Ameetee

𝐀 𝐃𝐞𝐞𝐩 𝐃𝐢𝐯𝐞 𝐢𝐧𝐭𝐨 𝐭𝐡𝐞 "𝐒𝐨𝐥𝐮𝐭𝐢𝐨𝐧𝐬 𝐏𝐫𝐨𝐯𝐢𝐝𝐞𝐫𝐬" Solutions providers have become essential in the private markets, offering data-driven, cost-effective access for investors. Private equity has been growing at twice the rate of public markets, showing strong performance and promising continued growth. New areas like infrastructure and private debt present further opportunities.   With around 6.5K private funds in North America and 11.5K globally, navigating this landscape is challenging. Limited resources and opaque markets make it difficult for institutional investors to manage private market allocations. According to Oppenheimer & Co., public markets, shrinking at a 3% CAGR, contrast sharply with the expanding private market, where 17K out of 21K US companies with over $100M in revenue are private.   Solutions providers offer expertise in managing these complexities, helping investors balance capital. This ensures stable and predictable investments, highlighting their crucial role in the evolving private markets landscape.

As markets remain frozen, private equity funds are facing growing concerns from investors, as reported by Eric Platt, @Sun Yu, and Antoine Gara for the Financial Times. The article features an interesting quote from Steven Meier, CIO of the New York City Retirement System. He mentions that the growth of fund-level NAV loans — which many leading PE funds including Vista Equity Partners and The Carlyle Group had been using — was driven by the need to appease #investors pushing for more exits and cash distributions. Given LP’s heightened unease about adding new layers of leverage, private #equity firms have now drastically reduced their use of these loans to pay dividends. This caused the total value of NAV loans acquired for this purpose to plummet by 90%. However, it seems that some funds are continuing to promote these #loans with other intentions, such as injecting liquidity into portfolio companies in dire need of fresh capital. What are your thoughts on PE funds using NAV loans to allay liquidity concerns? Let us know in the comments!

The secondary market is booming. An article by Jessica Hamlin on PitchBook underscores that Hamilton Lane, a global investment management firm, has successfully closed its largest fund ever. The proceeds, which totalled $5.6 billion, will be invested in the secondary market, which has garnered traction in recent years. A recent Pitchbook report outlined that in 2023, funds focused on #secondaries raised 124.5% more than in 2022. Given the liquidity challenges that have affected the overall fundraising landscape, secondaries have become more attractive for LPs. Investors in Hamilton Lane’s fund include pension #funds, sovereign wealth funds, and foundations, among others, which signals the bullish outlook that financial institutions have in secondaries to generate attractive long-term returns and boost #investor outcomes. Read the full news here: https://lnkd.in/e8VaJH3m

𝐆𝐄𝐍 𝐀𝐈: 𝐓𝐎𝐎 𝐌𝐔𝐂𝐇 𝐒𝐏𝐄𝐍𝐃, 𝐓𝐎𝐎 𝐋𝐈𝐓𝐓𝐋𝐄 𝐁𝐄𝐍𝐄𝐅𝐈𝐓? Recently, several important articles have been published discussing the limited returns from AI investments, notably by David Cahn from Sequoia and The Economist. Goldman Sachs Research has attempted to quantify this pressing issue. The promise of generative AI technology to transform companies, industries, and societies has led tech giants and other companies to allocate an estimated $1T on capital expenditures in the coming years. This includes significant investments in data centers, chips, AI infrastructure, and the power grid. However, this spending has shown little return beyond reported efficiency gains among developers. Economist Daron Acemoglu forecasts only a 0.5% increase in productivity and a 1% increase in GDP over the next decade, starkly contrasting Goldman Sachs' estimates of a 9% productivity increase and a 6.1% GDP growth.

The student loan sector is attracting interest from private #equity titans, as reported by Eric Plat, Maria Heeter, and Antoine Gara for the Financial Times. Carlyle and KKR, two of the most established firms in the sector, are now competing for Discover Financial’s $10 billion student #loan portfolio. Even though student loans can have higher default rates, they also offer higher yields, and, when securitized as SLABS (Student Loans Asset-Backed Securities), can provide stable payouts. The prospective deal comes as Discover, which was recently acquired by Capital One for $35 billion in a synergy of #financial giants, aims to let go of its student loan portfolio, which was a condition of the deal. Read the full news here: https://lnkd.in/dzZSayFJ What do you think about PE #funds participating in the student loans arena? Let us know in the comments. 

𝐅𝐢𝐧𝐭𝐞𝐜𝐡: 𝐓𝐡𝐞 𝐅𝐮𝐧𝐝𝐢𝐧𝐠 𝐖𝐢𝐧𝐭𝐞𝐫 𝐂𝐨𝐧𝐭𝐢𝐧𝐮𝐞𝐬, 𝐛𝐮𝐭 𝐒𝐨 𝐃𝐨𝐞𝐬 𝐆𝐫𝐨𝐰𝐭𝐡 Despite the capital abundance in fintech, the industry has faced a sobering reality check since the highs of 2021. According to BCG, revenue multiples have plummeted from 20x to 4x, and funding has dropped by 70%, with late-stage investments hit hardest. However, these challenges are seen as a short-term correction. The focus has shifted to sustainable growth, with an emphasis on positive net income and neutral cash flow. Global fintech revenues have grown robustly, averaging 14% over the past two years. Profitability is improving, with EBITDA margins up by 9 percentage points on average. Yet, most leading fintechs still fall short of the "rule of 40," signaling the need for continued focus on profitable growth.

We’re proud to share that, last week, Ameetee participated in the final selection round for Tenity, Switzerland’s largest #fintech accelerator backed by SIX and UBS. 28 out of 150 innovative companies were chosen to pitch their ideas at the event, which was very well-organized, professional, and engaging, and featured representatives from prominent financial institutions such as UBS, #venture capital funds, and other partners of Tenity. The event kicked off with a series of one-minute elevator #pitches, where each startup had a chance to shine. The cohort was quite diverse, with companies from the UK, Italy, and Spain, and founders, solving different problems, and ranging from very early-stage projects to those that have already garnered some traction and revenue. Each participating startup had a meeting with the investment team, three meetings with Tenity partner groups, and a technical interview where they had a chance to present their technology and the impact of their solutions. During the last 18 months, we have had numerous meetings with early-stage funds and angel investors, which didn’t always go smoothly. In comparison to these, we were impressed with the quality and depth of the questions the Tenity’s #investment team and partners asked. They quickly grasped the essence of what we’re building and dimensioned our impact. Between 10 and 15 companies will be selected for the program, which starts in August and will run for four months. Many thanks to Tenity and Nir Netzer for the invitation!

𝐀𝐈 𝐂𝐨𝐮𝐥𝐝 𝐀𝐝𝐝 $𝟏𝟕𝟎 𝐁𝐢𝐥𝐥𝐢𝐨𝐧 𝐭𝐨 𝐆𝐥𝐨𝐛𝐚𝐥 𝐁𝐚𝐧𝐤𝐢𝐧𝐠 𝐏𝐫𝐨𝐟𝐢𝐭𝐬 𝐛𝐲 𝟐𝟎𝟐𝟖 AI and ML have long been integral to finance, handling structured data and quantitative tasks. Now, GenAI expands these capabilities to unstructured data, which makes up 80-90% of enterprise data. This unstructured data, found in emails, documents, and reports, holds immense value for customer insights, risk management, and fraud detection. With advanced AI analytics, banks can personalize services, optimize operations, and ensure regulatory compliance. According to Citi, 93% of financial institutions believe AI adoption will enhance profitability within five years. By 2028, AI could increase global banking profits by 9%, or $170B, rising from $1.8T to nearly $2.0T.

𝐇𝐚𝐬 𝐩𝐫𝐢𝐯𝐚𝐭𝐞 𝐞𝐪𝐮𝐢𝐭𝐲 𝐝𝐞𝐚𝐥𝐦𝐚𝐤𝐢𝐧𝐠 𝐟𝐢𝐧𝐚𝐥𝐥𝐲 𝐛𝐨𝐭𝐭𝐨𝐦𝐞𝐝 𝐨𝐮𝐭? After a two-year decline in deals, exits, and funds closed, the pace slowed in the first half of 2024. Limited partners continue to push for faster distributions and are focusing new commitments on a select few favored funds. General partners struggling to deliver attractive outcomes may face challenges. While the decline in deal count has leveled off, buyout funds are expected to finish the year flat compared to 2023. Exits remain low, and raising new capital is difficult. Despite 2024 deal value potentially matching pre-2021 levels, activity remains subdued given the available dry powder. With few large deals, there’s little evidence of a market upswing.

In 2023, there were 146 private equity deals with U.S. strategic communication firms. Eleanor Hawkins, from Axios, dives deeper into this trend, outlining that PE funds are becoming increasingly interested in #investing in the field. Notable deals include CVC Partners’ acquisition of a majority stake in Teneo, and KKR’s purchase of a 30% stake in FGS Global at a $1.4 billion valuation. In our opinion, these firms are attractive given the high demand for strategic communication #firms that can help #companies and executives fend off the growing challenges of culture wars, intensified regulations, AI, and others. Future #investors, especially in a sector like PE, which follows the money trail, will target firms that have specialized capabilities.