September 29, 2021
2020 was marked by unprecedented disruptions brought by the COVID pandemic, but also the resilience of both the private and public markets. PE deal volume globally fell by 22%, the lowest year since 2015, however despite the turbulence, PE experienced a vigorous rebound seeing a flourishing in secondaries, with continuously climbing multiples and dry powder reaching new high at $1.4tn. The PE industry in early 2021 strongly resembles early 2020, with robust fundraising, rising deal volume, and elevated multiples. In fact, PE funds worldwide closed on$459bn this year through June, highest volume for the period in at least the past 5 years, 51% above the $303bn raised in the same period of last year. The number of active firms in private market stopped 11,000 in 2020, with PE holding 75% of the total, placing it as the fastest growing private market, at 9% per annum.
In the meantime, 2020 was a record year in funding for VC with $309bn of investments across almost 18,300 deals, driven by outsize interest in Tech and Healthcare. VC funding activity continued to break records at $91.3bn in 4Q20, up 75% yoy, with563 VC exits. So far in 2021: global VC funding has already reached $50.5bn across 1766 deals versus $22bn for the same period in 2020.
Deal volume in the Tech sector dropped by only 5% in 2020 with rapid growth in both public and private, pushing multiples upward and outperforming the market. 72% of PE capital is concentrated in software and IT services. Technology, Healthcare, and Fintech/Financials continue to be the largest recipients of funding activity from CVCs. In 2020, Supply Chain &Logistics reached $15bn and AI grew to $31bn, with a new demand for Edtech, while SaaS, Payments, and Adtech all saw declines.
Healthcare VC enjoyed record fundraising growth of 70% yoy, with Biotech, drug development and pharma all seeing meaningful investment growth. Biotech VC funding peaked in 2020 with $23bn across 750 deals. Additionally, large pharma companies such as Merck & Co, Allergan, Eli Lilly & Co, Novartis, Pfizer, and others have been the top M&A acquirers with at least 5 acquisitions each in the past 5 years.
From 2019 levels, when the watches and jewelry market stood at $329bn of annual sales and despite COVID, which pushed the demand for fine jewelry down by 10-15%, the jewelry sector is expected to grow back annually by 3-4%for the 2019-2025 period. The rebound will vary depending on the region and consumer segments. While the strongest consumer recovery will be in Asia (c.a. 45% of global branded fine jewelry) growing by 10-14% CAGR in the 2019-2025, the biggest swing will arise from new consumers’ profile and shopping habits. The coming five years will offer significant opportunities for players to rewrite the rulebook following the three seismic shifts in the fine jewelry industry: buying into brands (branded fine jewelry to grow at 8-12% CAGR from 2019 to 2025, to represent 25-30% of the market by 2025), online magic (expected to grow to 18-21% of total sales by 2025, up from 13% in 2019), and the sustainability surge (20-30% of fine jewelry purchases in 2025 will be influenced by sustainability).
