From a ruling by the Delaware Supreme Court to Spotify-inspired investments, we round up the news stories that caught our attention last week. Please note, some of these sites may require a subscription to view the article.
Private equity healthcare deal value surged to almost $63bn in 2018
Bain & Company’s Global Healthcare Private Equity and Corporate M&A Report highlights the activity of private equity-backed healthcare in 2018. Disclosed deal values surged by almost 50% to reach $63bn, and the aggregate number of deals also topped the previous year’s total.
Source: Private Equity Wire
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Blackrock CEO Larry Fink sees a “risk of a melt-up, not a meltdown” for markets
During an interview with CNBC, Blackrock CEO Larry Fink warns there is a market risk of a “melt-up, not a meltdown.” Fink feels that this risk leans towards an upswell in markets where investors face being underinvested; however, this sudden uptick could be a self-fulfilling prophecy as investors chase returns driven by a fear of missing out.
Source: Market Insider
Delaware court clarifies stance on “efficient markets hypothesis”
The Delaware Supreme Court has ruled that a lower court had erred when it used the “efficient markets hypothesis” to value Aruba Networks when it was acquired by Hewlett-Packard. In a case closely followed by hedge fund managers, the court ruled that Aruba was worth $19.10 per share, an increase from the earlier ruling of $17.13. The ruling may have implications for future cases of this nature, with the consensus being that judges would usually award the deal price to dissidents. The ruling over Aruba setting even lower prices opens up the prospect of big losses from the strategy –and could see it end entirely.
Source: Financial Times
Spotify prompts Nordic pension funds to add private equity to playlists
Nordic pension funds are looking to increase their allocations to local private equity opportunities following the success of domestic companies including Spotify, Skype and Rovio. With a vibrant start-up scene, these pension funds are looking to access the Nordics’ inner circle to find the best prospects early on. This activity has widened investment parameters in the region, and Sweden’s largest pension funds – APS 1, 2, 3 and 4 – are allowed to allocate up to 40% of their portfolio to illiquid investments.
For more data and analysis on investors’ plans for the year ahead, take a look at the recently launched Preqin Investor Outlook: Alternative Assets, H1 2019.
Singapore private equity into Indian real estate triples in last two years
According to an ANAROCK report on Private Equity in Indian Real Estate, Singapore-based investors are betting big on commercial real estate in India. The report states that of a total of $14bn of investment from private equity funds in property in India, approximately one-third was from Singapore-based firms. With less funding from banks over recent years, this has led to financing coming from private equity players. Singapore-based managers lead the charge, but there has also been investment from US-, Canada- and China-based firms.
Source: APN News
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Quant funds train sights on private equity
Morgan Stanley has stated that private capital revenues are estimated to reach nearly $70bn a year by 2023, which is attracting interest from quantitative investment firms. Two Sigma quietly relaunched Sightway Capital in 2018 and started to raise external capital for the first time, believing “that private equity firms that use more information and advanced approaches to decision science will have better outcomes.”
Source: Financial Times
Pinterest, Zoom shares surge in trading debuts
Shares of Zoom Video Communications Inc. jumped 72% on their trading debut on Thursday. The IPO was originally priced at $36 per share, but the shares were soon trading for $65 apiece. Pinterest had a similarly promising first day of trading and closed up 28% on the initial IPO price.
Source: The Wall Street Journal