PitchBook March 30, 2015
The year so far has been quite eventful, and PE, VC and M&A were no exception. One can discuss at some length how the trends that shaped activity in 2014 have evolved in 1Q 2015, but brevity and data are our priorities, so we’ll be brief in the kickoff of our quarterly recap series.
In this inaugural post, PitchBook’s editorial team breaks down highlights from what we’ve observed in 1Q. Over the next several days, we will unfold a series of datagraphics summarizing everything PE, VC and M&A in the past quarter, so stay tuned.
“As of late, we’ve seen the amount of closed Europe-focused buyout and growth funds trend slightly lower. With the recent depreciation of the euro relative to the U.S. dollar, however, along with the ECB enacting tools to stimulate/sustain growth in the region, I wouldn’t be surprised to see deal flow, especially from foreign capital, increase in the region moving from 1Q to 2Q. Bridgepoint Europe V, which just closed with over €500 million above its original €3.5 billion target, I think serves as a good example of the interest LPs and investors are beginning to see in Europe.”
“Preliminary 1Q fundraising numbers are strong for PE vehicles of at least $1 billion, and that doesn’t include upcoming mega-funds from Blackstone (reportedly nearing $10 billion first close) and TPG Capital (held $6.5 billion first close). In an increasingly competitive dealmaking environment, are there really enough quality targets out there to justify the ever-growing piles of capital?”
“1Q VC deal count in IT companies continued its year-long downward trend, falling roughly 200 deals from 4Q 2014 levels. Capital invested also fell to $7.1 billion (from $9.2 billion the previous quarter), though the median pre-money valuation in the space went up more than $1 million to over $26 million. Bitcoin had its most well-funded quarter, raising over $150 million for the first time, led by Coinbase’s Series C.”
“Even if VC activity was down in 1Q compared to the end of 2014, Europe saw its second-highest capital invested total since the start of 2012 at $3.3 billion, with three new companies grabbing $1 billion valuations. European investors also closed 13 funds totaling more than $1 billion in commitments during the quarter and participated in $5 billion+ in venture deals worldwide.”
“M&A wasn’t expected to slow much going into 2015, and it didn’t disappoint. Globally, $489 billion worth of deals were closed in the first quarter, more than any quarter over the past two years. The fundamentals in the market didn’t change when the calendar was flipped, and the strong 1Q numbers may signal an even stronger, more active year ahead.”
“There are plenty other examples from the past few months, but to use something very recent, the just-announced and pending $12.8 billion acquisition of Catamaran by UnitedHealth Group exemplifies how much of healthcare M&A is centered in consolidation. Big providers are positioning in a competitive space through M&A, anticipating dropping reimbursement rates and seeking ever-greater efficiency. Through consolidation, many in the U.S. will be able to capitalize on the growth of insurance customers as Affordable Care Act subsidies continue to kick in.”
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