Tikehau believes Europe urgently needs more defense financing
Fundraisings from Banner Ridge, Charlesbank, Capitala, Sienna IM and Wonder Capital
👋 Hey, Nick here. A special welcome to the new subscribers from Point 72, MLC Asset Management, and Napex Finance. It’s great to have you. Reach out and say hi. This is the 105th edition of my weekly newsletter. Each week, I write about private credit insights and fundraising announcements. You can read my previous articles here and subscribe here
📕 Reads of the Week
Tikehau: Europe urgently needs to strengthen financing of its defense ecosystem. Link
I expect European defense will receive increased focus in 2025. See Sienna IM’s fundraise below for further evidence.
A string of UK collapses highlights cautionary tales for invoice financing investors. Link and Link
Net Income: BDCs have been around for over twenty years and have weathered at least one major cycle. Looking ahead, their success may depend less on competing with banks and more on achieving scale. Link
Talking about BDCs, this report compares their funding structures with those of banks. (Take a look at the charts on page 23). Link
How does Apollo Credit approach ESG due diligence? (While ESG has fallen out of favor, I know a few people still dealing with Article 8 disclosures😉). Link
The Rise of Private Credit Restructuring Teams. Link
The SEC approves Blackstone’s Private Multi-Asset Credit and Income Fund. Link
The Walgreens Boots Alliance LBO is backed by $18 billion of debt. PitchBook has a great breakdown. Link
🎧 Alt Goes Mainstream Interviews Blue Owl's Marc Lipschultz. Link
🎧 New Mountain's Holson on Defensive Direct Lending. Link
🏦 Partnerships of the Week
Mubadala’s partnership with Apollo has funded $1 billion in deals. Established in 2023, the partnership now aims to deploy up to $2.5 billion into global credit opportunities by 2028. More here
Apollo and Citi are offering potential buyers of Boeing’s Jeppesen navigation unit up to $3.5 billion in debt. Apollo and Citi agreed to partner on $25 billion worth of deals in October 2024. Under the arrangement, Citi will source new financing opportunities from its clients, while Apollo will provide the capital. More here
📆 Event of the week - Flexible Capital Meets ABL Lending
Register to hear Blue Owl, J.A. Mitsui Leasing and Wells Fargo Capital Finance discuss How Flexible Capital Is Reshaping ABL Lending.
Register for the March 25th webinar here.
📊Configure Partners Q424 Update
I regularly share the Configure Partners’ updates because they offer an unbiased and honest perspective on private credit. Configure Partners highlights topics discussed behind closed doors but rarely addressed openly.
Here are three key insights that stood out to me, but you should also read the full report here.
Managers Are Issuing More Term Sheets.
Configure tracks the number of term sheets received by a company relative to the number of lenders contacted. (For example, if they contact 10 lenders on a deal and 3 issue term sheets, that’s a 30% conversion rate.)
Configure saw a significant improvement in the conversion ratio in 2024, as deals faced less scrutiny than in 2022/23 and lenders faced pressure to deploy. This stabilized in Q4 at around 35%.
LBOs Generate Significantly More Term Sheets
Only one in ten lenders will issue a term sheet for a refinancing deal.
LBOs receive three times as many term sheets.
Lenders perceive a shortage of quality deals and intensifying competition for the limited opportunities available. Well-performing businesses yield conversion ratios greater than 50%.
Most Lenders Have 20-30% of Their Portfolio in Amendment Discussions
The most common amendments include a 12-month repayment extension, additional reporting, increased fees, and pricing, and at least one or two covenants.
Read the full report here
💰Fundraising News
Banner Ridge Partners, a New York-based manager, aims to raise $3.2 billion for its Secondary Fund VI. The fund will acquire stakes in credit funds focused on special situations, distressed debt, and opportunistic credit strategies. It aims to commit at least $80 million, or 2.5% of the new vehicle’s target size to each fund. More here
Charlesbank Capital Partners, a New York-based manager, is targeting $1.75 billion for its Credit Opportunities Fund IV, according to PDI. It is expected to focus on established mid-market companies, predominantly in North America, with an EBITDA between $20 million and $100 million. More here
Capitala, a Charlotte-based private markets firm, announced that it raised over $1 billion for its latest fund. Capitala finances lower mid-market companies across the US. Target companies typically have EBITDA between $5 million and $20 million and an EBITDA margin greater than 10%. Since its inception in 1998, Capitala has invested and managed over $3.2 billion. More here
Sienna Investment Managers, a Paris-based manager, launched its defense-focused European private credit fund, Sienna Hephaistos. The fund will support European SMEs and Mid-Caps in the defense sector. It aims to raise between €500 million and €1 billion primarily from European investors. More here
Wonder Capital, a Hong Kong-based investment manager, has partnered with Choco Up, a Singapore-based revenue financing platform, to create a $50 million partnership. The partnership will fund SMEs across APAC. It will focus on asset-light businesses, particularly in e-commerce and software-as-a-service. More here
This newsletter is for education or entertainment purposes only. It should not be taken as investment advice.