Loan Note: Fundraising poised for take off; Blackstone’s latest insurance deal

Preparing for the next fundraising wave. Plus: Blackstone's latest permanent capital deal and the refinancing surge during the pandemic. Here's today's brief for our valued subscribers only.

They said it

“European investors are really ahead of the game on ESG and as ESG becomes more important to investors [in Europe] it might create a barrier to investing in the US.”

Trevor Castledine, a senior director at consultancy bfinance, quoted in this month’s Private Debt Investor cover story (see here).

First look

The coffers are set to be filled
There has been much talk in the market about a possible distressed wave, but many market observers are now sceptical that this will happen to any significant degree. From recent conversations, however, there is increasing confidence in a fundraising wave.

Private Debt Investor was recently told of an endowment which had seen its portfolio rise by a third over the past year – just one example of how strong market performance has boosted investor firepower. “Everything’s up,” one fund manager told us, “and all these allocators have a lot more capital.”

Our database has tracked the subdued fundraising environment during covid-19, with investors hampered by remote due diligence and reluctant to take a punt on anything outside established comfort zones. But we are being told there is a huge amount of pent-up capital, and that private debt could be a major beneficiary given how well its performance has been perceived through the health crisis and also how the floating rate nature of many loans makes private debt attractive in the face of inflationary pressures.

There is a view that September could be the month for fundraising to begin its ascent to a new peak. For analysis of all the key fundraising data for the first half of 2021, watch out for the next issue of PDI. 

Blackstone’s latest insurance deal
In our June cover story we examined the evolving relationship between insurance and private debt. Among the many partnerships and takeover deals we provided as examples was Blackstone’s $2.8 billion purchase of Allstate’s life insurance business. At the end of last week, we reported that Blackstone had claimed another slice of permanent capital by paying $2.2 billion for a 9.9 percent stake in the assets backing the life insurance and annuities business of American International Group. In all, Blackstone will have some $150 billion in insurance assets under management by year end. Permanent capital is looking very much like a permanent trend.

Data snapshot

Refinancing in a pandemic. European mid-market deals saw the proportion of refinancings grow during the pandemic according to data from Deloitte. Refinancings made up less than 12 percent of all deals in the first quarter of 2020 but rapidly rose to more than 20 percent as the pandemic took hold in Q2. Since then, the proportion of refinancings has remained higher than before covid and began to increase again in Q1 2021.


New deputy CEO at Tikehau
Paris-based manager Tikehau Capital has appointed Cécile Cabanis as deputy chief executive officer. She will take up her role on 1 September.

In the newly created position, Cabanis will oversee the human capital, ESG/CSR, communications and brand marketing functions of the group. She will also coordinate efforts to develop Tikehau’s global network with corporates and further develop the franchise. She will report to co-founders Antoine Flamarion and Mathieu Chabran.

Cabanis joins from French food products firm Danone Group where she was executive vice-president in charge of finance, strategy, information systems, purchasing, cycles and sustainable resource development, a member of the executive committee and sponsor of inclusive diversity.

ESG head for Oaktree
US-based fund manager Oaktree Capital Management has appointed Priya Prasad Bowe as the firm’s head of ESG.

Prasad Bowe will spearhead the firm’s environmental, social and governance efforts globally, lead Oaktree’s ESG governance committee and report directly to co-chairman and chief investment officer, Bruce Karsh.

Prasad Bowe joined Oaktree in 2019 as a credit product specialist focused on private and multi-strategy credit. She has been involved in the design and implementation of the ESG framework for Global Credit, Oaktree’s flagship multi-strategy product.

Before joining Oaktree, she spent over a decade in credit-, sales- and strategy-focused roles at Citadel Securities and Morgan Stanley.

Leveraged finance body launches CLO committee
The European Leveraged Finance Association has launched a new committee to establish industry best practice and serve investors in the collateralised loan obligation market.

The CLO investor committee will offer a forum for members to identify CLO investors’ requirements, facilitate discussion on general market progress and key issues, and contribute to the regulatory dialogue in the asset class. One area of focus is the development of ESG credentials for managers and deals, including defining the concept of an ESG CLO in a way that will avoid greenwashing.

LP Watch

Institution: Connecticut Retirement Plans and Trust Funds
Headquarters: Hartford, US
AUM: $43.7 billion
Allocation to alternatives: 20.5%

Connecticut Retirement Plans and Trust Funds confirmed $327 million-worth of commitments to private debt funds at its July 2021 investment advisory council meeting, a contact at the pension informed PDI.

The commitments comprised €150 million to ICG Europe Fund VIII, $150 million to Strategic Value Special Situations Fund V and $125 million to BIG Real Estate Fund II.

ICG‘s eighth series European debt fund is in market targeting €7 billion from investors, with SVP‘s fifth special situations vehicle having raised $4.4 billion across a number of interim closes, surpassing its initial $4 billion equity capital target. BIG‘s second real estate debt fund raised more than 70 percent of its $550 million target via its first close in June 2021.

Connecticut has a 5 percent target allocation to private debt which stood at 0.8 percent as of 31 May 2021. The pension’s private debt portfolio has a market value of just under $350 million.

The $43.7 billion US pension’s recent private debt commitments have targeted vehicles with strategies varying from senior or subordinated lending to those focused on acquiring distressed debt.

Today’s letter was prepared by Andy Thomson with John BakieRobin Blumenthal and Michael Haley.

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