Tech Conglomerates Eye Financial Services Sector

December 20, 2018

PitchBook revealed its predictions for the private equity, venture capital and emerging technology industries in 2019. Predictions are developed by PitchBook analysts and are based on industry trends surfaced through PitchBook data as well as conversations with prominent industry pundits and influencers. In addition to predictions, analysts also weigh caveats and other considerations that may impact 2019 industry outcomes.

Trending in 2019:

PitchBook 2019 Private Equity Outlook

•GP stakes will experience ongoing innovation.

•Secondaries activity hits another all-time high.

•Short-term returns fall for PE funds, but performance improves relative to public equities.

•PE fundraising will grow for China-focused funds.

•Private debt fundraising rebounds but remains below 2017 levels.

•Multiples in public and private markets will converge further.

•Take-privates will increase in prominence.

"PE multiples continue climbing as both dealmaking and fundraising remains robust," said James Gelfer, senior strategist at PitchBook. "As traditional private market strategies become more crowded, we expect PE investors to turn their focus to innovative new approaches including, GP stake deals and secondary transactions, as well as geographic expansion, particularly in China."

PitchBook 2019 Venture Capital Outlook

•IPO's proportion of total VC exit value hits new decade high.

•New participants in VC continue to proliferate.

•Median early-stage valuation step-ups will hit 2.0x in 2019.

•Median angel & seed deal size will continue to climb.

•Growth in median fund size decelerates.

•Banks back more institutional blockchain solutions.

"Capital has poured into the venture ecosystem at an accelerated rate in 2018, which has created an ever-growing population of unicorns and has placed upward pressure on deal sizes and valuations for angel, seed and early stage private companies," said Cameron Stanfill, analyst at PitchBook. "What's more, strong returns in recent years have encouraged a host of new entrants into the ecosystem, further stiffening competition and driving up price tags. For investors hoping for liquidity through IPO in 2019, poor public equity performance or extended volatility in 2019 would likely cause a significant slowdown in public listings as companies could choose to postpone IPOs in a less-than ideal market."

PitchBook 2019 Emerging Technology Outlook

•A secular shift away from pure-play shared mobility applications toward bundled mobility-as-a-service (MaaS).

•Autonomous vehicle partnerships and M&A activity will remain elevated.

•North America and Europe will move toward bundling consumer fintech products and services.

•Technology conglomerates to make a grand entrance into the financial services sector.

"While some industries are in the midst of unbundling, we expect bundled solutions to mark the next wave of development for certain emerging technologies such as ridesharing, autonomous vehicles and fintech," said Robert Le, analyst at PitchBook. "Looking ahead to 2019, we expect major players in ridesharing to expand into bundled mobility services, while fintech business will adopt the China model of packaging micro-services into large-scale products."

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