Coronavirus Effects On Private Markets Updates(Aug. 31-Sep. 2):

Despite the economic slowdown amid the pandemic, the tech fundraising boom isn’t finished yet. Thoma Bravo, the Chicago-based firm that buys software companies and other tech-focused businesses, plans to wrap up fundraising this fall for three vehicles that could combine to bring in over $21 billion, according to The Wall Street Journal.

The bulk of that total will go toward the firm’s 14th flagship fund, which has a $16.5 billion target. Another $3.5 billion will reportedly be for a middle-market vehicle focusing on enterprise software and tech deals, and another $1.3 billion will go toward a small-cap tech fund.

Fundraising for tech-focused private equity vehicles has surged over the past decade: After sitting at $25.2 billion in 2010, industry-wide dry powder for tech funds topped $100 billion in 2019, according to PitchBook data. And the past 12 months have brought even more mega-funds.

Last September, Vista Equity Partners closed its latest flagship effort on some $16 billion, blowing past a predecessor that raised $11 billion in 2017. In June, meanwhile, Francisco Partners closed three new tech funds with a total of $10 billion in LP commitments.—Adam Lewis, 10:57 a.m. PDT, Sept. 2

Coronavirus effects on venture capital

Shopmonkey drives home $25M

Automotive software startup Shopmonkey has raised a $25 million Series B led by Bessemer Venture Partners, with Index VenturesE.ventures and I2BF participating. The San Jose-based company, which provides a platform for auto repair shops, said its customers have shown increased interest in digitization amid the pandemic. In connection with the deal, Bessemer partner Byron Deeter will join Shopmonkey’s board of directors. —James Thorne, 11:11 a.m. PDT, Aug. 31

SoftBank to sell $14B in wireless unit stock

SoftBank has announced plans to sell up to 1.03 trillion shares of SoftBank Corp, its telecom unit, that are currently worth around $14 billion. The company has already sold or monetized 96% of its 4.5 trillion yen (about $43 billion) asset sale program announced in March, which aims to shore up the company’s balance sheet and stock price. SoftBank said it was necessary to expand the program, citing uncertainty around the COVID-19 pandemic. —James Thorne, 10:58 a.m. PDT, Aug. 31

Coronavirus effects on private equity

KKR continues frenetic 2020 with $4.7B software exit

KKR hasn’t allowed the COVID-19 pandemic to slow down its dealmaking. And now it has scored a 10-figure exit.

Clayton Dubilier & Rice has agreed to acquire business software company Epicor Software from KKR in a deal worth $4.7 billion, marking an end to KKR’s four-year ownership run. Based in Austin, Epicor offers management and sales software products to middle-market companies in a range of industries including automotive, retail and manufacturing.

KKR originally acquired Epicor from Apax Partners for roughly $3.3 billion, including debt. The New York firm struck two add-ons for the business last year, acquiring 1 EDI Source, a provider of software tools, and Majure Data, which offers warehouse management software. A few months later, KKR reportedly took Epicor through a $1.7 billion dividend recap, including $560 million that went into the firm’s coffers.

The latest deal comes after KKR in May made a $1.5 billion minority investment in Jio Platforms, an India-based telecom company. Last week, the firm led a $300 million investment in cybersecurity provider ReliaQuest. And its infrastructure arm got board approval last week to purchase a €1.8 billion (about $2.2 billion) stake in Telecom Italia, an Italian broadband provider. —Adam Lewis, 10:28 a.m. PDT, Sept. 1

PitchBook reports on the coronavirus impact on private markets

Real assets fundraising tops $100B in H1

After bringing in over $200 billion in 2019, real assets funds remain strong, with more than $100 billion raised through the first six months of this year. Notably, real estate fundraising has been remarkably resilient despite the ongoing economic crisis, accounting for more than half of that total.

Capital is continuing to pour into real assets funds as institutional investors bet on the pandemic’s longer-term recovery, according to PitchBook’s H1 2020 Real Assets Report. And as fund managers search for opportunities, the burgeoning life sciences sector, detailed in the report’s spotlight, may be worth a look. Other key takeaways include:

  • Brookfield’s $20 billion vehicle was the second infrastructure fund ever to reach that threshold
  • Many physical infrastructure assets saw write-downs, while digital infrastructure assets outperformed
  • The oil and gas sector hit low points for both fundraising and deal activity, as global shutdowns hammered demand

—Dylan Cox, Wylie Fernyhough and Joshua Chao, 10:15 a.m. PDT, Sept. 1

Despite insurtech’s slow start to 2020, its potential is undiminished

Health and life insurtech startups drove the bulk of H1 2020’s venture activity in the sector, which amounted to $1.9 billion in total across 168 deals. However, both capital invested and deal count showed a marked decline year-over-year, down 39% and 20%, respectively.

Yet there is still strong potential for startups in insurtech, according to our latest Q2 Emerging Tech Research, as a growing class of venture-backed companies are seizing opportunities to disrupt the industry. Key takeaways from the report include:

  • From 2014 through 2019, the compound annual growth rate of yearly VC insurtech investments soared nearly 60%
  • The pandemic has accelerated the shift to digital insurance sales, which had been slow to change in an industry that is traditionally behind the curve when it comes to digital transformation
  • Insurance underwriting technology is still in the early stages of development, but insurance APIs and platforms are becoming more prevalent

—Robert Le and Bailey York, 11:30 a.m. PDT, Aug. 31

Source: PitchBook

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