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On a long enough horizon, returns for PE funds of all sizes converge
By and large, the macroeconomic environment remains the most significant factor to bear in mind when assessing long-term private equity fund performance. Given the impact of the financial crisis, it makes sense that no matter the size of the fund in question, at the longest time horizon—10 years—internal rates of return (IRRs) have by and large converged. Following the typical J-curve of fund performance, at that point in the conventional fund lifecycle most assets that end up contributing to the majority of a fund’s return have already been sold...
First-Time Fund Managers
The environment for first-time private debt managers has begun to stabilise in recent years as the industry continues to mature. Fundraising has been consistently robust, performance has been strong, and investors are increasingly open to the prospect of committing to managers without a proven track record.
First-time private debt managers secured a record total in 2013 ($9.6bn), and in the years 2013-14 firms have raised over $23bn as the market continues to develop....
Leverage on institutional middle market deals climbs on new money deals in 1Q17
Interest in middle market loans from large corporate investors tends to wax and wane based on market conditions, but currently investors are super receptive to these smaller credits given a supply demand imbalance in the leveraged loan market. As a result, leverage levels on institutional middle market deals are rising in 2017 across most deal purposes. Leveage on dividend recap deals peaked in 2013 at 5.3 times and was in decline through 2016 down to 4.3...
Private Debt Fund Performance by Strategy
The private debt asset class has continued to satisfy institutional investors with 93% of those surveyed by Preqin at the end of 2016 stating that the performance of their private debt investments had either met or exceeded expectation. However, performance as measured by the median net IRR of funds varies notably across the three central private debt strategies: direct lending, mezzanine and distressed debt...
Review of Current Market Conditions/ Analysis of Capital Markets Metrics Including Covenants, Pricing, and Leverage/ Review of Credit Quality/ Outlook for First Quarter 2017
Beginning in September 2016 The Lead Left published a series of articles on sponsors. This report consolidates those articles. Enhancing Corporate Value/span> Working with Family-owned Companies Non-Sponsored Lending Revealed Non-traditional Sponsors
Review of Current Market Conditions/ Analysis of Capital Markets Metrics Including Covenants, Pricing, and Leverage/ Review of Credit Quality/ Outlook for Fourth Quarter 2016