Home Venture Capital Shifting dynamics in private equity fundraising; early infotech funding slows

Shifting dynamics in private equity fundraising; early infotech funding slows

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S&P Global Market Intelligence offers our top picks of global private equity news stories and more published throughout the week.

Private equity started the year with ambitious fundraising goals, but the past nine months have tempered expectations.

Back in February, Hamilton Lane Inc. was touting the “15/15 club,” a group of at least 15 buyout fund managers each aiming to raise $15 billion or more over the next 12 months. Private equity appeared on track to maintain the record-setting fundraising pace set by the asset class last year.

But 2022, marked by high inflation, rising interest rates and public market turmoil, has been anything but a rerun of private equity’s remarkable year in 2021. And fundraising faltered; as early as the end of the first quarter, large publicly traded private equity firms were signaling that a “crowded” fundraising arena would slow their efforts to secure capital commitments from investors.

By the second quarter, private equity fundraising totals were down about 50% compared to the same period in 2021, according to Shifra Ansonoff, global head of research for Preqin Inc., who gave a presentation on fundraising trends at this year’s SuperReturn North America event. Private equity investors at the multiday conference in New York City said the flood of fund managers seeking capital is forcing them to become much more selective.

Read more on how that dynamic is shifting the balance of power between private equity investors and fund managers here.

CHART OF THE WEEK: Early-stage funding for infotech contracts in Q2

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⮞ The flow of early-stage funding from private equity and venture capital firms to North America’s information technology sector fell significantly in the second quarter after a very strong first quarter.

⮞ Totals dropped to just $1.19 billion in the second quarter, a decline of 52% from the previous quarter, when early-stage funding from private equity and venture capital totaled $2.45 billion, the most in at least eight quarters.

⮞ The largest early-stage infotech funding total in the second quarter was a nearly $450 million raise by Yuga Labs Inc., the company behind the collection of Bored Ape Yacht Club digital art non-fungible tokens.

DEALS AND FUNDRAISING

* KKR & Co. Inc.’s Asia Pacific Infrastructure Fund and India-based The Hero Group Ltd. will invest $450 million in Hero Future Energies Pvt. Ltd., the motorcycle maker’s renewable energy arm.

* Vista Equity Partners Management LLC made a nonbinding offer to acquire all outstanding shares of KnowBe4 Inc., a security awareness training and simulated phishing platform, for $4.2 billion. The all-cash proposal of $24 per share represents a 39% premium to KnowBe4’s closing price on Sept. 16.

* Apollo Global Management Inc.-backed Intrado Corp. will sell its safety unit, which provides public emergency telecom services, to funds advised by Stonepeak Partners LP for $2.4 billion.

* EQT Partners AB’s EQT Mid Market Asia III fund divested its co-control stake in Chinese specialty packaging company GPA Global to Ontario Teachers’ Pension Plan Board.

* Junction Growth Investors, a Belgian growth equity fund, pulled in €75 million at the first close of its latest energy fund, including a €30 million capital commitment from the European Investment Fund. The vehicle will invest in European companies developing software and hardware solutions that allow for the energy transition.

* HarbourVest Partners LLC collected over $3 billion at the final close of its 12th flagship fund, HarbourVest Fund XII, exceeding its $2 billion target. The vehicle will make buyout, micro buyout, venture capital and growth equity investments primarily in the U.S.

ELSEWHERE IN THE INDUSTRY

* A partnership between venture capital firm OurCrowd Ltd. and the WHO Foundation launched a $200 million financial-first impact venture capital fund. The Global Health Equity Fund will invest across healthcare, energy transition and food agriculture sectors.

* Stellus Capital Management LLC entered into a strategic partnership with +Subscribe, an order management and electronic subscription document platform for the alternative investments sector.

* Vector Capital will acquire a minority stake in cybersecurity platform Malwarebytes Inc. via a $100 million capital injection.

FOCUS ON: CLEAN ENERGY

* Dutch Infrastructure Fund BV, or DIF Capital Partners, bought a 55% stake in Paris-based electric vehicle charge point operator Bump SAS through DIF Core-plus Infrastructure Fund III.

* H.I.G. Capital LLC acquired a controlling stake in Northern Biogas LLC, a waste-to-renewable natural gas company.

* Clean power generation provider Mainspring Energy Inc. raised $290 million in a series E funding round led by Lightrock LLP, with participation from investors including Khosla Ventures LLC, Fine Structure Ventures and Princeville Capital.

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