Latest news with #directlending
Bloomberg
12-06-2025
- Business
- Bloomberg
Private Equity Is Looking for a Little Help
Things aren't going all that great for private equity firms. They're struggling to sell the companies they own and return cash to investors. But it turns out their counterparts in the world of private credit are offering special loans to tide them over. Direct lending arms at shops from Ares Management to Neuberger Berman Group and even private equity titan KKR have all launched what some are calling 'dequity' funds—to convey the presence of both debt and equity—to the tune of $30 billion industry-wide since 2023. Demand for this type of stopgap financing has soared lately as cash-strapped PE firms face a prolonged deal drought. Higher borrowing costs as well as erratic US trade policies have made it harder for corporate buyers to appraise the value of potential targets or for sponsors to figure out how public stock offerings will go. That's left PE firms saddled with their portfolio companies longer than they'd planned, creating a situation where they don't have enough money to distribute to their limited partners.
Bloomberg
11-06-2025
- Business
- Bloomberg
Private, Public Debt Markets Seen Converging in Credit's 3.0 Era
Private and public credit are converging as we speak, according to Clearlake Capital Group co-founder José Feliciano, who expects the trend to dominate financial-market evolution over the next 10 years. 'The convergence of private credit, direct lending and syndicated liquid credit is happening in real time,' Feliciano said at Bloomberg's Global Credit Forum in Los Angeles on Wednesday. 'It gives us a window into credit 3.0.'
Zawya
22-05-2025
- Business
- Zawya
Private credit touts resilience amid uncertainty: IFR
Recent market volatility has demonstrated the resilience of private credit, and the asset class is well positioned to withstand any future economic turbulence, according to industry participants. At the US Private Credit Industry Conference on Direct Lending, hosted in Nashville by the loan trade group, the LSTA, and events company DealCatalyst, speakers discussed avenues for growth, such as the proliferation of funds geared towards retail investors. Conference speakers largely agreed that the momentary pause in the broadly syndicated loan market following US president Donald Trump's April announcement of sweeping tariffs presented an opportunity for private credit to take market share. Though market activity has since normalised, there remains a broader trend towards private markets, they said. 'Private credit has been taking share from the liquid credit markets for a while,' Kerry Dolan, managing partner at Brinley Partners, who spoke on the conference's opening panel on Monday morning, told IFR. 'We expect that shift to continue. Private credit also typically increases in popularity during times of volatility as it reduces market risk.' Leveraged buyout activity, however, remains relatively sluggish given a slump in valuations for private equity portfolio companies and, more recently, a cloudier economic outlook given uncertainty around tariffs. Even so, said Eric Muller, portfolio manager and partner at Oak Hill Advisors and CEO of the firm's business development companies, his firm has had strong investment opportunities come its way. 'The buyouts that are happening right now are of very high quality,' Muller said during a Monday afternoon panel on large-cap lending. 'We're seeing add-ons within portfolio companies, as well as refinancings and other transactions that a borrower may need to execute right now and doesn't have the flexibility to wait.' Good exposure Private credit has so far been largely insulated from worries over tariffs. Several private credit managers have estimated that less than 10% of their portfolios face direct exposure to such import taxes. Investor sentiment towards the asset class has remained largely positive in the face of market volatility, Dave Donahoo, head of Americas – wealth management alternatives at Franklin Templeton, told IFR. Donahoo also spoke on a Tuesday morning panel about retail access to private credit investments. 'Private markets price on fundamentals, not market sentiment or technicals,' he said. 'So it's moments like this that the wealth management community – the individual investor – is reminded why having exposure to private markets helps their overall portfolio.' There are concerns, however, about the impact that tariffs may have on the economy at large. A slowdown could weigh on the performance of private credit borrowers, some of which already face challenges from persistently high interest rates, as S&P noted in a May 9 report. Nonetheless, conference speakers were largely sanguine about private credit's ability to navigate a potentially weakening economy. 'We're coming off a relatively strong backdrop if we were to head into a recession,' said Jonathan Bock, a senior managing director at Blackstone and co-CEO of the business development companies Blackstone Private Credit Fund and Blackstone Secured Lending Fund. Certain situations, such as stagflation, are 'challenging for equities but can be okay for credit', said Colbert Cannon, a managing director at HPS Investment Partners. Bock and Cannon spoke alongside Muller on Monday afternoon. Sizing up While the commentary regarding the prospects for private credit was largely upbeat, some speakers expressed caution regarding investment selection, especially as the asset class has taken on large transactions that overlap with the broadly syndicated market. Matt Freund, managing director at Barings and president of Barings BDC, said his firm is not actively seeking to chase after these large deals. 'I'm sceptical of the idea that origination is proprietary in the upper end of the market,' Freund said on a panel focused on investment strategy. But competition is also fierce for loans to lower-middle-market borrowers, and spreads have also tightened significantly among that segment, he said. Though his firm does not emphasise seeking larger transactions, according to Anthony DiNello, head of direct lending at Silver Point Capital, it does have strong relationships with banks, which have proven beneficial in periods of market dislocation. 'Some of our best deals come through relationships with Wall Street banks,' DiNello, who spoke on the same panel as Freund, said.
Reuters
22-05-2025
- Automotive
- Reuters
Private credit's boom faces a cyclical test
NEW YORK, May 21 (Reuters Breakingviews) - As private credit rises into the stratosphere, the air is becoming thinner. Non-bank loan providers like Apollo Global Management (APO.N), opens new tab and Blackstone (BXSL.N), opens new tab have exploded in size, with so-called direct lending reaching $1.6 trillion in assets under management, according to BNP Paribas. As they grow, they're increasingly exposed to factors out of their control. Automotive chipmaker Wolfspeed (WOLF.N), opens new tabexemplifies a recent push into strategic industries. Under President Joe Biden, the United States sought to foster electric vehicles and rapid chip expansion, agreeing to extend a $750 million loan to the company under the CHIPS Act. Buyout barons moved aggressively to capitalize, with Brookfield Asset Management and Apollo inking joint ventures with domestic giant Intel. The firm run by Marc Rowan also led a more conventional $1.25 billion funding round for Wolfspeed, with another $750 million to match the government money. President Donald Trump is less enthusiastic about both EVs and CHIPS funding. Amid federal loan delays and a slowdown in battery-powered vehicle growth, Wolfspeed's market value collapsed from $4 billion to $157 million. The company is now planning a bankruptcy filing, the Wall Street Journal reported. Meanwhile, humdrum but ordinarily recession-resistant businesses have also struggled. Zips Car Wash, which grew to 260 locations through aggressive acquisitions, saw its annual interest burden jump by roughly 58%, opens new tab to $93 million in the space of a year as rates rose. Lenders took haircuts in a bankruptcy this past February that wiped out private equity backer Atlantic Street Capital. Technology deals that propelled direct lending's post-pandemic boom can go awry, too. Back then, they extended a flood of loans sized on recurring revenue rather than profit to the likes of Zendesk and Anaplan. A Blue Owl Capital-led group put up $1.5 billion to fund Vista Equity Partners' buyout of video training provider Pluralsight. Tech layoffs and, again, rising rates, tipped the company into a messy restructuring, opens new tab, with creditors ultimately taking the keys. Lenders' own assessments of these loans only slowly reflected these slides. Main Street Capital valued its loans to Zips at 94 cents on the dollar in early 2024, less than a year before bankruptcy. Blue Owl pegged Pluralsight at 97 cents at the end of 2023. Similarly, investors trying to gauge the risks they're taking have their work cut out. Around 24% of global private credit assets are still yet to be deployed, BNP reckons. To spend this hoard, lenders are tackling bigger, complex deals, like Thoma Bravo's $11 billion buyout of Boeing's navigation software business, opens new tab, Bloomberg reported. As the stress of tariffs or a potential consumer pullback rises, just how exposed private credit is the vagaries of the economic cycle and policy whims will become clear. Follow @sptruestories, opens new tab on X
Bloomberg
21-05-2025
- Business
- Bloomberg
Blue Owl Capital Targets Expansion to Retail Investors in Japan
New York-based alternative asset management firm Blue Owl Capital Inc. said it aims to enter the Japanese mutual fund market as early as next year. Johann Santer, who oversees the firm's private wealth division in the Asia-Pacific region, said in an interview on May 13 that Blue Owl would offer to individual investors publicly traded funds that include things such as direct lending involving companies or asset-based finance linked to things including consumer loans.
