Private Capital Monitor 21/07
21st July 2023
Alexandra Scaggs opines for the Financial Times on the growth of private credit. Scaggs highlights that whilst media headlines indicate the private credit market is booming, the asset class is still dwarfed by the traditional markets for junk-rated debt. Scaggs notes this warped perception is driven by a nuance in data birthed by firms that track private capital and caveats this perceived shift is “not to private-credit cannibals, but to the Federal Reserve and simple bond maths.”
Worth a read
Allison Schrager writes for Bloomberg Opinion on the UK’s considered shift towards heavier private equity investment in pension funds. Schrager notes that critics believe this exposes retirees to undue risk and goes against the goal of providing stable income in retirement. While some argue that European and British pensions should take on more risk for higher returns, excessive risk with opaque and illiquid assets is seen as problematic.
Bloomberg reports Blackstone’s milestone of becoming the first private equity firm to manage $1 trillion, has been “tempered by a dealmaking slump” that weighed on second-quarter results. Distributable earnings tumbled 39% to $1.2 billion, the lowest in two years.
Bloomberg reports investments by GGV Capital, GSR Ventures, Walden International and Qualcomm Ventures are being probed by the House select committee on China. The investigation into four venture capital firms for their investment in Chinese technology companies is the latest sign of Washington’s increasing scrutiny of American funds suspected of helping develop sensitive industries in China.
The Financial Times reports The US Department of Justice (DoJ) and Federal Trade Commission (FTC) have proposed merger guidelines that signal a tougher stance against private equity and the technology sector. According to a senior administration official, if implemented, the guidelines will mean agencies will scrutinise an acquisition if it makes it “more difficult for consumers to choose between different platforms” or if it “would enable a dominant firm to deprive rivals of scale or network effects”. Jonathan Kanter, head of the DoJ’s antitrust division, said it was “vital” to adapt enforcement tools “to keep pace so that we can protect competition in a manner that reflects the intricacies of our modern economy”.
Media of the week
A Venture Capital family affair
Jesse Draper, founding partner of Halogen Ventures, discusses her family’s rich history in the VC space and her firm’s commitment to investing in women-led and women-focused businesses.
|Nextech||TPG||Thomas H. Lee Partners||$1.4 billion||19-Jul||US||Medical Software|
|Standish||Thomas H. Lee Partners||$1.6 billion||18-Jul||US||Fund Administration|
|Gresham House||Searchlight Capital||£470 million||17-Jul||UK||Asset Management|
|Kahoot||Goldman Sachs||$1.7 billion||14-Jul||US||Game-based Learning|
|Riveron||Kohlberg & Company||HIG Capital||n/a||17-Jul||US||Business Advisory|
|Sureserve||Cap10 Partners||£214 million||17-Jul||UK||Energy Services|
|Crescent Point Capital||Ares Management Corp||n/a||18-Jul||China||Private Equity|
Wall of Money
CVC Capital Partners IX exceeded its €25 billion target and has beaten Blackstone’s $26.2bn Capital Partners VIII fund to take the top spot. It will continue its predecessor’s focus of investing across Europe and America.
The mid-market firm, established by former executives at Paris-based PAI Partners, has raised over €600 million for its debut strategy. The fund has completed five platform investments in total, including a UK nursery operator and a European firm that produces, packages, and distributes fresh fruit.
Smart City Fund II will invest in high-growth companies operating in sectors that underpin the transition towards more sustainable cities, from renewable energy to the built environment through mobility, logistics and manufacturing. It will invest primarily in Europe but also in Asia, Israel and North America and prioritise companies with “verifiable” environmental impact. The fund has been supported by five sovereign wealth and development institutions.
Movers and Shakers
- Tim Franks, head of KKR’s UK and Ireland PE business, is stepping down a few months after the company wrapped up its recent European buyout fund with $8bn capital commitments.
- Warburg Pincus has chosen Jeffrey Perlman as a successor to the firm’s long-standing president, Timothy Geithner.
- Nomura Private Capital has appointed Steve Kavulich, ex-portfolio manager and investment committee member at BlackRock, for the position of Head of Opportunistic Private Credit in their New York office.
- Akin has appointed Patrick Dundas, formerly of Schulte Roth & Zabel, as a partner in its investment management practice in New York. Dundas will spearhead the market intelligence and legal practice infrastructure initiative in his new role.
From the Horse’s Mouth
“The deal market feels like it’s unfreezing a bit” – Blackstone President Jon Gray
“The current market cycle has exerted acute pressure on private equity liquidity. In this challenging landscape for M&A and the limited availability of IPOs, secondaries have emerged as one of the few viable avenues for investors to access much-needed liquidity” – Stuart Ingledew of Investec Fund Solutions
“There is no friend as loyal as a book” – Ernest Hemingway, Author, born on this day in 1899.