KKR: Multi-Asset Platforms are Credit's iPhone Moment
Fundraisings from Apollo, Balbec Capital, Heitman and o15 Capital Partners
š Hey, Nick here. A couple of notable developments this week.
This newsletter has been my baby for the past two yearsāIāve enjoyed obsessing over unnecessary details, overreacting to every ādanger,ā and telling friends how life-changing it is. Hopefully, that was great training because, in the early hours of Wednesday morning, my wife and I welcomed our son Lawrence into the world.
Unfortunately for you, that means I now have to split my time between The Credit Crunch and Lawrence. As any parent of two will tell you, expectations might need adjusting in the short termābut Iāll do my best to keep this newsletter as sharp as ever.
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š Reads of the Week
British Columbia Investment, one of Canadaās largest institutional investors, completed the sale of its majority stake in Hayfin Capital. BCI acquired the majority stake in 2017. Since then, Hayfin has grown its AUM from ā¬8 billion to over ā¬33 billion today. Link
HPS and PennantPark portfolio company, Zips Car Wash, filed for bankruptcy and plans to hand over control of the business to its lenders. The Chapter 11 filing listed assets of $500 million to $1 billion and liabilities of $1 billion to $10 billion. Zips plans to reduce its debt by about $279 million and secure $15 million of new capital. Link
M&G buys majority stake in European Manager, P Capital Partners. The 45-strong Stockholm-based P Capital Partners team has raised ~ā¬7 billion and invested in over 175 companies since inception. Link
Matt Levine thinks that private credit is becoming public credit Link
Blue Owl signed a forward flow agreement to purchase up to $2.4 Billion of Consumer Loans Originated on the Pagaya Network. Link
Buy Private Credit With Crypto. Apollo and Securitize launched a blockchain-based fund that provides investors access to Apolloās Diversified Credit Fund using tokenized assets such as Ethereum and Solana. Link
Pimco has fallen behind as it fails to keep up with private creditās growth. Link
š±KKR and Creditās āiPhoneā Moment
āInnovation distinguishes between a leader and a followerā
Steve Jobs
KKRās Credit Market Review is filled with top insights. Below with a summary of KKRās thoughts on Multi-Asset Platforms - read the full report here (check out the PE DPI stats on page 12ā¦.)
TLDR
The launch of the iPhone wasnāt just the debut of a new product; it was the dawn of a new paradigm. By seamlessly integrating music, communication, and web access into a single device, Apple did not just enhance a device, they redefined it.
Today, the global credit markets are undergoing their own transformation. The old paradigm of siloed, fragmented products is giving way to a new era of diversified income solutions across multi-asset credit platforms.
Much like the iPhone streamlined how people interact with technology, customized investment solutions are transĀforming how businesses access and optimize capital.
KKR believes exposure to diversified credit as an asset class has gone from a ānice to haveā to a āmust haveā on a risk-adjusted basis.
Nick here. Whilst I think this analogy is far-fetched, I do believe that the biggest managers will continue to play on this trend (See below Re:Apollo). I would also go one step further and say that Multi-asset, Multi-Geography platforms will transform credit. See Page 16 for KKRās view on the Asian Opportunity.
š°Fundraising News
Itās not just KKR that believes in multi-asset credit.
Apollo launched a $5 billion multi-strategy credit fund with a 30-year maturity. The fund will invest across investment-grade credit, including both private and public credit. Apolloās product is similar to a rated feeder, but Apolloās strategy strays from the norm in that it bundles several different types of credit in the same underlying fund. And, at 30 years, it also has a much longer life, helping insurers match assets with long-term liabilities. More here
Balbec Capital, a New York-based alternative manager, closed its $1.7 billion InSolve Global Credit Fund VI. The fund is Balbecās largest to date and will invest in the U.S. and Western Europe. Its portfolio will consist of primarily amortizing financial assets, including residential and commercial mortgage loans, consumer NPLs, and restructured payment plans. More here
Heitman, a Chicago-based real estate manager, closed its $806 million Real Estate Debt Partners III fund. The fund finances real estate projects across the US in traditional and alternative property sectors. The fund targets returns that fall between core-plus and value-add strategy equity programs. Heitmanās debt platform manages $5.5 billion. More here
o15 Capital Partners, a Georgia-based alternative manager, closed its $370 million Emerging America Credit Opportunities Fund. The fund provides debt and equity solutions to lower-middle market businesses in the healthcare, education, and business services sectors. It typically invests $10 to $40 million in companies with EBITDA between $3 to $15 million. More here and here
This newsletter is for education or entertainment purposes only. It should not be taken as investment advice.