2020 was a turbulent year for private markets as much as it was for the world. Over the years or decades, meaningful changes in the industry are quite common, but the COVID-19 pandemic and other events have made significant changes to various industries. However, despite the pandemic and the ongoing inflation, private equity operations continue to perform well outpacing most measures of comparable public market performance and other private market asset classes in Sport, Bio tech, Healthtech, Web3/Metaverse and Indsutries.
The speed and strength of the rebound indicate resilience and continued momentum as investors such Licorne Gulf to continue to look to private markets for sustained low-yield environments and higher potential returns. Thus according to Rim Mathlouthi, Board Member; Investment demands and discussions with her traditional VC and Investment fund counterpart, by nearly any measure, private equity operations outperformed public market equivalents in 2022 and is going to be more promising in 2023!
“Furthermore, in 2021 and 2022 despite the pandemic and economic situation in the world, private equity deal-making reached historic heights, and private equity set new yearly records in global deal volume and transaction value. Prominent firms continue to raise funds of unprecedented size, and capital supply is robust and keeps on growing” mentioned Mrs Rim Mathlouthi; “And when it comes to global investments, our Investors from Europe, the USA, and GCC are the most active and are expected to continue to grow in the coming years with large amount to dispatch in PE to private companies”, she added.
As transactions have been completed over the past two years, it is clear to private and institutional Licorne Gulf portfolio of investors that the trend is accelerating and highly demanded in the technology, biotech, sports and industrial markets.
“Many start-up companies and Family Owned business are interested in the rapid financing and capital injection solution and low cost transactional offer for their funds”; mentioned Irina Duisimbekova; Co-Founder & President, “It is obvious that most of the time our clients constitute an interesting technological pool for their investment funds or their medium and long term vision and either an enhancement to go directly towards a stock exchange listing or a merger with a SPAC, or the excitement of reselling shares after the substantial dividends received is largely profitable with regard to the initial capital paid”.
With that said, the metaverse market is currently attracting billions of dollars when it comes to investments and has the potential to generate up to $5 trillion in value between 2023 and 2030. This year, many businesses varying from startups to large technology organizations as well as venture capital and private equity companies have already allocated over $120 billion for the metaverse. However last year the metaverse managed to attract up to $13 billion in funding from private equity. But in 2022 investments into the metaverse market have doubled in comparison to 2021 and are expected to further increase in 2023. The concept of metaverse which is associated with the virtual realm, tokens, cryptocurrencies, and other digital assets, has been attracting interest from various companies, and investors. In addition, despite the global situation web 3.0 has continued to attract substantial venture capital investments this year where the first quarter did extremely well. However, when determining figures, tokens have not been taken into account thus there is a high chance the real volume is much higher.
“We strongly encourage Companies to submit their deck and discuss with us to assess their needs and advise on the most efficient of our Investors introduction we could present their file for succeeding a capital increase” Rim Mathlouthi.
When it comes to the main sectors of the blockchain industry which include web3, decentralized finance, centralized finance, Tokens, and more, DeFi has always taken the lead for VC inflows. However, in 2022 we have seen a change; Web 3.0 has taken the lead leaving DeFi in a far distant corner.
Out of the top ten most active VCs, seven of them chose Web3 as the sector of choice for investment. The driving force behind this trend is the push for companies to actively involve to pursue becoming a part of the concept of the Metaverse.
Overall, private equity’s interest in investing in the technological sector is expected to continue. In 2021 a record volume of PE-backed tech deals was recorded in the U.S. alone, there is no sign of this slowing down in 2022- 2023.
This industry is expected to be an area of interest due to its reliable recurring-revenue model as well as consistent returns. And also, in comparison to other industries, the technology industry consists of lower fixed operating costs and is also less capital intensive.
Due to the above and many other reasons, we can expect investments towards the mainstream to continue over the next five years and even pick up their pace. Furthermore, in 2017 a new fundraising record was set, which broke a barrier that had stood for almost a decade. That year the private equity funds closed securing at $527bn, which initially broke the half-trillion dollar mark and surpassed the previous record by almost $75bn. With that said, by 2023, 79% of investors are looking forward to having higher allocations to PE than they did this year, this is the same for alternative assets, thus similar successes to 2017 can be expected in 2023.
Overall, PE deal-making, as well as fundraising, is expected to continue to rise for the rest of 2022 and all 2023, whilst also midmarket managers in both Europe as well as the U.S. are mindful of inflationary pressures as well as high valuations as they deploy record amounts of cash but for a cheaper price!
Contact:
Rim MATHLOUTHI rm@licorne-gulf.com
www.licorne-gulf.com @licornegulf