Investor insights

Discover the latest in private capital
from leaders across the globe

On the future of private credit allocations

“LPs have only just started investing in private credit. There is no reason why private credit can’t become as big an allocation for investors as private equity. After all, it is driven by the same trend of shifting allocations from liquid, public markets to illiquid, private markets.” Kirsten Bode, Co-Head of Private Debt, Pan-Europe, Muzinich & Co

On the deal and exit environment

“You can’t remove the economic cycle, but if you buy companies that benefit from secular growth trends and add value through operational improvements, you have a better chance of navigating it successfully. This year is shaping up to be more positive for dealmaking, driven by lower interest rates and more motivation from both buyers and sellers – some of whom have been sitting on assets for longer than they would have liked. We are seeing opportunities to deploy capital across multiple sectors, amid major shifts in the real economy and financing markets that companies and sponsors have been dealing with over the last few years.” Michael Bruun, Global Co-Head of Private Equity, Goldman Sachs Alternatives

On the re-emergence of PIK

“With higher interest rates, we’ve seen some private credit providers support their portfolio companies by being lenient on interest payments – some are offering 50% cash and 50% PIK. Our view is that investors want cash from us. We can be flexible and offer PIK on a portion of the debt, especially to support growth initiatives, but there will be an extra charge for that. We also tend to include sunset provisions and other protections, because ultimately this is a cash asset class.” Blair Jacobson, Partner, Co-Head of European Credit, Ares Management

Investors want cash from us.

Blair Jacobson, Partner, Co-Head of European Credit, Ares Management

On the deal and exit environment

If you buy companies riding secular growth trends and add operational value, you’re better positioned to navigate the cycle.

Michael Bruun, Global Co-Head of Private Equity, Goldman Sachs Alternatives

On technology roll-up opportunities

“We are seeing opportunities in technology sectors that have become more mature. In fintech, for example, the technology is no longer new; it’s often off the shelf - for example, pretty much anyone can build a payment platform. So these are no longer technology companies; they’re businesses that require high quality sales and operations teams. That puts pressure on valuations and deters venture capital investors, but it presents opportunities for larger companies to acquire smaller zombie fintech companies with good enough technology and teams. While those smaller companies wait for exit opportunities, they are now looking at roll-up consolidation strategies to build value. We’re also seeing this dynamic in insurtech, healthtech and cybersecurity among other sectors. These consolidations present strong value creation opportunities.” Isabelle Freidheim, Founder and Managing Partner, Athena Capital

In sectors like fintech and healthtech, it’s no longer about new technology - it’s about strong sales and operations. That’s creating big opportunities for roll-up consolidations.

Isabelle Freidheim, Founder and Managing Partner, Athena Capital

On special situations opportunities

“The past two years have been good for our pace of deployment, driven by a growing economy and strong company performance. However, rising interest rates have disrupted capital structures. If inflation risk and interest rates remain relatively high, then we’ll continue to see the kind of good company, bad balance sheet opportunity that is unique in the past 20 years. Before this started playing out, our strategy had relied more on solving idiosyncratic company issues. Today, there is a more blanket opportunity.” Jordon Kruse, Co-Portfolio Manager, Special Situations, Oaktree Capital Management

On early-bird discounts

“Fee discounts don’t work on the margin. There are some great funds that always offer sweeteners for first close investors, but when you’re investing with a fund for the first time, it’s more important to ensure that the manager fulfils all the criteria for team, strategy and track record. In these cases, any sweetener is not a decisive factor.” Britta Lindhorst, Independent Senior Advisor, Private Equity and Impact Investing