Fund manager of the year
1. Apollo Global Management
2. Ares Management
If the key to winning in this category is to pack as much into one year as possible, then it’s no surprise that Apollo triumphed. It was a busy 12 months for the New York-based private markets giant to put it mildly. In the early months of the year, it formed a strategic partnership with Apeiron Management to target stressed and distressed debt in Italy. It also hired former GE Capital senior executive Adam Johnson to its European private credit business as a managing director and boasted a $500 million private credit allocation from Teachers’ Retirement System of Texas. As the year progressed, things didn’t slow down. In May, a BDC leverage hike was set to boost the company’s assets in that market by $1 billion. The following month it debuted a debt-equity vehicle focused on Europe and North America, and then posted a $2.2 billion first close on the fund in August. By October, it had taken its Structured Credit Recovery Fund IV up to $2.3 billion in committed capital – just shy of its $2.5 billion target size. All in all, quite a year.
Newcomer of the year
1. Adams Street Partners
2. Sagard Holdings
3. Blu Family Office
Co-founded in 2016 by partners Bill Sacher and Shahab Rashid, the private credit arm of Adams Street Partners – itself established in 1972 – enjoyed a prolific 2018. The firm made 13 investments, deploying $268 million in all, having built its team up to nine dedicated investment professionals. Last year, the firm boosted its ranks through the hire of Ervis Vukaj, who was brought in as an associate having had prior spells at Jefferies and JPMorgan Securities.
PDI reported that in April last year Adams Street had raised more than $365 million for its debut private debt fund, which had a $750 million target, according to regulatory filings. Founding investor Texas Municipal Retirement System reportedly committed $200 million to the vehicle. Asked about market conditions, Sacher, who is also head of private credit, told PDI: “In late 2018, we saw a significant step-up in public market volatility. Whether it was a temporary market correction or a harbinger of more significant things to come remains to be seen, but regardless, private credit managers need to be vigilant in deal selection and protect against late cycle excesses.”
Sponsored deal of the year
1. Hydro International (EQT Credit)
2. Air Medical (Ares Capital Corporation)
3. Community Brands (Ares Management)
EQT Credit’s debt support for UK-based Hydro International not only saw it solidify a new private equity relationship but also leverage the full weight of EQT’s global network of industry expertise.
The lender joined forces for the first time with private equity buyer Agilitas to back the buyout of Clevedon headquartered Hydro, which specialises in water management products and services. EQT Credit had been looking at several deals with Agilitas and the decision to back Hydro helped firm-up the relationship. The business is set to benefit from increased focus on managing water resources in environmentally friendly ways, including new regulations in this sector.
Commenting on the due diligence, EQT Credit partner Paul Johnson, said: “With half Hydro’s revenues coming from the US, it was difficult for us to understand the dynamics of that market, but part of EQTs private equity network there had invested in this industry and was familiar with the company and could help us better understand the business.”
CLO of the year
1. AXA Investment Managers
2. Fortress Investment Group
3. BNP Paribas Asset Management
June saw AXA Investment Managers close its seventh CLO in the US market since the global financial crisis at $400 million, bringing its total CLO assets under management to more than €4 billion. The vehicle, Allegro VII CLO, closed on 13 June and reported high demand across all its tranches with a significant number of repeat investors.
The firm said its regular presence in the CLO market, with several CLOs issues around the world each year, is one of the keys to being a successful player in the market as investors show regular demand for the asset class.
Regularity also helps to build a consistent track record to demonstrate success in creating CLOs in multiple geographies, vital for ensuring investors keep returning. AXA said it was particularly successful with its mezzanine tranches and was able to price them approximately 20 basis points tighter than the wider market.
Distressed deal of the year
1. Gibson Brands (KKR and others)
2. Project Helix (Apollo Global Management)
3. Italian NPL portfolio (Varde Partners)
Having once formed half of folk band Red Rooster, KKR’s head of alternative credit Nat Zilkha was arguably as well placed as anyone to evaluate the merits of Gibson Brands, the iconic guitar maker.
Zilkha, who led the KKR team that helped Nashville, Tennessee-based Gibson out of bankruptcy alongside other lenders, told Bloomberg he felt “a responsibility to try and bring it back to what it’s supposed to be”.
The deal went through once the lenders came to an agreement on the debtor-in-possession loan that resolved disagreements over the refinancing of Gibson’s pre-Chapter 11 asset-based loans. KKR was joined on the DIP financing by Melody Capital Partners, Silver Point Capital and Grantham, Mayo, Van Otterloo & Company. Gibson had sought court protection at the beginning of May, facing declining sales and liquidity challenges stemming from a $100 million loss of credit insurance overseas following a ratings downgrade.
Fundraising of the Year
1. Ares Management
2. GSO Capital Partners
3. Goldman Sachs
That Ares Management pulled in a large direct lending fund in 2018 should be a given, but €6.5 billion for Ares Capital Europe IV is still an eye-popping amount. With leverage, the firm added an additional €1.28 billion to the vehicle.
“[One] factor which contributed to the success of the fundraise, was the result of Ares offering more ways in which investors could access our strategy, through our various fund structures including multiple currencies and leverage options,” Blair Jacobson and Michael Dennis, co-heads of European Credit, said.
The firm’s credit team group collected $31.61 billion, including fund-level leverage, of the $36.13 billion the firm gathered as a whole.
Ares also raised $3.47 billion for its US Senior Direct Lending Fund, its first closed-end fund for the strategy that announced a final close in early January. (The firm’s main direct lending vehicle is its BDC, Ares Capital Corporation.)