Suspicious minds

News, WEEKLY SPIN

Heightened criticism around Net Asset Value loans, what will suspicions mean in 2024? NAV loans have been under the spotlight of late. But Oaktree majority owned 17Capital – a NAV loan specialist – says the use of these loans by GPs to make distributions to LPs fell a whopping 90% during the last six months of 2023. So we wonder what that says about leverage and deal activity in the market today? The dividend dilemma had previously led PE firms to use NAV loan financing to compensate investors for a slower exit environment. In such an arrangement, the financing is secured against the underlying assets across a fund portfolio. The Fund Finance Association expects the market to grow from $100 billion to $600 billion by 2030. Still, if LPs increasingly harbor suspicious minds over NAV loan use for dividends, then the reported drop last year might be seen again.

Inspired by Financial Times

Distress signal

News, WEEKLY SPIN

Pain ahead for private equity and real estate, time to move into a higher gear? Oaktree Capital’s Howard Marks sees pain coming for the real estate and private equity space as firms struggle to refinance their debt. The same leverage that allowed these two asset classes to juice returns will generate disruption, impact returns, and offer up distressed investment opportunities. Speaking to Bloomberg, Marks thinks this will generate some of the best opportunities in more than a decade. Retail and office real estate owners who relied upon leverage to finance deals could hardly have expected the US Federal Reserve to hike interest rates by some 500 basis points. Now, as the time comes to renew those debt arrangements, distressed investors will hope to move into a higher gear themselves. Watch out for those distress signals over the coming years!

Inspired by Bloomberg

Meme - Investcorp sure have moved quick off the blocks with this new fund

Block Party

News, WEEKLY SPIN

Signs that the block(chain) party is getting into full swing are evident with Investcorp becoming the latest guest arrival. The investment firm has announced a new partnership with Securitize to make its latest GP-stakes fund available for individual investors on a public blockchain. Tokenizing private markets funds has been underway for a few years with the likes of KKR and Hamilton Lane already lowering the cost of access to retail investors. This is a new age of block & roll for private investors; who would have thought it would be possible to invest in a GP stakes fund for as little as $20,000? Investcorp’s new tokenized offering provides a way to gain exposure to minority stake ownership of mid-market fund managers with $1 billion to $10 billion of assets under management. Who knows. Maybe this partnership will lead to a bigger chain reaction as more GPs tap in to the democratization trend.

Inspired by PitchBook

IPEM Paris 2024: Inspiration Awaits!

IPEM Paris 2024: Inspiration Awaits!

Advisors - LC2021, News, PARIS 2024, PAST EVENTS

If ever there were a city to inspire new ideas, there’s no better place than Paris. Which seems altogether appropriate as the global private markets industry gathers September 9th – 11th for the 2nd edition of IPEM Paris, where this year’s theme will be “Forging Confidence”.

Building on the success of last year’s event, which welcomed over 6,000 delegates, IPEM will once again bring together a brains trust of global GPs and LPs at the Palais des Congrès. It is a key moment for the industry, as some investors look to increase their total private markets exposure, while others scale back. Fundraising has become much harder over the last 12 months, as private equity funds increasingly find themselves competing with private debt and infrastructure funds. Some GPs are more bullish on deal flow and exit opportunities than others, while ESG issues are becoming both more and less relevant, depending on the financial institution.

How then, to make sense of the divergence of views?

LP power shift means traditional allocation trends can no longer be assumed

LP power shift means traditional allocation trends can no longer be assumed

News, PARIS 2024, PAST EVENTS

How confident are LPs today as they assess their private markets portfolios and try to determine what the best path should be? It is a big question, made all the harder by the growing sense of uncertainty ahead of a historic period of global elections where more than 2 billion people will cast their votes.

“Although our intellect always longs for clarity and certainty, our nature often finds uncertainty fascinating.” – Karl Von Clausewitz, Prussian general and military theorist.

Even though private equity still dominates total industry AUM like Jupiter dominates our solar system, some investors are finding virtue – and confidence – in other alternative assets such as private credit and infrastructure.