Fund Finance

Some sponsors are in liquidity binds because they must wait longer to get carry.

In a trickier exit environment, fund managers may be forced to embrace longer hold periods.

Why? Because lower returns will be a temporary phenomenon and because private equity has operated in a much higher interest rate environment before, according to industry participants.

Banks hitting concentration limits and syndicating deals, insurance companies coming in as both buyers and lenders, and even rising interest rates all point to a bigger slice of market for non-banks.

A considerable drop in the number of capital calls made by private capital funds comes as no surprise to those in the asset class, as managers have increasingly been looking to subscription lines to simplify investments.

Covid-19 precipitated record fund financing activity in 2021, and this upward trajectory has no end in sight, writes Justin Partington, group head of funds at IQ-EQ.

Investor appetite and regulatory imperative are creating demand for net-zero investments and low-cost debt. The private equity sector can benefit from both, say Deniz Harut and Gavin Templeton.

Oaktree's parent company, Brookfield, has opened another front in its expansion strategy, having entered the real estate and infrastructure secondaries markets beginning in 2020.

Will the strategy remain attractive after markets rebound?