Private Equity Wire Newsletter

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NEWSLETTER | 7 May 2020

Many of us are now several weeks into lockdown and governments across the globe are beginning to look for ways to ease restrictions, with some European economies having already begun the process of gradually reopening for business.

In the UK, Boris Johnson is due to set out a 'road map' to lifting lockdown restrictions on Sunday evening starting, potentially, with a slight easing of some measures from Monday.

This is despite the fact that the UK death toll has now surpassed 30,000 making it the worst affected country in Europe with a greater number of deaths than either Italy or Spain. Other than the US, which has yet to enforce a national lockdown, the UK is now the world’s worst affected country.

Coronavirus continues to ravage the global private equity space with many international PE firms reporting large losses across their portfolios.

KKR is the latest in a line of PE firms to disclose theirs; the group reported a loss of USD1.3 billion in Q1. “Since February, we have seen more uncertainty and volatility than at any time since the financial crisis," commented Kravis and Roberts, co-chairmen and co-chief executive officers of KKR.

Moving onto some brighter news, this week has been a busy one for the tech sector with a number of deals reported in the seemingly relatively healthy VC space.

William De Gale, co-portfolio manager of BlueBox Global Technology and former BlackRock Global Technology Fund manager predicted that the IT sector would lead the way in terms of post-pandemic recovery. However, he was cautious in his evaluation of how the tech industry would fare for the rest of 2020.

Also related to tech is the fact that the way we are working is going through some rapid and drastic changes. Research done by Azurite Consulting indicates 70 per cent of American C-suite execs and small business owners plan on hiring fewer people to do the same amount of work following the virus. Many business owners cite new tech as a reason for this.

Despite the turbulent times we’re in, investors may want to hold off on making drastic decisions. This is the advice from Clare Flynn Levy, CEO and founder of Essentia Analytics and from Rhonda Ryan, head of European private equity at Mercer, in her interview with James Williams.

Private Equity Wire

PE investors should hold their nerve, even if mark-to-market valuations worsen in Q2

Thu | 7 May 2020, 18:31

It is unlikely that the full extent of mark-to-market valuations will be known until 30 June, when Q2’s financial reports are issued. And while this might cause investors to break out into a cold sweat, the advice being offered by investment consultants is, ‘Don’t make any knee-jerk decisions and keep investing’.

Finding value in Asia Pacific

Thu | 7 May 2020, 18:31

Asia Pacific’s private market attracted USD117 billion in net capital inflow in 2019, led predominantly by private equity where fund raising topped USD94 billion according to McKinsey’s Private Markets Review 2020. This represented a 25 per cent reduction year-on-year, led principally by closed ended real estate, which closed 2019 with a modest USD13 billion in fundraising; down 39 per cent on 2018.

Thu | 7 May 2020, 18:31

By Clare Flynn Levy, CEO & Founder of Essentia Analytics – There is nothing familiar about the situation we’re in today. So it’s easy – almost automatic, in fact – for us to assume that our familiar modes of behaviour no longer apply. But as investors, we know that uncertain and turbulent times are precisely when it’s most important to observe – and adhere to – our established investment process.

Thu | 7 May 2020, 18:31

Two partners from global private markets investment manager Adams Street Partners – Alejandra Lesch and Alicia Pando – are to join panel discussions at the forthcoming Private Equity Wire LIVE online seminar, which is taking place from 2-4 June.

Thu | 7 May 2020, 18:31

In a recent white paper entitled Evolution in Asset Management, SEI pointed out that 70 per cent of US fund managers are currently looking to deploy advanced analytics in the front-office. The field of data science and machine learning-based data analysis is helping to transform how fund managers think about data to gain a competitive edge.

Exit expectations for next year fall dramatically, says Investec

Thu | 7 May 2020, 18:31

A majority (83 per cent) of private equity GPs do not expect to make a portfolio exit within the next 12 months in the Covid-19 environment, a new report by Investec reveals.

Thu | 7 May 2020, 18:31

The world of private capital has witnessed a solid number of tech fund closures and tech related deals since the coronavirus crisis began. But despite the sharp rally that started in March and continued through April though, William De Gale, co-portfolio manager of BlueBox Global Technology, is cautioning against thinking that the rest of 2020 will be plain sailing for technology.

Thu | 7 May 2020, 18:31

When the US emerges from Covid-19, 70 per cent of American c-suite execs and small business owners plan to hire fewer employees to perform the same amount of work, while only 4 per cent plan to hire more people than before the pandemic.

Thu | 7 May 2020, 18:31

Digital financial services company Alpian, incubated by the Swiss banking group REYL & Cie, has completed a Series A funding round worth CHF12.2 million.