Sovereign-backed deals set for potential rebound; Japan PE investment drops

S&P Global Market Intelligence offers our top picks of global private equity news stories and more published throughout the week.

Sovereign wealth fund coinvestment activity dipped in 2023, but the pieces are in place for a rebound in 2024.

The value of sovereign wealth fund coinvestments with private equity or venture capital firms amounted to $18.94 billion globally in 2023, declining nearly 52% from the prior-year total of $39.03 billion, according to S&P Global Market Intelligence data. It was a big step back from dealmaking — understandable, maybe, in a year when uncertainty clouded the macroeconomic outlook. But to Diego Lopez, founder and managing director of data platform Global SWF LLC, the bearish sentiment appeared overblown.

"I expect to see an increased level of activity in 2024, aligned with the recovery in markets," Lopez told Market Intelligence, noting that some of private equity's most frequent coinvestment partners are loaded with dry powder.

New partnerships are a possibility, too. One of the richest sovereign wealth funds in the world, Norway's $1.5 trillion Government Pension Fund Global, is expected to decide during the year on making its first-ever allocations to private equity.

Read more about sovereign wealth fund dealmaking in 2023 and the outlook for coinvestments in 2024.

CHART OF THE WEEK: Shrinking private equity deal value in Japan

⮞ The value of private equity- and venture capital-backed deals in Japan fell sharply in 2023, declining 73% year over year to $8.56 billion from $31.84 billion in 2022, according to Market Intelligence data.

⮞ Deal value is poised to move higher again in 2023 with the Tokyo Stock Exchange's decision to release a monthly list of companies planning to improve their capital efficiency, which some buyout shops could use as a tool for selecting acquisition targets with strong value-creation potential.

⮞ The dry powder targeting private equity and venture capital investments in Japan also grew in 2023, increasing nearly 65% year over year to $13.84 billion from $8.40 billion in 2022.

TOP DEALS AND FUNDRAISING

– Novo Holdings A/S will acquire Catalent Inc. in an all-cash transaction that values the pharmaceutical company at $16.5 billion.

– Thoma Bravo LP agreed to buy critical event management solutions company Everbridge Inc. at a valuation of about $1.5 billion in an all-cash transaction.

– General Atlantic Service Co. LP closed on an investment in Dutch real estate classifieds site Funda BV.

– The Riverside Co. brought in $235 million for Riverside Acceleration Capital Opportunity Fund II LP at final close.

– Coalesce Capital Management LLC raised $900 million in capital commitments at the close of Coalesce Capital Fund I LP.

– Trinity Hunt Partners LP secured $700 million in capital commitments for its Trinity Hunt Partners VII LP fund, closing at its hard cap.

MIDDLE-MARKET HIGHLIGHTS

– Gryphon Investors Inc. agreed to sell emergency response and scheduled environmental services provider HEPACO LLC to Clean Harbors Inc. in a transaction worth $400 million.

– Greater Sum Ventures LLC made a majority investment in public safety software solutions provider SOMA Global Inc.

– Tailwind Capital Group LLC sold specialized services provider Loenbro Inc. in a deal with buyer Braemont Capital Management LLC.

FOCUS ON: HEALTHCARE EQUIPMENT

– Serendipity Partners acquired a 49% stake in Swedish medical device company Perimed AB.

– Clinical-stage medical device company Procyrion Inc. secured $57.7 million in a series E funding round led by Fannin Innovation Studio.

– Danish cardiovascular device company Neurescue ApS pulled in €6.7 million in a series A round led by West Hill Capital LLP.

For further private equity deals, read our latest In Play report, which looks at potential private equity-backed M&A, including rumored transactions, each week.