Category Archives: WEEKLY SPIN

Sayonara Savings, Hello Investments

Just as wasabi gives a hot kick to any sushi roll, Japan’s retail investors are warming up to the value proposition of private equity. Like a cat drawn to a sunny windowsill, individual investors, are becoming increasingly interested in alternative assets. Blackstone’s inaugural private equity fund for individual investors has already raised $1.2 billion in just four months, according to the Japan Securities Dealers Association. Urged to invest their cash by Japan’s government, the growth opportunities for PE firms targeting Japanese investors could be significant in the next few years. Indeed, Blackstone also has a $252 million fund targeting unlisted U.S. REITs and a $580 million private credit fund. Democratizing private markets for private investors looks like it could bloom in Japan, like cherry blossoms in March. And have both PE firms and investors purring in satisfaction.

Inspired by The Japan Times

Suspicious minds

Heightened criticism around Net Asset Value loans, what will suspicions mean in 2024? NAV loans have been under the spotlight of late. But Oaktree majority owned 17Capital – a NAV loan specialist – says the use of these loans by GPs to make distributions to LPs fell a whopping 90% during the last six months of 2023. So we wonder what that says about leverage and deal activity in the market today? The dividend dilemma had previously led PE firms to use NAV loan financing to compensate investors for a slower exit environment. In such an arrangement, the financing is secured against the underlying assets across a fund portfolio. The Fund Finance Association expects the market to grow from $100 billion to $600 billion by 2030. Still, if LPs increasingly harbor suspicious minds over NAV loan use for dividends, then the reported drop last year might be seen again.

Inspired by Financial Times

Distress signal

Pain ahead for private equity and real estate, time to move into a higher gear? Oaktree Capital’s Howard Marks sees pain coming for the real estate and private equity space as firms struggle to refinance their debt. The same leverage that allowed these two asset classes to juice returns will generate disruption, impact returns, and offer up distressed investment opportunities. Speaking to Bloomberg, Marks thinks this will generate some of the best opportunities in more than a decade. Retail and office real estate owners who relied upon leverage to finance deals could hardly have expected the US Federal Reserve to hike interest rates by some 500 basis points. Now, as the time comes to renew those debt arrangements, distressed investors will hope to move into a higher gear themselves. Watch out for those distress signals over the coming years!

Inspired by Bloomberg

Block Party

Signs that the block(chain) party is getting into full swing are evident with Investcorp becoming the latest guest arrival. The investment firm has announced a new partnership with Securitize to make its latest GP-stakes fund available for individual investors on a public blockchain. Tokenizing private markets funds has been underway for a few years with the likes of KKR and Hamilton Lane already lowering the cost of access to retail investors. This is a new age of block & roll for private investors; who would have thought it would be possible to invest in a GP stakes fund for as little as $20,000? Investcorp’s new tokenized offering provides a way to gain exposure to minority stake ownership of mid-market fund managers with $1 billion to $10 billion of assets under management. Who knows. Maybe this partnership will lead to a bigger chain reaction as more GPs tap in to the democratization trend.

Inspired by PitchBook

Let festivities commence

Live and direct. As consumer demand rises for live entertainment experiences – just look at the crowds at Taylor Swift’s Eras tour – KKR has just announced the acquisition of Superstruct Entertainment. The global buyout firm has agreed to buy one of Europe’s leading live entertainment groups from Providence Equity Partners. It is another example of private equity plugging in to Media & Entertainment space, which has also seen increased investment in music rights and royalties. As part of the deal, Providence has the option to invest $250 million in to Superstruct, which under its stewardship has enjoyed strong organic growth; it now operates over 80 music festivals and live events in Europe and Australia including Boardmasters and Sónar. The new partnership is music to the ears of the Superstruct team. Could KKR’s deal will spur other PE groups to dance to the same beat and seek out further opportunities in the live entertainment space?

Inspired by the Financial Times