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

Research shows slowdown in deal volume.


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.

Exits: As deal activity falls, so to does exit activity, which readers of this column know impacts other areas of PE, including LP plans and fundraising. Overall exit activity fell to $391.4 billion in 2022, according to Preqin, compared to $576.3 billion in 2021.

“To a large extent, the corrections that we’ve seen in 2022 are quite healthy because we’ve taken a lot of the excess out of the market,” said Cameron Joyce, deputy head of research insights for Preqin, in an S&P report.

Slower exit activity will likely mean longer hold periods for GPs, who will want to wait, if they can, for the markets to correct and prices to hopefully go up.

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: The fundraising market is sluggish and the firms that will feel the true brunt of that are the newbies – the first timers and the emerging managers trying to build new relationships and attract investors to their new enterprises.

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 or find me on LinkedIn.