View this email online 

CalPERS pledges $1bn to new manager ecosystem; deal activity continues steep slowdown

Morning!

Hope all is going well this week.

Fresh research today is revealing the slowdown in deal activity, but it’s important to remember that, rather than reflecting a depressed market, what we’re seeing could be more of a return to normal from the peak of 2021.

Numbers out from S&P yesterday showed private equity and venture capital deal activity dropped steeply, tallying 957 entries into new investments in December, down 58 percent from 2,253 entries in December 2021. Read more here.

Deal value could have been lower but was driven for the month from three large agreed transactions: Thoma Bravo’s and ADIA’s $8 billion take-private of Coupa Software; Advent International’s and British Columbia Investment Management Corp’s agreed $6.5 billion acquisition of Maxar Technologies; and MBK Partners’ $1.82 billion agreed buy of Medit Corp.

The year closed with aggregate deal value of about $705 billion across 16,487 PE investment entries globally, compared to last year’s deal value of about $1.15 trillion across 20,511 announced and completed deals.

However, even as deal activity appears to be slowing, volume in 2022 was relatively strong compared to prior years excluding 2021’s strong showing, which resulted from the rebound in deal activity from the health crisis in 2020.

Interestingly, deal activity remained relatively similar in 2018, 2019 and 2020, according to S&P.

The top deal sector by value was tech, media and telecom, accounting for 38 percent of the total, followed by industrials and healthcare.

Climate: OceanSound Partners acquired Gannett Fleming, an infrastructure consulting company, in what it sees as a bet against the strained economy, writes Obey Martin Manayiti on PE Hub today. Gannett’s services include engineering, architecture and construction and program management.

“The US is undergoing massive infrastructure transformation and the combined impacts of climate change, aging infrastructure, decades of underinvestment, electric vehicle demand, among other factors, are driving investments in infrastructure at an increasing rate,” said OceanSound managing partner Joe Benavides.

Read more here on PE Hub.

Newbies: While LPs hunker down and look to mostly stick with their tried and tested existing managers, raising a first-time fund is a daunting prospect. However, some good news on that front – CalPERS has agreed to commit $1 billion into the emerging manager ecosystem through vehicles managed by TPG and GCM Grosvenor.

Read more here on Buyouts.

That’s it for me! Have a great rest of your Wednesday. Hit me up with tips n’ gossip, feedback or juicy rumors at [email protected] or find me on LinkedIn.

Read thefull wire commentary on PE Hub …

Also of note (may require subscriptions)

Blue Owl Capital’s Dyal Capital reaffirmed its position as the market’s largest GP stakes investor with the outsized closing ($12.9 billion) of a fifth offering. (Buyouts)

Infrastructure Investor's latest podcast: Who’s investing in infratech? Not yet fodder for infra investors, but outside the wheelhouse of most VCs, infratech has endured a funding gap – but that’s changing.

The Wellcome Trust, the UK’s biggest investor in private equity according to the GI 100, saw its PE turn cashflow negative and has said it expects longer fundraising cycles as GPs take longer to deploy capital. (Privte Equity International)

Extended fundraises: Will we see more of them in 2023? (Privte Equity International)

A commentary from Jakob Thomä, principal and co-founder of 2° Investing Initiative Germany and Professor in Practice at SOAS, University of London, asks: How many future climate deaths are linked to your fund? Finding meaningful ways to convey the impact of investment portfolios on the environment can be challenging, but it is essential. (Responsible Investor)

Measurement has become one of the defining elements of impact investing; how do managers in impact’s most popular theme – climate – measure up? (New Private Markets)

A recent secondaries deal run by Harvest Partners garnered what some market participants see as a sluggish level of limited partner sales, throwing into question whether LPs are ready to sell their stakes for ready cash. (Secondaries Investor)

"Deloitte has struck a deal to sell its UK pensions advisory division to Isio, the private equity-backed business spun out of KPMG in 2020." (Financial Times)

"Despite everything going on, many of Wall Street’s businesses are actually doing pretty well. But a dearth of debt underwriting is holding firms back for the time being." (Wall Street Journal)

"Pension funds, insurers, and foundations have long looked to private markets to boost returns, but wealthy individuals are moving more assets into these sectors as fund managers make it easier for them to invest." (Barron's)