Overbay Capital Partners

Overbay Quarterly Update Q2 2020

September 30, 2020

Overbay Capital Partners is pleased to provide its quarterly update for the second quarter of 2020. In total, Overbay investors benefited from over 250 liquidity events across a diverse range of industries and geographies. Buyout (76) and Venture/Growth (177) represented the most active strategies for exits. The most active regions include North America (170) and Europe (68). There was liquidity coming from a variety of vintages, with the majority coming from pre-2004 (52) and 2006 (47) vintage year funds.

MARKET TRENDS & INVESTMENT THEMES

As the world struggled to adjust to the COVID-19 pandemic, the second quarter of 2020 presented an unexpected turnaround. Markets rallied around economic stimulus packages, medical progress, and expectations of recovery. Economic stabilization and re-openings carried this rebound even further throughout the quarter. This quarterly update reflects upon the economic environment as it stood at the end of Q2 2020.

As mentioned, global markets rallied significantly in Q2 2020 as they recovered from losses suffered in the first quarter. Throughout the quarter, governments and central banks in many countries offered stimulus packages and lowered interest rates, instilling confidence in investors and bolstering fixed-income and equity markets. Although the crude oil price has recovered from its lowest point in April, global oil demand remained significantly lower than it was at the beginning of the year. Despite this quarter’s large rally, uncertainties surrounding COVID-19 still linger and many markets have yet to fully rebound from their Q1 losses. As of June 30, 2020, the MSCI World Index is up 18.8% from March 31, 2020.

While public markets rallied strongly throughout the second quarter, private market investments slowed down amid lockdowns and investor uncertainty. Private markets fundraising is expected to remain below post-GFC levels for the foreseeable future. Throughout the quarter, private equity investors appeared to step away from larger allocations, as the popularity of almost all private equity strategies declined. Buyout deal activity dropped sharply in Q2, with few multi-billion dollar deals, while venture capital and growth equity deal flow began to rebound at the end of the quarter. Secondaries were one of the few private markets strategies that experienced an increase in interest levels from private market investors, with potential for increased opportunities as distressed assets and firms were sold at attractive valuations. Despite being in the fundraising spotlight, LP-stake sales had remained slow while GP-led and structured solutions such as preferred equity and fund-level financing became more prevalent. Deal volume is expected to pick up in Q3 2020 as investors gain more confidence behind the valuation of assets.

Selected exits

  • • Agora.io (Video Engagement Software) – IPO’d on Jun 26, 2020 (NASDAQ: API)
    • Overbay acquisition date: Q4 2019
  • •Aleris International, Inc. (Aluminum Rolled Products) – Acquired by Novelis Inc.
    • Overbay acquisition date: Q4 2018
  • •Arxan Technologies (Digital Rights Management) – Acquired by Digital.ai
    • Overbay acquisition date: Q4 2019
  • •Avantor (Chemicals Manufacturing) – Secondary Offering (NYSE: AVTR)
    • Overbay acquisition date: Q4 2019
  • • AVI-SPL (Audio-Visual Technology) – Acquired by Marlin Equity Partners
    • Overbay acquisition date: Q4 2018
  • • Ceros (Digital Design Platform) – Acquired by Sumeru Equity Partners
    • Overbay acquisition date: Q3 2018
  • • CloudGenix (Enterprise Software) – Acquired by Palo Alto Networks
    • Overbay acquisition date: Q4 2018
  • • CrowdStrike (Cyber Security) – Sale of Shares (NASDAQ: CRWD)
    • Overbay acquisition date: Q4 2019
  • •Draft Kings (Fantasy Sports) – Reverse Merger (NASDAQ: DKNG)
    • Overbay acquisition date: Q4 2018
  • • Inari Medical (Medical Devices) – IPO’d on May 22, 2020 (NASDAQ: NARI)
    • Overbay acquisition date: Q4 2018
  • • Insmed (BioTech) – Sale of Public Shares (NASDAQ: INSM)
    • Overbay acquisition date: Q4 2018
  • • Metallo (Multi-Metal Recycling) – Acquired by Aurubis AG
    • Overbay acquisition date: Q4 2019
  • • Metaswitch (Telecommunications) – Acquired by Microsoft
    • Overbay acquisition date: Q4 2018
  • • Ostara Nutrient Recovery (Renewable Energy) – Acquired by Wheatsheaf
    • Overbay acquisition date: Q4 2018
  • • Petsmart / Chewy Inc. (Retail – Pet Products) – Sale of Shares
    • Overbay acquisition date: Q4 2019
  • • Pliant (Pharmaceuticals) – IPO’d on Jun 3, 2020 (NASDAQ: PLRX)
    • Overbay acquisition date: Q4 2018
  • • Silk Road Medical (Health Care Supplies) – Sale of Shares
    • Overbay acquisition date: Q4 2019
  • • Sundyne (Industrial Equipment Manufacturing) – Acquired by Warburg Pincus
    • Overbay acquisition date: Q4 2019
  • • Surgical Affiliates (Healthcare Services) – Acquired by Varsity Healthcare Partners
    • Overbay acquisition date: Q4 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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