Market Snapshot
Private Equity
According to PitchBook, 2,247 private equity deals totaling $264 billion were completed in the U.S. during 1H18, a 2% increase in volume but a 6% decrease in value compared to 1H17. Exit activity was flattish, too, compared to recent quarters at $12.9 billion even though IPO activity has picked-up. About $4 billion of the IPO proceeds represented PE exits. FACTSET reports that M&A activity, while strong by historical standards, has not seen a dramatic uptick in 2018. Hence, the market reflects steady activity rather than a rush for the exits given elevated valuations and readily available financing.
Leverage Lending
Thomson Reuters reports that leverage lending volume eased 4% in 1H18 to $770 billion from $736 billion in 1H17 because there was less refinancing activity. Otherwise, the market remains strong as investors attracted to LIBOR based loans in a rising rate environment have absorbed supply that would be retained on bank balance sheets. An emerging theme that may be bullish for LBO-sponsors is a looser regulatory interpretation of leverage lending guidelines in which 6.0x EBITDA may not be the Maginot-Line for bank participation. The 2013 guidance shifted most deals above 6x to non-bank firms.
Venture Capital
While venture funding has picked up this year, exit activity remained tepid during 1H18. The glut of invested capital continues to grow, but in fewer large, late-stage companies. Two of the larger pending exits are Lyft Inc. and Uber Technologies. Lyft is in the process of interviewing bankers, while Uber’s CEO has reaffirmed an eventual IPO.
FEATURE ARTICLE
Venture Capitalists in the Family
Also in This Issue
Updated Metrics for
Private Credit and Equity
Publicly Traded Private Credit
Venture Capital