Private Capital Call

This month, we have Jack Ablin, Chief Investment Officer and founding partner at Cresset Capital, a top fractional family office serving high net worth individuals and families. Jack discusses his extensive investment background dating back to the 1980s, highlighting how his strategy has evolved towards asset allocation. Jack shares insights into the current macroeconomic landscape, particularly the shift in the bond market's competitiveness with equities and its implications for investors. He explores the attractiveness of private credit as an asset class, noting its potential as a hedge in a higher-for-longer interest rate environment. He shares his perspective on navigating private markets, advocating for a focus on middle-market opportunities and economically insensitive sectors.

This month our guest is Ron Kahn, Managing Director at Lincoln International and head of their valuations practice. Ron sheds light on the current market dynamics, highlighting the robust performance of private companies despite lackluster M&A activity. The podcast explores the current economic climate, noting positive indicators like EBITDA growth and expectations of Fed rate cuts. Throughout the conversation, Ron and Randy emphasize the resilience of private capital and predicting continued strength despite geopolitical uncertainties and upcoming elections. We also cover topics such as Lincoln private market index, financing costs, and the outlook for private capital and deal-making in the coming years.

This month our guest is Ed Goldstein, Partner, CIO of Coller Credit Secondaries, a leading investor in the secondary market for private assets. In the wake of the global financial crisis, the private credit landscape experienced a seismic shift. As the secondary market gained traction, it began to offer liquidity solutions for investors in the private credit space. Investors, motivated by reasons such as underperformance, regulatory concerns, liquidity needs, stress, and opportunistic selling, started to explore this emerging avenue for portfolio management. The discussion shifts to credit secondaries being more of an LP market, investing for upside potential, and the necessity of diversified portfolios to mitigate risk. In essence, the private credit market, though relatively young, is showing signs of maturation and paving the way for a future characterized by specialization, strategic partnerships, and a more developed secondary market.

In this week's episode, we are honored to welcome the renowned economist, Dr. Mickey Levy. As a visiting scholar at the Hoover Institution at Stanford University and a respected member of the Shadow Open Market Committee, Dr. Levy brings a wealth of knowledge and insight. Join us as we delve into a range of critical economic topics with Dr. Levy. Our discussion encompasses the resilience and recent slowdown of the U.S. economy, the ongoing concerns surrounding inflation, and the Federal Reserve's interest rate policy. We also examine the current state of interest rates, including both short-term rates and bond yields, and discuss the implications of persistent budget deficits and escalating national debt. Concluding our conversation, Dr. Levy shares his expert assessment of the long-term outlook for the U.S. economy.

This week our guest is Van Hesser, chief strategist at KBRA, a credit rating analysis agency. Van is also the host of his own insightful podcast, "Three Things in Credit," which I highly recommend. In this episode, we dive into the current economic landscape, explore the concepts of economic soft landings, no landings, and where we currently stand. We also discuss the aftermath of the banking crisis earlier this year, the question of systemic risk and private capital, and how to think about the default cycle – all essential considerations for private capital investors in the coming months.

We are thrilled to have Steve Segal as our first guest on the podcast. Steve Segal, a former Executive-in-Residence and Lecturer at Boston University’s Questrom School of Business. He developed and taught a graduate level course in private equity and leverage buyouts. Steve was a co-founding partner of J.W. Childs, investing in middle-market growth companies, primarily in the consumer products, health care services and specialty retail sectors. During his tenure the firm completed more than 40 transactions with a total transaction value in excess of $11 billion. Today, Steve is primarily a private investor, frequently collaborating with others on early stage ventures.

Now we come to the G in ESG. The governance link to environmental and social goals was cemented by the sub-prime debacle in 2009. Corporate malfeasance and lack of transparency propelled the need to identify future responsible ESG parties and enforcement...

As with climate change, diversity, equity and inclusion, with its goals of broad representation, fair pay and equal opportunity have become the lens through which investors are judging both managers’ investment selections and their internal DEI efforts...

Despite the politics of #climatechange, the burden of scientific evidence and rise in extreme weather events has compelled global policy makers to largely unite their efforts towards decarbonization...

Today’s #ESG river had many tributaries. From Mosaic law in 1500 BC and the Koran, to 18th century England, to the 20th century’s socially responsible investing, or SRI, all have joined doing business with doing good...

Last week we took our eight-year daughter to the library to stock up on books from her reading list. (The “Ready, Freddy!” series, in case you’re curious.) On the way out, a mother and her two young sons preceded us. The boys ran into the automatic revolving door. “No,” she said. “Come this way,” opening the swinging door...

Investors are settling into the view that economic effects of the war in #Ukraine will be more local than widespread. As the head of equities for a top European asset manager said, “You can draw a correlation map between proximity to the conflict and market impact.”...

It was almost a clean getaway. Two years since it emerged, Covid was crumbling. Vaccinations and infection immunity were finally having an effect. Hawaii became the last state to announce an end to indoor masking...

Increased focus on #ESG has mirrored the rise of private credit as an established asset class. This may not be a coincidence. The examination of environmental, social and governance factors as part of risk management has a long history in private credit given its illiquid nature...

Once considered a novel concept, the #unitranche – a one-stop senior secured financing melding senior and subordinated tranches into one – has captured the attention of private equity sponsors and lenders alike. Unitranche structures accounted for a remarkable 36% of middle market LBO financings in 2021, up from 10% in 2016...

From loan issuance, to LBO and M&A activity, to record CLO volume, 2021 was an unprecedented year in many forms. Coming off that record-breaking activity, we consider what lies ahead in 2022. In December 2021, our content partner S&P / LCD surveyed buy-side, sell-side and advisory professionals to gauge sentiment for the year ahead...

Historically, #covenant-lite was not a topic for much conversation in the middle market, as these loans were seen mostly in the broadly syndicated market. However, as the market has evolved, competition has intensified and lines have blurred between public and private credit. Cov-lite has increasingly gained share among smaller, unrated loans. What prompted this change? We observed the following dynamics...

We caught up recently with our chief investment strategist at Nuveen, Brian Nick for a conversation on markets and the economy: “4Q was the best quarter of 2021 from a GDP perspective,” he told us. “Last year’s growth was 5.5%, best since 1984. Even half that rate in 2022 would still be above trend. But the hairpin turn by the Fed was remarkable. We went from one possible hike to 4 or 5 hikes today! “Everything’s selling off in unison with nowhere to hide. Markets are adjusting to a more hawkish Fed, and a different set of winners and losers than we saw last year...

For private capital investors, the recent spate of market volatility is another opportunity to show strength relative to public asset classes. The threat of higher #interestrates and spiking #inflation sent equity indices on a roller coaster ride. But loan buyers looked at this same data set and voted with their feet. Last week another $2 billion flowed into retail funds, bringing inflows to almost $7 billion for 2022. Assets in these funds total $93.6 billion, double the level from only a year ago. In contrast, $13 billion flowed out of retail high-yield bond funds...

Last week we held our first “Lead Left Presents” webinar. 500 attendees heard four top middle-market #investment bankers discussing what happened in the M&A market in 2021, and what’s to come for the year ahead. From a sector perspective, industrials were challenged in 2020, then bounced back sharply last year. Backlogs were “very strong” going into this year. #Covid highlighted increased labor costs and motivated businesses to ramp up in areas such as automation, water filtration, and air purification. Covid “spiked” growth in some areas, but which ones will fall to earth and which are sustainable? Technology and software are “eating the world” by creating...