They said it

“The number of transcripts that mention ‘recession’ along with words such as ‘concerns’ and ‘fears’ has jumped to an all-time high”

A statement by Tina Fong, a strategist at Schroders, based on findings from the firm’s Data Insights Unit, which used natural language processing to analyse thousands of earnings transcripts.

First look

Competition: Four talking points
So, what’s the competitive environment like for private credit today? This was the “Question of the Week” mulled by credit specialists at law firm Proskauer as part of the firm’s Beyond the Deal series: Evan Palenschat, Sandra Montgomery, Faisal Ramzan and Steve Peck. Among their observations:

Go large: “Lenders that can write bigger checks will have a competitive advantage for the rest of the year,” says Palenschat. He says sponsors accept pricing and terms have tightened, and their main priority is to get the capital in the door and not have to deal with too many lenders.

It’s all about the credit: Lenders’ “appetite for deals remains robust and focused on the credit worthiness of the investment not the size of the investment,” says Montgomery. She also thinks there’s an opportunity for “less known” lenders to gain a foothold with sponsors and that a greater number of club deals are likely.

The bank fightback: “Over the past 18-24 months, an increasing number of banks have set up dedicated private credit businesses,” notes Ramzan. This is part of a response from banks in Europe, which have been forced to witness funds claiming market share ever since the global financial crisis. With funds having done much of their hiring from the banks, the trend is starting to reverse.

End of the deal boom: “Competition is likely to increase as a result of dealflow retreating to more normalised levels,” says Peck. While price is the main factor in competing bids, certainty of closure and flexibility of terms will also be important. Peck sees an advantage for lenders able to provide flexible financing structures such as holdco loans and debt-like preferred equity.

Comvest launches new platform and fund
Comvest Partners, a Florida-based investment firm, has announced a new structured capital investment platform, Comvest Special Opportunities, and the close of the platform’s inaugural fund, Comvest Special Opportunities Fund, with $252 million in commitments.

In a statement, Comvest Partners described the new platform as targeting companies with enterprise values of more than $50 million in Comvest’s core industries, which include business and tech services, consumer and e-commerce, financial services and specialty finance, transportation and logistics, industrial services and healthcare.

The newly closed fund launched in November 2020 with a focus on the North American corporate sector, according to the PDI database.

Companies seeking growth capital, greater liquidity, debt recapitalisation, distressed credits or forward-flow asset purchases all constitute what the release calls “investment situations of interest”, which can include structured debt as well as non-control equity.

The statement says the platform’s borrower criteria are enterprise values of between $50 million and $500 million and the prospects of unique growth or a unique operational situation. Its range of investment sizes begins at $15 million and extends beyond $100 million.

Tom Goila, a Comvest partner, said in a statement that Comvest is “grateful for the strong support CSO has received from our limited partners”, which include public pension plans, insurance companies, asset managers and family office investors.

Comvest has $7.7 billion in assets under management.

Essentials

Dear LP: What’s on your mind?
Private Debt Investor’s research colleagues want to hear from all investors globally – on an anonymous basis – about their investment plans for our LP Perspectives Survey 2023. Now in its 11th year, the survey results will be published in a special report in December. Click here to take part. The deadline for submissions is 7 October.

Churchill names Lawler to head new secondaries strategy
Fund manager Churchill Asset Management has named Nick Lawler as managing director and head of secondaries, a newly created post.

Lawler will be responsible for investments across the landscape of secondaries. He will work out of CAM’s Chicago office and report to Jason Strife, CAM’s head of junior capital and private equity solutions.

The secondaries strategy is a relatively new development at CAM. It was only a year ago, in September 2021, that the firm oversaw its first secondaries transaction. In partnership with Ardian, CAM sold private equity fund commitments that established two new commingled funds, totalling $1.5 billion of committed capital: Churchill Secondary Partners and Churchill Co-Investment Partners.

Strife oversees more than $20 billion of committed capital across Churchill’s junior capital and private equity solutions business.

BBI backs debut UK venture debt fund
British Business Investments has made an initial commitment of €30 million to London-based Atempo Growth’s inaugural venture debt fund, which will target VC-backed businesses in the UK and Europe. It joins the European Investment Bank and Santander as backers of the fund.

With the venture debt market growing fast between 2015 and 2021, Atempo’s debut fund has been launched at what some see as a key time for the European tech ecosystem, with record investments in the sector. BBI says its commitment will support fast-growing technology companies across the UK.

BBI, a wholly owned commercial subsidiary of the British Business Bank, aims to increase the supply and diversity of finance for smaller businesses across the UK by boosting the lending capacity of a range of finance providers. Since it was established in 2014, it has committed more than £3 billion ($3.4 billion; €3.4 billion) to providers of finance to UK smaller businesses.

LP watch

Institution: Alameda County Employees’ Retirement Association
Headquarters: Oakland, US
AUM: $11.35 billion

Alameda County Employees’ Retirement Association (ACERA) has discussed the search for a new investment consultant, according to the firm’s September meeting minutes. The pension’s five-year contract with its current investment consultant, Verus Investment Consulting Services, is due to end on 31 May 2023, and the pension will select a replacement.

The criteria within this upcoming RFP has not been confirmed. However, the pension has outlined a proposed timeline that will lead to the appointment of a new consultant.

In the week commencing 19 September, the committee began discussing the full timeline, staff involved and selection criteria. By 14 November, the pension will finalise the RFP.

The RFP will be posted on the ACERA website on 14 November.

By 5 December, the pension will start to accept bids from prospective investment firms with a deadline set for 19 December.

From 3 January to 10 February, bids for the contract will be reviewed internally.

By 8 March, the pension will announce and confirm three finalists to present to the rest of the committee.

By 21 April, a new investment consultant will be selected and confirmed, following contract negotiations.

ACERA’s recent private debt commitments have focused on distressed and subordinated/mezzanine debt vehicles in North America.

Today’s letter was prepared by Andy Thomson with John Bakie, Christopher Faille and Robin Blumenthal