Insights

Private Debt Outlook 2023 (Pitchbook)

Private Debt Outlook 2023 (Pitchbook)

Despite the uncertainty around market conditions, institutional investors will still find private debt attractive in 2023. The asset class offers options that fit various risk appetites while providing diversification. For example, Direct Lending to the middle market requires strict underwriting and deal terms. This strategy tends to yield better returns during a downturn vs. the large-cap market. For those firms that offer opportunistic credit strategies, investors will find the flexibility to pivot from making loans to trading stressed/distressed debt in secondary market appealing.

Whether investors are concerned with inflation protection, higher interest rates, or slower economic growth (or all of the above), investing in private debt offers several solutions.

Credit Suisse Spinoff Asks If World Needs a New Investment Bank

(Bloomberg) Credit Suisse Spinoff Asks If World Needs a New Investment Bank

CS First Boston is spinning-out of Credit Suisse as a major piece of CS’s restructuring. Bloomberg rolls the tape on First Boston’s history pre- and post-acquisition – including its famous dealmakers and infamous moments – and asks if a mid-sized investment bank is prepared to thrive in a competitive marketplace.

The Supreme Court will make it harder to hire a diverse team

(Bloomberg) The Supreme Court will make it harder to hire a diverse team

“Two cases pending before the justices involve affirmative action at universities, but there are clear implications for companies.”

Stay tuned for our comments on SCOTUS’ decision.

Prices Are Dropping as Investors Sell Private Equity Stakes at a Record Pace

(Institutional Investor)
As investors rethink their private equity allocations, the PE secondaries market has benefited – reaching a new record of $57 billion through H1. As long as concerns about inflation, rising rates, the war in the Ukraine and impact of Covid remain, the Secondaries market will offer diversification, liquidity and should continue to thrive.

The state of diversity in US private equity

(McKinsey & Company) The state of diversity in US private equity. 
McKinsey & Company examine the efforts of PE firms to ensure a diverse workforce. The data shows that private equity firms have increased the percentage of ethnically diverse talent and women employees but note that promotions for women and deal-team diversity metrics are still lagging.

(FT) Fund houses buy up ‘alts’ specialists to move beyond equities and bonds

(FT.com) Fund houses buy up ‘alts’ specialists to move beyond equities and bonds
Following Oak Hill’s acquisition by T. Rowe and CarVal’s acquisition by AllianceBernstein, FT calls attention to fund managers’ drive to acquire private equity and private credit businesses. Higher management fee revenues and the demand for alternative strategies from private wealth channels are cited as driving forces.

Not included is First Eagle’s announced acquisition of the credit manager Napier Park, which follows earlier acquisitions of THL Credit and Newstar. The First Eagle acquisition highlights the driving force private equity sponsors are playing in asset management M&A and growth strategy.