Overbay Capital Partners

Overbay Quarterly Update Q1 2020

June 30, 2020

Overbay Capital Partners is pleased to provide its quarterly update for the first quarter of 2020. In total, Overbay investors benefited from over 280 liquidity events across a diverse range of industries and geographies. Buyout (78) and Venture/Growth (187) represented the most active strategies for exits. The most active regions include North America (169) and Europe (58). There was liquidity coming from a variety of vintages, with the majority coming from 2006 (63) vintage year funds.

MARKET TRENDS & INVESTMENT THEMES

In mid-March, the World Health Organization declared COVID-19 a global pandemic, causing a major dislocation in global equity markets and affecting the health and daily lives of nearly everyone in the world. This quarterly update reflects upon the economic environment as it stood at the end of Q1 2020.

Global markets tanked at the end of the quarter as many countries were locked down in an effort to contain the virus. In the high yield debt markets, default rates are expected to skyrocket. Uncertainty around country reopening efforts have caused oil producers to assess production as storage decreases rapidly while crude oil pricing fluctuates. As of March 31, 2020, the MSCI World Index is down 21.4% from the end of 2019. (At the time of writing, the US public markets had made a strong rebound, largely behind unprecedented stimulus measures and investor optimism).

Private markets fundraising has remained healthy going into 2020, with well over $900 billion raised globally in 2019. Purchase price multiples across the US, Europe, and MSCI World indices continued to stay high in the 10-11x range up until Mid-March, when the majority of deal flow came to an abrupt halt. Fund managers are focused on their portfolio companies as they assess liquidity needs and analyse various scenarios going forward. Global venture capital fundraising started the year strong, with Q1 2020 fundraising totaling more than $20 billion. Some industry sectors were better positioned during the pandemic’s initial stages and experienced a demand uplift with potential for long-term sustainability. However, venture-backed investment activity and exits are expected to slow down as public market volatility continues. Following a record $80 billion in global deal volume in the private equity secondary market, deployment is expected to drastically decline in the near term. Secondaries activity is expected to pick up in H2 2020 as strong fundraising momentum continues and buyers gain more conviction in pricing assets. While managers continue to remain opportunistic across the private markets, the threshold for making new investments is still high as the market is still assessing the early stages of the global health crisis.

Selected exits

  • • Achillion Pharmaceuticals (Biopharma) – Acquired by Alexion
    • Overbay acquisition date: Q4 2018
  • • Adyen (Payments) – Sale of Public Shares (AMS: ADYEN)
    • Overbay acquisition date: Q4 2019
  • •Affirmed Networks (5G Software) – Acquired by Microsoft
    • Overbay acquisition date: Q4 2018
  • • Aptos (Retail Technology) – Acquired by Goldman Sachs Merchant Banking
    • Overbay acquisition date: Q4 2018
  • • Cardlytics (Marketing Intelligence) – Sale of Shares
    • Overbay acquisition date: Q4 2018
  • • Electronic Arts (Gaming) – Sale of Shares
    • Overbay acquisition date: Q4 2018
  • • Galco (Industrial Electronic Components) – Acquired by Freeman Spogli & Co.
    • Overbay acquisition date: Q2 2018
  • • Graduation Alliance (Alternative Education) – Acquired by Undisclosed Buyer
    • Overbay acquisition date: Q4 2019
  • •Hollar (Discount Retailer) – Acquired by Five Below
    • Overbay acquisition date: Q4 2018
  • • Locaweb (Web Services) – IPO’d on Feb 4, 2020 (BVMF: LWSA3)
    • Overbay acquisition date: Q4 2018
  • • New Seasons Market (Natural Food Retailer) – Acquired by Good Food Holdings
    • Overbay acquisition date: Q4 2018
  • • Nexi (Banking & Payments) – Sale of Shares
    • Overbay acquisition date: Q4 2019
  • • OCENSA (Crude Oil Transportation) – Stake Acquired by I Squared Capital
    • Overbay acquisition date: Q4 2019
  • •OneWater Marine (Boat Dealer) – IPO’d on Feb 7, 2020 (NASDAQ:ONEW)
    • Overbay acquisition date: Q4 2018
  • • Sentient Energy (Distribution Grid Transformation) – Acquired by Koch
    • Overbay acquisition date: Q4 2019
  • • Sophos (Cybersecurity) – Take-Private Acquisition by Thoma Bravo
    • Overbay acquisition date: Q4 2018
  • • Spear Education (Dental Continuing Education) – Recapitalization
    • Overbay acquisition date: Q2 2018
  • • Uber (Rideshare, Technology) – Sale of Shares
    • Overbay acquisition date: Q3 2019
  • • VBI Vaccines (Biopharma) – Sale of Shares
    • Overbay acquisition date: Q4 2018
  • • Veracyte (Diagnostics) – Sale of Shares
    • Overbay acquisition date: Q3 2019

Overbay acquisition date is the quarter in which Overbay acquired exposure to the company through a secondary purchase. Select companies listed are held within one or more fund structures in which Overbay is a limited partner.

Liquidity by Strategy
Liquidity by Vintage Year
Liquidity by Geographical Focus

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