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1、Global Fund Banking Outlook Report Q4 2022Investors today have lived through some of the most interesting few years in the history of private markets.Following a brief recession at the onset of the COVID-19 pandemic,investor sentiment quickly reversed,sending fundraising and investment figures to ne
2、ver-before-seen levels.Today,the winds of change have blown again,as investor sentiment has soured throughout the year,catalyzed by poor performance in the public markets and softening macroeconomic conditions.Investors in todays market face any number of challenges.On the macroeconomic front,stubbo
3、rnly high inflation and the accompanying rising interest rates have put the brakes on the global economy.Meanwhile,industry-specific challenges proliferate,such as persistently elevated valuations and the denominator effect.Fund managers and limited partners are forced to grapple with these and othe
4、r issues in an increasingly difficult environment.Despite the market fog,rays of hope continue to shine through.Dry powder levels remain near record highs,providing fuel for continued private market investment and investment levels while lower than the most recent quarters are in-line with investmen
5、t activity seen before the heights of 2021.In fact,downturns have historically brought great opportunity,with funds raised during recessions outperforming surrounding years.Meanwhile,Chief Financial Officers(CFOs)are helping firms navigate current market conditions by finding ways to capture efficie
6、ncies and capitalize on opportunities that present themselves.The use of long-term hedging strategies has increased significantly as currency markets have become more volatile.Interest in lines of credit has also risen,facilitating effective management of fund finances.If history is any guide,our cl
7、ients,partners and the broader private equity(PE)ecosystem will continue to prove remarkably resilient.The existing market landscape will serve as an exciting opportunity for firms and funds to take advantage of current uncertainty and trends,with the best emerging as huge winners.We remain optimist
8、ic that the state of the private markets will remain strong over the long term.Despite the Market Fog,Rays of Hope Shine ThroughQ4 2022 GFB Outlook Report2Jesse HurleyHead of Global Fund BankingQ4 2022 GFB Outlook Report3In our latest video,Luis Rivera,CFO and partner of G Squared discusses strategi
9、es for navigating a market downturn,how CFOs can add value to limited partnerships and tips for CFOs to drive success with diversity,equity,and inclusion(DE&I).Page 13Assessing Global Financial MarketsFocusing on Efficiency and TalentHolding,but Optimistic About PerformanceMaintaining Availability f
10、or Companies and FundsWhile inflation has started to show potential signs of cooling off,it remains at multi-decade highs.This has prompted the Federal Reserve to raise interest rates at the fastest pace in over 30 years and a pace about six times faster than the last cycle.Based on current sentimen
11、t and expectations,the Federal Reserve shows no signs of taking its foot off the pedal,even as interest rates creep closer to levels not experienced since the 20042006 cycle,though it took longer to reach these levels with the hikes taking place over two years.While absolute interest rate levels are
12、 important because they impact economic activity,the pace of interest rate hikes is just as important,especially for equity markets.The current rate cycle is the fastest pace since the 1970s.Looking at historical equity market returns during different rate hike cycles;faster-paced rate hike cycles t
13、end to correspond with lower equity market returns.Notably,among the fast-paced rate hike cycles,the lowest equity return two years post an initial rate hike occurred during the 1973 rate hike cycle a period also plagued with elevated energy prices and soaring inflation.If history were to repeat its
14、elf(or at least rhyme),this could have significant knock-on effects for the PE ecosystem from general partners(GPs)marking their portfolios to market or limited partners(LPs)pulling back on allocations to PE as risk management comes more into focus.Q4 2022 GFB Outlook Report5Notes:1)CPI=Consumer Pri
15、ce Index for All Urban Consumers,seasonally adjusted.Monthly data from 1/31/1948 to 10/31/2022.Peak of current period is as of 10/31/2022 as the period is still ongoing.2)This represents interest rate hike cycles based on changes in the target federal funds rate after the initial rate hike.Data as o
16、f 11/15/2022.3)Slow-paced rate hike cycles=periods where interest rates were raised over a period of time and did not occur during consecutive months or FOMC(Federal Open Market Committee)meetings.fast-paced rate hike cycles=periods where interest rates were raised during consecutive months or FOMC
17、meetings.This analysis uses daily data and does not include cycles where rates were raised but subsequently paused or stopped.slow-paced rate hike cycles include 1946,1955,1958,1963,1977 and 2015.fast-paced rate hike cycles include 1967,1973,1980,1987,1994,1999 and 2004.Current rate hike cycle data
18、through 11/10/2022.Source:S&P Capital IQ,US Bureau of Labor Statistics,Federal Reserve,Charles Schwab and SVB analysis.Average S&P 500 Returns Pre-and Post-Rate Hike by Type of Rate Hike Cycle3US CPI Change Year-Over-Year Since 19481Pace of US Interest Rate Hikes Since 03504004
19、50060-19952004-2006Change in target federal funds rate(bps)Months since hiking cycle startedFastest increase since 10115120-12-11-10-9-8-7-6-5-4-3-2-51222324-12-10-8-6-4-20246802224Months before initial
20、 rate hikeMonths after initial rate hikeIndexed to 100 on date of initial rate hike-4%-2%0%2%4%6%8%10%12%14%16%482202020 mos.+1,260 bps27 mos.+930 bps26 mos.+840 bps29 mos.+760 bpsCurrent rate hike cycleSlow-paced rate hike cyclesFast-paced rate hike cyclesTrough to
21、peak in past periods of extreme inflation1The Federal Reserves tightening monetary policy has meaningfully strengthened the US dollar(USD)compared to foreign currencies since the beginning of this year.This level of currency fluctuation is reminiscent of that during the Global Financial Crisis(GFC),
22、when the USD moved more than 30%compared to currencies such as the great British pound(GBP).1This is creating added risk for cross-border investing.An analysis using cashflows of a sample of USD-denominated funds showed that currency changes can change top quartile internal rates of return(IRR)by ne
23、arly six percentage points a large number,given that most funds have hurdle rates of 8%.2On the fund manager side,many are mitigating currency risk through hedging facilities.In fact,despite a drop in short-term hedging due to a drop-off in new investments and exits this year,growth in short-term an
24、d long-term foreign exchange(FX)hedging transactions is on track to increase 75%and 208%since 2020,respectively.The continued strength of activity in long-term hedging facilities reflects a view that currency risk could remain elevated for some time,leading managers to employ long-term hedging strat
25、egies.Such facilities involve hedging the projected valuation of an asset until the anticipated exit date,which can be important components of a risk mitigation strategy.Q4 2022 GFB Outlook Report6Notes:1)The GBP/USD exchange rate moved 36%between 1/1/2008 12/31/2008.2)Based on all global buyout fun
26、ds with terms in Preqin.3)Percent change in the cost of USD in terms of the respective foreign currency since 12/31/2021.Data through 11/17/2022.4)Sample constructed of all USD-denominated PE/VC funds in Preqin with vintages 20152019;daily exchange rates were used when converting cashflows.Funds wit
27、h incomplete cashflows were not included.5)Note that 2022 numbers were annualized based on H1 2022 figures.6)Example assumes no cashflows prior to exit.This example is for illustrative purposes only.7)Includes a 1.7%carry trade.8)Assumes 10%probability the euro can depreciate by this amount over a 5
28、-year period according to SVB analysis.Source:S&P Capital IQ,Preqin,SVB proprietary data and SVB analysis.FX Hedging Transaction Growth5Benefits of Long-Term Hedging6Cost of USD in Select Currencies3Case Study:FX Impact on IRR4JPY/USDGBP/USD2020NAV with 100%FX forward on projected NAV7Base case NAV(
29、no change in exchange rates)EUR/USDCNY/USD20212022(annualized)IRR interquartile range(25th,50th and 75th percentiles)of a sample of USD-denominated funds for international LPs,by domestic currency of the LPDownside NAV8US-based PE fund holds EUR-denominated assets with an anticipated 5-year holding
30、period.$50$100$150$200$250$300InitialYear 1Year 2Year 3Year 4Year 5IRR=22%IRR=20%IRR=11%7.8%8.8%10.8%10.0%11.1%20.4%21.5%22.7%24.6%25.0%34.2%35.4%37.6%40.1%38.7%CADUSDMXNJPYINRDifference of 590 bps in top quartile IRRs due to currency fluctuationsShort-term hedgingLong-term hedging+75%+208%-5%0%5%10
31、%15%20%25%30%35%Jan 22Feb 22Mar 22Apr 22May 22Jun 22Jul 22Aug 22Sep 22Oct 22Nov 22Despite public markets showing a high correlation to private market returns,particularly for late-stage venture capital(VC),valuations for private investments have remained stubbornly firm until now.After a period that
32、 had investors scratching their heads over when valuations would begin to turn,Q3 data has started to show signs of softness.This is likely due to public markets continuing to remain volatile and depressed,a continued uptick in inflation and interest rates,as well as notable events in the PE ecosyst
33、em such as FTXs fallout.A sample of fund-level financials also suggests that current private market portfolios are beginning to fall as portfolio companies are written down due to the current environment weighing on business growth prospects and the public market downturn weighing on public company
34、comparables.If the current market environment continues,its likely firms will continue to rebase valuations of their private holdings,especially at the later stages.While early-stage valuations should remain more resilient,they are not immune from public company fundamentals or broader market downtu
35、rns.Despite this,the fair value of private holdings still remains well above the cost basis,indicating that investors are still in the green.Q4 2022 GFB Outlook Report8Notes:1)Current downturn peak=Q4 2021.GFC peak=Q4 2007.DCB peak=Q1 2000.Current downturn data through Q3 2022.2)Proprietary data is
36、based on fund-level financials from Q4 2021,Q2 2022 and Q3 2022(where available)for a select group of VC and PE growth funds with a vintage year pre-2019.Fair value-to-cost basis ratio is calculated by dividing a funds fair value at the statement date by its cost basis at the statement date for its
37、private and public market investments.Source:PitchBook,SVB proprietary data and SVB analysis.Fair Value-to-Cost Basis Ratio for Select Investors,by Investment Type2Quarterly Median US Early-and Late-Stage Valuations Post-Market Peak by Downturn13.9x3.8x3.4x2.2x2.3x2.1x2.9x2.9x2.5x2021Q2 2022Q3 20223
38、.5x2.3x2.0 x1.1x0.6x0.4x2.4x1.5x0.7x2021Q2 2022Q3 2022Public portfolioPrivate portfolio%that increased private portfolio cost basis in Q3%that increased public portfolio cost basis in Q3%that decreased public portfolio cost basis in Q3%that decreased private portfolio cost basis in Q3020406080100120
39、09876543210Quarters after public market peakQuarters after public market peakMedian US late-stage valuations,indexed to 100Median US early-stage valuations,indexed to 100Current downturnGFCDot com bust(DCB)Median metricMiddle 50%5%11%40%44%Never
40、10+years5-7 years1-3 yearsDespite the market fog,fundraising remains elevated,with the first three quarters of 2022 outpacing several recent full-year numbers.This lends credence to the idea that the market is experiencing a reversion to pre-2021 dynamics rather than a full-scale downturn.However,fu
41、ndraising is becoming increasingly concentrated.Across VC,growth and buyout,the percentage of fundraising from the top 10 funds is at seven-year highs.Still,there are signs that fundraising is becoming more difficult.Funds are raising less of their target sizes by the first close and more time is ne
42、eded to get to the final close.With such high concentrations of fundraising going to the largest funds,this could be particularly problematic for emerging managers(EMs),who may have a less proven track record.While survey results suggest that LPs still plan to allocate capital to private markets and
43、 remain interested in new manager relationships,LPs continue to face the denominator effect limiting their ability to deploy capital to private markets until valuations meaningfully decrease.1Our market intel suggests that LPs are being more prudent about their 2022 allocations,primarily deploying c
44、apital to existing GP relationships.It remains to be seen whether this dynamic will continue into the new year or if LPs will begin to source new fund manager relationships in earnest.Q4 2022 GFB Outlook Report9Notes:1)An SVB survey of LPs conducted for the Q3 2022 Global Fund Banking Outlook Report
45、 found that 83%of LPs were open to or actively seeking new manager relationships.2)Top 10 funds based on fund size.3)Months between first and final close represents the difference in average months to first close and average months to final close.Years refer to the year in which the fund closed.Data
46、 for 2022 is as of 10/28/2022.4)SVB CFO survey was conducted in September 2022.The number of respondents for this question was 55.Source:Preqin,SVB CFO survey and SVB analysis.Global Fundraising Target Size and Pace3Global Fundraising and Concentration of Top 10 Funds Across Fund Types2SVB Survey:Fu
47、ndraising Expectations445%50%55%60%65%70%2000022468000022Average time(months)between first and final closes VCBuyoutVCBuyoutHow many years will it take for fundraising to reach 2021 levels again?Average percentage of target
48、 size raised at first close$97$123$168$190$155$171$221$64$59$464%3%5%5%2%5%5%8%0%1%2%3%4%5%6%7%8%9%$0$50$100$150$200200021 Q1-Q32022Year of fund closing$80$119$125$115$135$89$157$56$29$237%7%6%7%9%5%6%10%2%3%4%5%6%7%8%9%10%$0$20$40$60$80$100$120$140$200202
49、021 Q1-Q32022Year of fund closing$182$255$314$246$414$320$360$57$85$7517%18%20%16%21%21%19%24%12%14%16%18%20%22%24%$0$50$100$150$200$250$300$350$400$450200021 Q1-Q32022Year of fund closingPercent raised by 10 largest fundsVentureFundraising($B)GrowthBuyoutQ1Q2Q3Q1Q2Q3Q1Q2Q3Toda
50、ys dry powder dynamics speak to the resiliency of the private markets and the ability to find promising investments despite market uncertainty.The amount of dry powder has increased at a quick clip over the past two decades in both the VC and buyout spaces,the vast majority of which is the result of
51、 fundraising in the most recent vintages.1This can be viewed as a positive sign for the health of the private equity ecosystem,as fund managers retain a significant amount of capital for future deployment.However,excessive amounts of dry powder can be viewed as a negative indicator,as investors may
52、face pressure to deploy capital even to subpar opportunities.To better understand these dynamics,its helpful to consider dry powder compared to investment dollars throughout recent history.This ratio speaks to the balance of opportunities and capital in the ecosystem.The most obvious trend is a long
53、-term decrease in the dry powder ratio since 2000 a trend that is especially prominent in VC.This suggests that todays dry powder levels are not excessively high in a historical context,when normalized by the amount of investment in the market.During recessions,the dry powder ratio tends to tick up
54、as investment levels decrease.Fortunately,the industry appears adept at clearing this overhang of capital,as investors find promising investment opportunities as the markets settle.Q4 2022 GFB Outlook Report10Notes:1)The Q3 Global Fund Banking Outlook Report noted that 77%of VC dry powder and 68%of
55、buyout dry powder globally was raised in the most recent three vintage years.2)VC dry powder includes early-stage,late-stage/expansion and general subcategories as defined by Preqin.Data for 2022 as of 11/4/2022.3)VC investment includes all series,rounds and stages,including seed stage,as defined by
56、 PitchBook.However,it excludes PE growth and corporate deals without a series attached to the deal,as defined byPitchBook.Data for 2022 through 10/31/2022 and annualized to represent extrapolated full year totals.4)Recession years defined by the National Bureau of Economic Research(NBER).5)Buyout dr
57、y powder includes buyout as defined by Preqin.Data for 2022 as of 11/4/2022.6)Buyout investment includes buyout as defined by PitchBook.Data for 2022 through 10/31/2022 and annualized to represent extrapolated full year totals.Source:NBER,Preqin,PitchBook and SVB analysis.Global Buyout Dry Powder Ra
58、tio:The Ratio of Dry Powder5to Investment6Global VC Dry Powder Ratio:The Ratio of Dry Powder2to Investment3Dry powder ratioInvestment($B)Dry powder($B)Recession years40.0 x0.5x1.0 x1.5x2.0 x2.5x3.0 x3.5x4.0 x4.5x$0$100$200$300$400$500$600$700$800$9002000 2001 2002 2003 2004 2005 2006 2007 2008 2009
59、2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Dry powder ratioInvestment and dry powder($B)Uptick in dry powder ratio after recessionsVC dry powder ratio ticking up again todayDry powder ratioInvestment($B)Dry powder($B)Recession years40.0 x0.5x1.0 x1.5x2.0 x2.5x3.0 x3.5x$0$200$400
60、$600$800$1,000$1,200$1,4002000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Dry powder ratioInvestment and dry powder($B)Dry powder ratios sharp uptick driven by decrease in investmentOver the past two decades,private debt has grown int
61、o a mature asset class.Part of this can be attributed to the low interest rate environment,which pushed many LPs away from traditional fixed income products toward higher-yielding private debt funds.However,now that interest rates are rising,can private debts rise continue?The experience of past dow
62、nturns provides some clues.During the GFC,private debt fundraising decreased by nearly three-quarters following a record amount of fundraising.While todays market environment might bring a downturn in fundraising totals,the private debt industry is vastly more established.Mega funds now account for
63、30%of fundraising totals,illustrating the maturity of this asset class.Further,dry powder remains at record levels,well above periods immediately before past recessions.Many private debt funds still perform well during downturns.However,during past recessions,the dispersion of returns increased mark
64、edly,making it even more important for LPs to identify and invest with top managers who can navigate through choppy conditions.This underscores the importance of manager expertise during complicated periods of market uncertainty.Q4 2022 GFB Outlook Report11Notes:1)Data includes all funds whose asset
65、 class is private debt as defined by Preqin.Data for 2022 as of 11/8/2022;data for 2022 has been annualized.2)Recessions are defined by the NBER.3)Percentages based on the total amount of capital raised by globalprivate debt funds in each size category.Data for 2022 as of 11/8/2022.4)Dry powder data
66、 for 2022 is as of 11/8/2022;unrealized value data for 2022 as of 3/31/2022,due to reporting lags.5)Benchmarks are as of Q2 reporting period.Source:NBER,Preqin and SVB analysis.Global Private Debt Assets4Global Private Debt IRRs5Global Private Debt Fundraising1Share of Global Private Debt Fundraisin
67、g by Fund Size300500600700$0$50$100$150$200$250$300$3500192022Year of latest close dateFollowing the GFC,private debt fundraising decreased 74%Expected 10-year growth of 4.3xIRR interquartile range(25th,50th and 75th percentiles)$0.0$0.2$0.4$0.6$0.8$1.0$1.
68、2$1.42000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022Dry powder today is 4.5x that at the start of the GFCNumber of funds raisedFunds raised($B)Recession years2$250M$250-$499M$500-$999M$1-$4.9B$5B+0%20%40%60%80%100%2001820202022Vintage$5B+funds share increased from 0%to 30%in 1
69、0 yearsDry powder($B)Recession years2Unrealized value component of assets under management(AUM,$B)Recession years2Median IRR0%5%10%15%20%25%20002002200420062008200162018Vintage yearDispersion increases during downturnsQ4 2022 GFB Outlook Report13Luis Rivera,CFO and partner at G Squared,pr
70、ovides insight on how funds can successfully navigate market downturns,add value for their LPs and drive organizational success through diversity,equity and inclusion.Watch the video to get his tips on:Luis RiveraCFO and PartnerThe seven strategies to deploy when markets are volatile,and emotions ar
71、e highHow CFOs can provide unique perspectives and build relationships with LPsWays to connect with diverse operating companies,investors and talentWatch the video8%28%64%Proprietary buildEnterprise resource planningIndustry-specific point solution2%7%14%14%62%OtherGP accountingCRM and process manag
72、ementManagement company expensesPortfolio monitoringWhile every growth story is different,private capital firms generally grow by both scale and scope raising successive funds at a larger clip and in different strategies over time.However,as firms become larger,they also become more complex as they
73、manage larger teams,more LPs and additional reporting burdens.It falls mostly on management such as fund CFOs to identify and capture efficiencies to capitalize on economies of scale.At a recent gathering of CFOs hosted by SVB,attendees were asked a series of questions regarding how they were pursui
74、ng these efficiency gains.One of the most pressing areas is portfolio monitoring,with 62%of CFOs citing it as their top systems initiative concern.Rather than building in-house proprietary systems,however,most CFOs report using industry-specific solutions when implementing systems and process change
75、s.This reliance on outside solutions is clear in the assessment and selection of systems changes as well,with the vast majority of CFOs looking outside the organization for support.As CFOs continue to look for new efficiency gains,one area of potential focus is in the fundraising process.Despite the
76、 pandemic-era emphasis on remote work and meetings,over 40%of CFOs surveyed had not yet integrated technology into their fundraising process.Q4 2022 GFB Outlook Report14Notes:1)Strategies and fundraising based on Preqin classifications.Firms must have raised at least one PE/VC or private debt fund i
77、n order to be included.Strategies based on broader Preqin categories of PE and VC,private debt,real estate,infrastructure and natural resources.Analysis looks at global PE/VC firms.2)SVB CFO survey was conducted in September 2022.3)The number of survey responses for these questions ranged from 35 to
78、 42.Source:Preqin,SVB CFO survey and SVB analysis.SVB Survey:Pressing Systems Initiatives2SVB Survey:Integrating New Systems2Percentage of PE/VC Firms That Had Raised Only One Type of Fund,by Year1What is the most pressing systems initiative you currently face?3In your most recent systems or process
79、 implementation,which of the following solutions did you choose?39%9%40%43%OtherIn-house resourcesIn-house with vendorOutside consultantsHow have you managed systems assessment,selection and implementation?3Have you found ways to add technology to your fundraising process?358%42%YesNoIn 2002,87%of f
80、irms had raised only one strategy of fund.By 2022,more than 25%of firms are multi-strategy.Scotts comment was to look 20222000287%83%80%77%73%Yes74%No26%Yes33%No67%Growth of2.2x in the past two years.84%16%YesNo9%44%44%2%0 weeks12 weeks16 weeks20 weeks0123456Jan10Jan11Jan12Jan13Jan14Jan15
81、Jan16Jan17Jan18Jan19Jan20Jan21Jan22My firm offers XX weeks paid for parental leave.5Despite broader headwinds,the talent market remains tight and the PE industry is not immune to these pressures,with an extremely low unemployment rate in the finance industry of just 1.5%.1In fact,through most of 202
82、1 and 2022,there was fewer than one unemployed person per job opening in the US,across industries.While the slight uptick in recent months suggests some softening in the labor market,employers in the private equity space have had to work hard to attract and retain talent.One of the clearest ways fun
83、d managers are retaining talent is through compensation.Almost two-thirds of CFOs report increasing salaries for investment professionals.Firms are also using benefit packages to aid recruitment efforts.The vast majority of CFOs expect remote and hybrid work to remain a fixture of todays workplace.P
84、aid parental leave that exceeds federal requirements is also offered by most firms.Firms are increasingly focusing on DE&I initiatives as well,spurred by the push for racial justice over the past two years.In fact,the prevalence of DE&I programs has more than doubled since May 2020,an important step
85、 for an industry in which only 5%of firms are owned by women or people of color.2Aside from corporate social responsibility benefits,DE&I programs can also help firms identify and develop more diverse cohorts of firm talent and leadership.Q4 2022 GFB Outlook Report15Notes:1)The“finance”industry is d
86、efined by the Bureau of Labor Statistics;data for October 2022.2)According to a 2021 reportby Bella Private Markets and Knight Foundation,only 5.1%of PE/VC firms were owned by minorities and women.3)Percentage ofPE/VC firms reporting changes in base salaries for investment professionals.4)SVB CFO su
87、rvey was conducted in September 2022.5)The number of survey responses for these questions ranged from 45 to 63.Source:SVB CFO survey,US Bureau of Labor Statistics,Heidrick&Struggles 2022 North American Private Equity Investment Professional Compensation Survey and SVB analysis.SVB Survey:Select Bene
88、fits4SVB Survey:PE Firms DE&I Frameworks4Tight Talent Market:Job Openings RatioChange in PE/VC Firm Compensation3My firm has a diversity,equity and inclusion(DE&I)framework.5My firm had a DE&I framework prior to May 2020.5Is work-from-home(WFH)/hybrid here to stay?5April 2020Number of people per job
89、 opening,all industries in the USIncrease64%Decrease1%No change35%Increase65%Decrease2%No change33%2022versus20212021versus2020Q1Q4Q2Q32018Q1Q4Q2 Q32019Q1Q4Q2 Q32020Q1Q4Q2Q32021Q1Q2 Q3202280%46%65%76%85%88%94%86%86%75%66%20222020012M&A and buyouts value as a percenta
90、ge of all PE-backed exits valueThis year has been muted for exit markets,particularly for public exit routes.After a stunning level of IPO and de-SPAC activity through 2021 in which more than 450 companies went public,the IPO window remains effectively closed through Q3 2022,with just a fraction of
91、2021s transaction volume.Exits that are occurring in the PE/VC space are happening through private channels,such as strategic M&A and buyouts.In fact,99%of all US PE-backed exits have been via private routes so far this year.These dynamics are leading both fund managers and LPs to reconsider exit ro
92、utes.Continuation funds,which involve rolling over of one or more assets from a main fund into a continuation vehicle at the end of the main funds life,have emerged as a top alternative.This allows LPs to maintain exposure to the asset for an extended period of time,in hopes of a future lucrative ex
93、it.However,LPs remain unconvinced,as these funds bring complications such as valuations of the asset being transferred,cross-fund exposure and illiquidity.Another alternate exit route is the secondary market.While conversations with dealmakers suggest an increased interest in this area,deal volumes
94、for 2022 will fall below 2021 numbers,should the H1 deal pace continue.Still,similar to other areas of the private markets,this dip might be regarded as a return to pre-2021 levels.Q4 2022 GFB Outlook Report17Notes:1)Percentages are based on dollar amount of deals for US-headquartered companies;data
95、 for 2022 is as of 11/9/2022.Private exits include mergers and acquisitions,mergers of equals,buyouts,secondary buyouts and investor buyouts by management.2)Data includes completed IPOs and de-SPACs(i.e.,reverse mergers)of PE-and VC-backed companies;deal value represents the aggregate post-valuation
96、 of companies involved in these transactions.3)Based on third-party survey responses.4)Based on Evercore survey responses.Source:PitchBook,SS&C Intralinks 2023 LP Survey,Lazard Private Capital Advisorys Sponsor-Led Secondary Market Report First-Half 2022,Evercore Private Capital Advisory H1 2022 Sec
97、ondary Market Report and SVB analysis.Continuation Funds as Alternative Exits3Secondaries Transaction Volume4Acquisition Value as a Share of US PE/VC-Backed Exits1US PE/VC-Backed Public Exits2Would you roll over your investment or buy into a continuation fund if offered the opportunity?Sponsor-led s
98、econdaries transaction types in the first-half of 2022,by invested capital deployed27%44%29%NoUndecidedYes$10$22$26$27$26$47$42$37$54$72$80$60$134$532009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 H1202224%33%43%OtherContinuation fund:multi assetContinuation fund:single asset0306090
99、120150$0$80$160$240$320$400M&A and buyouts value as a percentage of all VC-backed exits value99%88%84%97%95%95%94%93%89%86%92%20222020012First-half 2022 transaction values match or surpass full-year numbers from recent yearsSecondary transaction volume($B)IPO value($
100、B)De-SPAC value($B)Combined deal count-40%-30%-20%-10%0%10%20%30%40%50%20032005200720092001720192021-5%0%5%10%15%20%25%30%200320042005200620072008200920001620172018Median net IRRVintageBuyoutWhile the exit environment remains difficult,optimism for strong performance
101、 over the long-term persists.As expected,PE/VC returns dip during recessions.Rolling one-year horizon IRRs weakened during the GFC,reflecting poor performance in the public markets the S&P 500 decreased 38%in 2008.1Data today is already starting to reflect a similar dip during this period of uncerta
102、inty.The uncertainty is compounded by VCs total value paid in capital(TVPI)in recent vintages.Several years of persistently strong public market performance facilitated robust VC valuations.The S&P 500,for instance,returned 18.7%on an annualized basis from 2015 through 2021.2This led to high VC TVPI
103、s buoyed by markups(i.e.,“paper returns”).As public markets correct,however,it remains unclear whether the high TVPIs will ultimately translate to distributions to LPs or if the industry will see a reversion to the mean as funds mark their holdings to market.Such dynamics necessitate a focus on the
104、long term.Funds raised during the last recession performed well compared to funds raised just prior to the GFC.One reason for this trend could be the reset in valuations that occurs during downturns,which allows funds to invest at lower prices.Should the market begin to see valuations settle again t
105、oday,it could be a promising sign to investors that todays vintages could be some of the strongest.Q4 2022 GFB Outlook Report18Notes:1)The S&P 500 price index decreased 38%between 12/31/2007 12/31/2008.2)The S&P 500 returned an annualized return of 18.7%between 12/31/2014 12/31/2021.3)Data as of yea
106、r-end except for 2022,whose data is through 3/31/2022 due to data reporting lags.4)Shaded years are those in which the NBER has defined a recession.5)Average DPI(distributed to paidin)represents the average of median DPIs from every vintage year,1980 through 2012.Data is as of 6/30/2022,due to repor
107、ting lags.6)Data is as of 6/30/2022,due to reporting lags.The five-year forward S&P 500 return is calculated as of year-end.Source:Preqin,NBER,S&P Capital IQ and SVB analysis.Global PE/VC IRR by Vintage Year and 5-Year Forward S&P 500 Return6Rolling One-Year Horizon IRRs3Global VC TVPI by Vintage Ye
108、ar and Average DPI Since 19805GrowthVenture0.00.51.01.52.02.53.0802004200820122016Recession years4TVPI by vintageAverage DPI,vintages 1980 to 2012IRRs categorized by strategy type for global fundsVenture5-year forward S&P 500 returnBuyoutRecession years4Funds raised around the
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