—— Private Equity Returns Hit 15-Year Low; Two Major Texas Energy Companies Merge; Pharmaceutical Companies Reach Record Equity Financing; Blackstone Creates UK’s Third-Largest Logistics Owner; U.S. Secretary of Defense in Critical Care; Gilead Acquires Liver Drugmaker; Bitcoin Hits $50,000 Again After Two Years
1. Private Equity Returns Hit 15-Year Low
According to the latest statistics from Raymond James Financial, last year, private equity investors (Limited Partners) saw a net return of only 11.2%, marking the lowest level since the 2009 financial crisis and falling short of the 25% median return over the past 25 years.
High loan interest rates, market volatility, and economic uncertainty have made it difficult for private equity firms to exit investments through sales or IPOs.
Sunaina Haldea, head of Raymond James Private Capital Advisors, explained that investment firms are unable to recover their invested capital, preventing them from entering new investments.
Currently, the fundraising cycle for new funds is 21 months, much slower than the 18 months it took two years ago.
The private equity market is facing significant challenges in navigating the current economic climate.
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2. Two Major Texas Energy Companies Merge
Diamondback Energy in Texas announced today that it will acquire Endeavor Energy Resources, another Texas-based oil and gas company, for $26 billion.
Following the merger, the two companies will form the largest energy firm in the prolific Permian Basin.
According to a statement released today, Diamondback will pay Endeavor $11.7 billion in stock and $8 billion in cash.
Post-merger, Diamondback will hold a 60.5% stake in Endeavor, with the remaining shares held by current stakeholders.
After the announcement, Diamondback’s stock price rose by 6.4%.
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3. Pharmaceutical Companies Reach Record Equity Financing
Investment bank Jefferies reported that in January this year, pharmaceutical companies raised $6.2 billion in U.S. capital markets, marking the highest level since February 2021.
Over the past two years, a dry spell in the capital markets forced many companies to lay off employees and delay projects, with some companies going bankrupt. Rahul Chaudhary, head of medical capital markets at Leerink Partners, stated that investor confidence has significantly improved as stock prices have rebounded, and the Federal Reserve is expected to cut rates.
The S&P Biotech ETF has corrected by two-thirds from its 2021 peak, but it has risen 40% since October last year.
This year, the market for pharmaceutical IPOs is expected to be more active as many companies temporarily suspended their plans last year.
Source：Financial Times – US biotech fundraising boom ends two-year deal drought
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4. Blackstone Creates UK’s Third-Largest Logistics Owner
Blackstone announced in a letter to its employees today that it plans to merge two of the largest warehouse owners in the UK, St Modwen and Industrial REIT, along with 25 previously acquired properties. The merged company will be named Indurent.
After the merger, the company will hold over 200 properties, covering more than 26 million square feet, making it the third-largest logistics owner in the UK, behind Segro and Tritax Big Box REIT.
In recent years, many logistics owners have rapidly expanded their assets through acquisitions. Tritax announced today that it plans to acquire a smaller competitor, UK Commercial REIT.
Goldman Sachs, a leader on Wall Street, earned $901 million in equity underwriting fees over the first nine months.
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5. U.S. Secretary of Defense in Critical Care
Last Sunday, U.S. Secretary of Defense Lloyd Austin was admitted to the intensive care unit for the second time in a month due to bladder issues.
In early January, the 70-year-old Austin was hospitalized for worsening prostate cancer and was discharged two weeks later. The hospital spokesperson stated that it is currently unclear how long Austin will remain in the hospital.
Austin returned to work on January 29 but did not immediately inform President Biden about his cancer diagnosis, drawing criticism from Congress.
Biden has stated that he will not ask for Austin’s resignation and continues to have confidence in him.
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6. Gilead Acquires Liver Drugmaker
Gilead Sciences announced today that it will acquire liver disease pharmaceutical company CymaBay Therapeutics for an equity value of $4.3 billion.
Gilead will purchase all of CymaBay’s outstanding shares at $32.5 per share, a 27% premium over last Friday’s closing price.
CymaBay’s drug, seladelpar, is primarily used to treat women with primary biliary cholangitis, and after successful phase 3 trials, it has received expedited review by the FDA, with approval expected on August 14.
Today, Gilead’s stock rose 2%, while CymaBay’s stock surged 25%.
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7. Bitcoin Hits $50,000 Again After Two Years
Today, Bitcoin’s price surpassed $50,000 for the first time in two years, having tripled in value since the beginning of the year.
The last time Bitcoin reached $50,000 was in December 2021. However, the current price is still far below its peak of $69,000 in November 2021.
Bitcoin was originally created to replace the traditional financial system, but its significant price volatility has made it one of the most speculated assets.
The recent surge in price is due to the approval of cryptocurrency ETFs by the U.S. SEC, and investors have rekindled interest in high-risk assets.
Several major cryptocurrency ETFs have already attracted $2.8 billion in capital.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.