S&P Global Market Intelligence offers our top picks of global private equity news stories and more published throughout the week.
Notwithstanding a headline-grabbing, $300 million round for ChatGPT innovator OpenAI LLC, the venture capital industry remains stuck in the doldrums.
Global venture capital investment activity for every month of 2023 has fallen year over year so far, and April was no exception. The $15.74 billion raised in 959 funding rounds represented a greater than 61% decline from the global total of venture capital investments during the same month in 2022.
Much like private equity, venture capital is still recovering from a serious case of whiplash. Rising interest rates and a worsening economic outlook put the brakes on investment activity in 2022, which suddenly decelerated from the record pace venture capital and private equity set in 2021. After peaking in December 2021, venture capital funding rounds have mostly trended downward.
Read more about the biggest venture capital funding rounds of April.
CHART OF THE WEEK: Private equity cautious on cannabis
⮞ Private equity and venture capital investments in the cannabis sector in 2023 are pacing for their lowest annual total since at least 2019.
⮞ In 2022, the value of private equity and venture capital investments in the sector fell 79% year over year to $796 million. With just six deals totaling $18 million between Jan. 1 and March 31, deal value in the cannabis sector is on a trajectory for an even lower annual total in 2023.
⮞ The lack of federal cannabis legislation — even though cannabis is legal for adult use in more than half of the US states — is the primary drag on private equity investment in the sector, said Mitchell Baruchowitz, managing partner at cannabis-focused investor Merida Capital Partners LLC.
TOP DEALS AND FUNDRAISING
– Advent International Corp. and Warburg Pincus LLC will acquire Baxter International Inc.'s biopharmaceutical solutions business in a cash deal valued at $4.25 billion, subject to certain closing adjustments. The deal is slated to close during the second half of 2023.
– Mutares SE & Co. KGaA will divest ATI Specialty Materials Ltd. to Cogne Acciai Speciali SPA in a €180 million deal, which will result in net proceeds of up to €150 million. The transaction is expected to close during the second quarter.
– LightBay Capital raised $1.04 billion in capital commitments at the close of its LightBay Investment Partners II LP fund and related vehicles. The fund exceeded its $800 million target and closed at its hard cap.
– One Equity Partners secured $1 billion at the close of a continuation fund co-led by The Carlyle Group Inc. unit AlpInvest Partners and HarbourVest Partners LP.
MIDDLE-MARKET HIGHLIGHTS
– SPP Management Services LLC and Trachte LLC sold metal-building maker Parkline Inc. Palladium Equity Partners LLC, Trachte's private equity backer, invested in Parkline in support of the deal.
– Vista Equity Partners Management LLC provided strategic growth capital to Resilinc Corp., which specializes in supply chain mapping, disruption sensing and resiliency analytics.
– Yellow Wood Partners LLC closed the purchase of beauty and personal care brand Suave in North America from Unilever United States Inc.
– Bluestone Investment Partners provided strategic funding to Precise Systems Inc., a provider of software development services to the US Navy, Marine Corps and Air Force.
FOCUS ON: HEALTHCARE
– An investor group agreed to sell artificial intelligence-based pharmaceutical research platform Valence Discovery to Recursion Pharmaceuticals Inc. for $47.5 million. The sellers include private equity firms Air Street Capital LLP, Amplitude Ventures, Front Row Ventures, Panache Ventures Inc., Fifty Years Industries LLC, Real Investment Management Inc. and Phoenix Venture Partners LLC.
– Recursion Pharmaceuticals will also buy artificial intelligence-augmented drug discovery platform Cyclica Inc. in a $40 million deal. GreenSky Ventures, Drive Capital LLC and Uni-Innovation Consulting Group are the sellers.
– Astorg Asset Management SARL reached a deal to buy a majority stake in orthopedic implant manufacturer hg medical Gmbh from Nord Holding.
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.