Private Credit Insights

Just in: Pemberton Asset Management reaches $1bn first close for NAV focused fund Dedicated to the niche lending sector called NAV facilities, Pemberton announced today the new fund’s first close with $1bn raised for deployment, reports Bloomberg. Expected to continue raising throughout this year and finally close next year, the fund attracted LPs such as Abu Dhabi Investment Authority (ADIA) and Legal & General who also owns an equity stake in the asset manager. Recently becoming a trend in the private credit world, NAV facilities are instruments lend against the Net Asset Value of the portfolio. It became increasingly popular with private equity sponsors over the last few years due to difficulty in capital raising. It could be used as a way to increase liquidity and potentially return proceeds to LPs, thereby avoiding the need to sell portfolio companies in unfavourable market conditions while also keeping the lifeline open. However, some would argue that as the market gradually pick up, sponsors will regain access to cheaper capital again and cease tapping NAV facilities. Second half of this year will likely show a good indication of whether NAV facility is here to stay given more sponsor activities are observed across the board. Follow to keep updated in private credit and alternative investment. #privatecredit #privateequity #alternativeinvestment #investmentbanking #finanicng

Just in: Nomura is looking to acquire private credit arm to beef up credit business Following previously covered boutique Lazard who is shopping for a private credit unit, Nomura Capital Management is also getting into the game, according to CEO Robert Stark. Bloomberg reports that the firm is aiming to add more investment capabilities including asset based lending, real estate and infrastructure debt to its existing business. However, contrary to many competitors deep in the direct lending field, Stark emphasized the focus on smaller, non sponsor backed deals on top of investment into the real assets space to create differentiation, given the recent heated competitive landscape with vast amount of capital pouring into the sector. Currently managing $36bn in the US and $600bn globally, Nomura is looking to grow the credit business. They have set up and are deploying a closed-ended fund targeting opportunistic credit, though the fund raising effort has yet to begun. Follow to keep updated in private credit and alternative investment. #privatecredit #privateequity #investmentbanking #financing #directlending

Just in: Blackstone upsizes $515m Coretrust Purchasing Group, LLC acquisition financing at cheaper cost from private lenders including Goldman Sachs Provided by a group of lenders consisting of Blue Owl Capital, Cliffwater, HPS Investment Partners, LLC, Goldman Sachs Asset Management, Apollo Global Management, Inc. and New Mountain Capital, Blackstone was able to upsize its original package by at least $100m on term loan and more on the $150m capex facility. The package was priced at 525bps over SOFR, cheaper than original financing at 650bps, reports Bloomberg. In addition, the lenders have also allowed Blackstone the ability to distribute the proceeds as dividends, though they have negotiated a call protection to as much as 102 cents on the dollar. Blackstone initially acquired a majority stake in CoreTrust back in 2022, supported by a group of lenders similar to the current make-up, including Fortress Investment Group. Markets gradually warming up and general transaction environment becoming increasingly borrower friendly, we will likely see more refinancing deals come through, especially on large cap deals, to reduce the cost of capital for sponsors. Follow to keep updated in private credit and alternative investment. #privatecredit #privateequity #investmentbanking #financing #directlending

Fundraising: New York based MidOcean Partners raises $765m for new opportunistic credit fund targeting liability management Closing its third fund aiming at mid-market direct lending and stressed assets, MidOcean’s opportunistic credit fund sees a net 15% IRR through 1Q24, reports Bloomberg. The firm is targeting businesses engaged in ‘liability management exercises’, which allows companies to borrow capital for refinancing in order to steer out of possible expensive legal proceedings. Pressured by the high interest rate environment over the past months, some corporates and their private equity sponsors have had to take on aggressive debt terms as maturities approach. This opened up a new window for investors targeting the capital structure to benefit from potential mispricing, yielding attractive return simply based on spread plays. As low as 40 cents on the dollar purchase has been achieved while the credit managers work through liquidity issue alongside the sponsors and the underlying business. Intriguing strategy which proliferated as a result of the hike cycle, however could this persist now the general sentiment start to warm up? Follow to keep updated in private credit and alternative investment. #privatecredit #privateequity #investmentbanking #credit #financing

Insight: Golub Capital foresees slowing trend in NAV financing Off the back of the recent M&A activity pick up, president of Golub capital David B. Golub sees the valuation gap narrowing significantly, when interviewed by Bloomberg. NAV loans have "gained momentum" when many private equity sponsors were not confident about selling. However recent market trends show that sellers and buyers no longer have a huge difference in their envisioned transaction price tag, as the general market sentiment warms up and more deals flow through, increasing confidence in future pricing. Though this could be true, some argue that once sponsors have seen and experienced the convenience brought by NAV loans, despite some restrictions such as LTV cap, they continue to be intrigued in this niche form of financing which can be used to effectively obtain more funding backed by the same pool of assets. Mainly extended by banks to sponsors, some credit players have also started offering this type of financing to expand territory. ECB has made its historic rate cuts and given the level of inflation across the board, suspect we are not far from entering the cutting cycle and general uplift in deal making activities. Would the sponsors continue to use NAV facilities and in some cases GP financing as cost of financing gradually comes down? Let’s see where the second half of 2024 takes us. Follow to keep updated in private credit and alternative investment. #privatecredit #privateequity #investmentbanking #financing #NAV

Just in: Bain Capital sells software company Zellis to Apax in privately financed deal valued at £1.25bn Lead by Sumitomo Mitsui Banking Corporation – SMBC Group and Park Square Capital, the private lenders provided a c.£550m financing package to support the transaction between the two sponsors. The structure includes a £450m unitranche facility, £100m capex facility and £80m super senior RCF, reports Bloomberg. Acquired by Bain Cap in 2017, Zellis has accelerated its growth through acquisition of another platform. Bain Cap remains bullish on the outlook of payroll tech sector. It’s been awhile since large sponsor to sponsor deals made the headline as general movement has been sluggish. However, macro sentiment growing more optimistic combined with the current environment packed with dry powder makes it easier for sponsors to access fianancing. The broader transaction landscape is improving, we expect to see more deals coming through the second half of this year. Follow to keep updated in private credit and alternative investment. #privatecredit #privateequity #investmentbanking #financing #technology

Just in: Leading boutique advisory firm Lazard is looking to acquire private credit arm The boutique is currently shopping around for private credit firms to acquire in order to beef up its asset management unit, as its CEO Peter Orszag expressed intention to buy in a Bloomberg interview. Lazard will likely buy up a firm already set up in private credit, infrastructure, real estate and other fields in the private market that Lazard doesn’t current have much footprint in. The ambition is to have increased weighting contributed through the firm’s asset management business on top of its infamous investment banking and advisory business by 2030, more specifically doubling the unit revenue, as it looks to match competitors expansion in the private market. Though keen to acquire, Orszag emphasises that the key focus land on pricing and cultural fit. The firm will be carefully picking in the mix, evaluating all of the options, reports Bloomberg. Advisory firms stepping in to the alternative investment space — competition heating up. Follow to keep updated in private credit and alternative investment. #privatecredit #privateequity #investmentbanking #assetmanagement #financing

Just in: KKR close to wrap up deal on $2bn loan purchase from Orange Bank As the French Telco giant Orange exits its financial services arm, KKR is near completion on bidding for its $2bn loan book through a competitive process lasting months, reports Bloomberg. Said to be advised by Morgan Stanley and financed by Rothesay, the private equity sponsor will buy three portfolios mostly in home and consumer loans. The move comes after a $7.2bn loan book purchase by KKR in December last year from Bmo Bank of Montreal on recreational vehicle. Competition in the credit space is heating up as traditional equity players see the potential to grow in the field. Follow for more deal news in private credit and alternative investment. #privatecredit #privateequity #investmentbanking #financing #directlending

Just in: Leading European credit manager Arcmont Asset Management receives regulatory approval for Long-Term Asset Fund Posing as an open-ended strategy, the Financial Conduct Authority has approved Arcmont to launch its LTAF today, the first of its kind offered by a specialist private debt asset manager, said Arcmont in a statement. LTAF is a new regulatory structure in the UK, aiming at giving sophisticated and professional investors more access to illiquid access, among which the alternative investments space such as private credit and private equity strategy. Arcmont’s fund aims to invest in European direct lending opportunities, and offers liquidity to a wide range of investors including UK defined contribution pension schemes, reports Bloomberg. The fund allows an opportunity to diversify professional investors’ portfolio to private debt, further boosting the space with capital. This structure could be particularly useful for UK DC pension schemes, as previously they were restricted in allocating resources to direct lending strategies. More investors eager to deploy in the space, to now new regulatory structure created for access. Potentially expect to see more credit managers compete in trying to unlock this type of funding and tap a new source of capital. Follow to keep updated in alternative investment and private credit. #privatecredit #privateequity #investmentbanking #financing #directlending

Just in: Pemberton Asset Management aims to raise €4bn for mid-market credit fund Set to complete in October this year, the fund would be Pemberton’s fourth vintage debt fund targeting mid-market investments, with the potential to reach €5bn in total fund size, reports Bloomberg. Pemberton’s typical mid-market strategy targets senior secured tranche for businesses with under €75mn EBITDA. In parallel, the firm is also raising its second generation senior loan fund, expected to close 1Q25 with a target of €3-3.5bn, specialising in senior secured investments. The moves follow a partnership announced with Abu Dhabi Investment Authority (ADIA) to create a niche lending business — NAV fund financing, in order to back private equity sponsors. Strong moves in the market riding the private credit wave, LPs show tremendous interest in investing and deploying capital in this space. Follow to keep updated in private credit and alternative investment. #privatecredit #privateequity #investmentbanking #fundraising #financing