first three months of 2022. Deal volume also slid dramatically in the first quarter, declining nearly 43% from a year earlier.
Economic volatility, however, cuts both ways. Even as it slows deal flow, it should also shake loose new investment opportunities for private equity funds, particularly in sectors where falling valuations are creating bargain entry points.
That was part of the reason S&P Global Market Intelligence launched a quarterly sector risk analysis last year, to see if it would offer clues to targeted sectors. That same risk analysis also highlights which private equity bets will likely go bad. Two sectors that have consistently ranked high on Market Intelligence's risk analysis — healthcare and consumer discretionary — are the same sectors with the most private equity portfolio company bankruptcies since 2022.
Read Market Intelligence's latest analysis of sector risk.
CHART OF THE WEEK: A big Q1 jump in semiconductor investment
⮞ Private equity investment in the semiconductor industry is off to a strong start in 2023. Private-backed transactions for semiconductor businesses totaled $9.12 billion in the first quarter, well above the totals for the same quarterly period in the previous three years.
⮞ However, only one deal accounted for the majority of the first quarter's aggregate transaction value: a $7.09 billion round of funding for Chinese chipmaker Yangtze Memory Technologies Co. Ltd.
⮞ The CHIPS Act, signed into law in the US in 2022 and intended to spur domestic semiconductor production, is expected to entice investment from private equity.
TOP DEALS AND FUNDRAISING
– KKR & Co. Inc. will make a growth investment in strategic advisory and communications firm FGS Global (UK) Ltd. Under the deal terms, WPP PLC will still be FGS Global's majority owner, while Golden Gate Capital will sell its stake in the London-based business to KKR.
– Cinven Ltd. agreed to buy Archer, an integrated risk management solutions provider. The seller is RSA Security LLC, which is backed by Clearlake Capital Group LP and Symphony Technology Group LLC.
– Blackstone Inc. raised $30.4 billion at the final close of Blackstone Real Estate Partners X LP.
– Pantheon Ventures (UK) LLP secured over $2.4 billion for Pantheon Global Co-Investment Opportunities Fund V at final close.
MIDDLE-MARKET HIGHLIGHTS
– Benford Capital Partners LLC added Legacy Bakehouse LLC, maker of baked snack products, to its portfolio.
– IManage LLC, which provides cloud-enabled work product management solutions for organizations, received a strategic growth investment from Bain Capital Pvt. Equity LP's Bain Capital Tech Opportunities Fund.
– Investcorp Holdings BSC took a majority stake in Shearer Supply Inc., a heating, ventilation and air conditioning equipment distributor in the southern US. The Shearer family and PNC RiverArch Capital will continue as shareholders of the business.
– Affiliates of Lee Equity Partners LLC and Twin Point Capital LLC agreed to purchase Tessco Technologies Inc., a technology company serving commercial customers in the wireless infrastructure ecosystem. The $9-per-share cash deal is targeted for completion in the third quarter.
FOCUS ON: APPLICATION SOFTWARE
– Turn/River Management LP sold Trakstar Inc., which provides cloud-based employee evaluation software, to Mitratech Holdings Inc.
– Innovacom Gestion, through its Technocom 3 fund, bought a stake French developer of pilot training applications Hinfact SAS.
– East Ventures Pte. Ltd. and Influencer Bank Inc. sold Creator Ninja KK, a Japan-based provider of tools, platforms and software for YouTube users, to Socialerus Inc.
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.