Private Debt article thumb

Private Debt: No stopping the Megatrend

INDUSTRY INSIGHTS, News

Private debt has proven itself in recent years to be a highly resilient, valuable asset class for LPs’ investment portfolios and there are no signs that the party will be coming to an end anytime soon. Overall industry AUM has grown to $1.5 trillion and is forecast to reach $2 trillion by 2027. This is now a mainstream alternative asset class; one that continues to grow and mature as a bona fide megatrend. Indeed, with the opportunity to earn double-digit returns on first-lien debt, industry leaders including Stephen A. Schwarzman believe this is a golden age for the asset class. There are various factors driving this megatrend. Some of these include, at a very high level:

• Diversification
• Yield enhancement
• Illiquidity premium
• Macro tailwinds
• Income generation

Private debt has evolved to become a highly diverse asset class. Since 2007, the market has grown from $280 billion in assets under management to $1.5 trillion in 2022. While direct lending to corporates, real estate, and infrastructure has been well established for some years, specialty finance has also been growing in areas such as aviation finance, litigation finance, NAV lending, IP & royalties, and venture debt. Indeed, KKR estimates that asset-backed finance is a $5 trillion market and growing.

Infrastructure article thumb

3D View: The 3 Megatrends Shaping Infrastructure

INDUSTRY INSIGHTS, News

These trends – which, in turn, open up thematic discussions around energy transition, and data/digital infrastructure developments (i.e. fiber optics, 5G towers, data centers) – have been an important feature at IPEM’s last two events: IPEM Paris (September 2023), and IPEM Cannes (January 2024). IPEM’s Infrastructure Summits bring industry experts together – both GPs and LPs – to present industry data and discuss the latest asset class developments. As such, they give delegates a great opportunity to delve deep into the details and ensure the right questions get addressed. Over the last two years, an array of leading organizations have taken the stage, including:

● Arclight Capital Partners
● Aon
● AXA IM Prime
● Eiffel Investment Group
● Vauban Infrastructure Partners

One of the key takeaways from the last two summits is that the ‘3D’ megatrends will open up the need for continued private investment over the coming decades. Funding gaps in the middle market, in particular, are likely to provide plenty of deals for investors to pursue, and drive operational improvement.

With inflation rising alongside interest rates, infrastructure has continued to expand in recent years. European core infrastructure investment has grown from approximately EUR26 billion in 2009 to EUR150 billion today. There is an optimistic feeling among institutional allocators on how infrastructure allocations will progress over the next few years given how resilient the asset class has proven to be across economic cycles. Not to mention its strong de-correlation to equities, and its ability to offer an effective long-term hedge against inflation.

This has supported strong fundraising (though 2023 was an exception), with overall dry powder growing from $275 billion in 2020 to $339 billion through January 2024.

Winthrop(ic) Endeavour

News, WEEKLY SPIN

Blackstone will be hoping to have the luck of the Irish on their side as they look to acquire a controlling stake in Winthrop Technologies for what is believed to be around GBP700 million. The privately owned Irish company is a leading constructor of data centers in Europe, where it has applied its expertise to design and build turnkey solutions in Germany, Ireland, the Netherlands and Sweden.

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