They said it
“I’m not sure every bank really understands the risk they have on their books … there’s really no uniform underwriting methodology across all the banks.”
A banker talks to sister publication Private Funds CFO about the increased risk for lenders of subscription credit lines.
Secondaries megafunds boost H1 fundraising
The PEI numbers are in: it was a strong start to the year on the fundraising front for private equity, with $241 billion gathered by 356 funds closing in H1. A few things to note:
- The two largest funds raised were secondaries vehicles, meaning the sub-asset class is well-capitalised for what could be a flurry of dealflow in the second half;
- Venture capital funds make up 40 percent of the 356 fund closes, with the $9.5 billion Insight Venture Partners XI the third-largest fund raised so far this year;
- Funds in market at the end of H1 were targeting some $765 billion.
As we’ve noted, the number of large funds in market coupled with a flight to quality brand names driven by coronavirus-induced uncertainty (and the fact many H1 fundraising processes began well before covid-19 took hold) makes a strong H1 not as surprising as might be expected. Whether fundraising timelines stretch out in the quarters to come will be more telling.
Dislocation strategies deep dive
Our colleagues over on Private Debt Investor are taking a deep dive into dislocation strategies in their July/August cover story. These new funds have taken the market by storm amid the covid-19-induced downturn and have the ability to deliver the returns they’ve promised investors. Something that quickly came to the fore: the need for speed. Funds from KKR and Apollo were both raised in just eight weeks, giving investors little time to do due diligence. Investors were well prepped, however – over the last couple of years fund managers had been encouraging LPs to set aside capital for a downturn they felt they could see coming.
KIC looks abroad
Korea Investment Corporation has partnered with a local bank to pursue overseas co-investments. The $158 billion sovereign wealth fund has committed $300 million to a $400 million joint venture with Korea’s Nonghyup Bank, or the National Agricultural Cooperative Federation, according to a statement. The move is intended to boost returns through a reduction of fees. KIC has a 6.17 percent allocation to private equity, representing around $9.7 billion, according to PEI data.
We did the math
Blackstone in good health
Blackstone has held a final close on its inaugural life sciences fund, Blackstone Life Sciences V, on $4.6 billion. The vehicle has already made some sizeable transactions, including a $337 million strategic collaboration with Medtronic on its diabetes management products.
Summer reads: Triago’s Mathieu Dréan
Every day this week we’ll be sharing some book suggestions to take with you if you’re lucky enough to be heading on a summer vacation this year. We recently caught up with placement agent and advisor Triago managing partner Mathieu Dréan who recommends Vers la sobriete heureuse (English translation: The Power of Restraint) by farmer/philosopher Pierre Rabhi.
“[Rabhi] chose many years ago to live a very simple life, in the country, outside of the consumer society,” says Dréan, adding that he immediately thought of this book when the lockdown started. Rabhi’s message: “We drift a little away with the hectic pace of society… he’s promoting a simpler way of life. It’s inspiring.”
LP meetings. It’s Monday, so here are some LP meetings to watch out for this week.
- Lancashire County Pension Fund
- San Bernardino County Employees’ Retirement Association
- Los Angeles City Employees’ Retirement System
- New Mexico Educational Retirement Board
- Alameda County Employees’ Retirement Association
- Los Angeles Fire & Police Pension System
- San Diego County Employees’ Retirement Association