Last week in our special series on private equity secondaries, we discussed how GPs are leveraging newly developed liquidity in that market to manage funds and assist their LPs with their specialized investment needs. Given today’s challenged capital markets it’s also tougher to extract expected values from your best properties. Sponsors are looking inwards and…
Our head of secondaries, Nick Lawler, relates the following story: “In April 2019, I was in the middle of a road-trip from Chicago to Louisville, when I got a call from one of our relationships at a major investment bank to discuss a new deal. The sponsor, one of the nation’s largest and most respected, was…
Over the past two decades, the private equity secondaries market has quietly expanded into one of the highest growth, yet still niche, areas of alternative investments. From 2002 to 2022, global secondary market volume scaled from $2 billion to over $100 billion in transaction value – a 50x growth rate. GP-led transactions now account for…
“The majority of GPs have observed some level of interest from their investors for continuation funds.” – Private Equity International Private Fund Leaders Survey 2023. Besides the above survey, an article last month in Secondaries Investor cited Jefferies data showing 80% of LPs sought liquidity by selling into continuation vehicles. This is an extraordinary shift…
”The bond market is the most important market in the world. It is the backbone of all other markets.” – Ray Dalio, founder, Bridgewater. A recent Financial Time piece on bonds [link] reminded us of their long, proud history as well as their critical importance to the proper functioning of today’s global markets. The article…
Our last Market Now series came in March 2022 [link] after Covid had peaked and begun to fade, when Russia invaded Ukraine. This week we think another pause to review conditions is appropriate given a number of dynamics at play. First, the Fed has paused in its rate hikes as their gravity seems to have…
In early 2020, just before Covid came crashing down on our heads, we were in the middle of a Lead Left series called “Ten Top Myths About Private Credit”. Myth #5, published on February 20, was “No one uses mezzanine debt anymore.” We felt compelled, after a decade of increasingly aggressive senior and unitranche financings,…
This space has covered at length the investor-friendly changes in senior debt terms since the Fed began its rate hiking regime in March 2022. We recently spent time speaking with junior capital providers about the state of mezz terms today. “Junior capital spreads have widened out 50 to 100 bps from the end of last…
We continue our discussion this week on why private mezzanine is going from strength to strength amid current economic and market conditions. “We did zero mezzanine deals last year,” one junior capital provider told us. “This year we’ve already done half-a-dozen. We’re getting calls from sponsors that don’t typically use mezz. Deal flow is up…
It’s been a while since we felt the need to reiterate the case for junior capital. Back in December 2015 the senior debt market was in full swing recovery from the Great Recession. Interest rates were at rock-bottom lows, and senior spreads were near their post-GFC tights. Unitranche financings were growing in popularity and size…