Private Equity News & Analysis

Side Letter: $124bn raised in Q1, capital calls up, government loans debate

Fundraising data have yet to reflect the current covid-19 crisis. Plus: capital calls are up, say LPs, and PE firms are still trying to get governments to let them in on rescue loan packages. Here’s today's brief, for our valued subscribers only.

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We did the math

A busy start to the year. The total amount of capital raised in Q1 was big: only 2017 saw more raised in the first three months of the year. We previously noted that the effect of covid-19 on the headline fundraising data would not be seen until Q3.

He said it

“We’re certainly working the phones in DC”

David Acharya, partner at independent sponsor AGI Partners, tells sister title Buyouts that his firm is lobbying hard for private equity portfolio companies to be included in the loan programme created under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Just happened

LP liquidity: more intel

Investor liquidity is has been one of the hotter private capital topics amid the covid-19 pandemic. Some survey data from ILPA – the limited partner group surveyed around 200 of its members – provides another useful points: most LPs (58 percent) have seen capital call activity increase since the onset of the crisis. For 9 percent activity is increasing “dramatically”, while 49 percent describe it as “somewhat” increasing.

CalPERS control

CalPERS staff have recommended that the pension fund approve a number of revisions to its investment committee delegation, including the removal of a clause to “approve and oversee asset class strategic plans and portfolio” on grounds that it’s too granular for committee oversight purposes, according to documents prepared for a 20 April board meeting. The update would also remove a clause to oversee the selection process and performance of external managers and non-board consultants “as this is the role of management, which must be held accountable,” the documents said.

Sale amid uncertainty

Canada Pension Plan Investment Board managed to close the sale of a large portfolio of brand-name private equity stakes valued at around $1.2 billion, despite the pandemic jarring markets. The portfolio included stakes in brand-name managers, including CVC Capital Partners, Blackstone and Apollo Global Management, a source told Buyouts. The deal closed at a time when many regular M&A deals, as well as secondaries transactions, are on hold as buyers and sellers wait for more transparency around valuations of assets.

Essentials

Access to rescue finance. The PE industry in the UK is facing a similar battle for access to government financial assistance as it is in the US, reports the Financial Times (paywall). The emergency loans package is designed to “offer a lifeline to ‘squeezed middle’ medium-sized businesses hit by the coronavirus pandemic,” the FT writes: “However, officials and senior banking executives involved in designing the scheme are concerned that using it to support companies backed by private equity might not be well received and could break EU state aid rules.”

New hired. ICYMI last week: Toronto-based manager Onex hired Jason New as co-chief executive of Onex Credit, as reported by sister title Private Debt Investor. New, a former co-head of distressed and special situation investing for Blackstone‘s GSO Capital Partners, will lead Onex’s credit business alongside Stuart Kovensky, and also be responsible for new strategies in opportunistic credit and special situations.

Dig deeper

LP meetings. It’s Tuesday, so here are some LP meetings to watch out for this week.

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Today’s letter was prepared by Toby Mitchenall, Isobel Markham and Adam Le.

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