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Cast your mind back to 2017 — Donald Trump’s first year in office as US president. The New York Times and New Yorker had published Pulitzer prize-winning exposés on Harvey Weinstein, kickstarting the #MeToo movement and Black Lives Matter protests were hitting the NFL. Woke was added to the Oxford English Dictionary that year.

At the same time there were the embers of a backlash. Starbuck’s decision to hire 10,000 refugees was met with a scorching response from a little-known, veteran-founded coffee start-up Black Rifle Coffee, which made an overture to 10,000 veterans to either seek training, aid, or employment at its own company. The coffee chain decried the “aggressive social progressiveness” on show from the Seattle-headquartered chain.

Fast forward a number of years and Black Rifle is now a public company (via a SPAC) making statements more focused on charitable initiatives and the expansion of locations than expressing disgust with “propaganda”.

Late last month, the coffee chain secured a $40m refinancing from Blue Torch at an interest rate of SOFR+600bps-650bps, cutting 200bps off its previous facility which was provided by Whitehawk Capital Partners just one year before. Blue Torch has also pledged an additional $20m unfunded commitment.

For any underwriter, politics is a reason to stay away from a credit if it’s too much of a factor in the risk assessment. Private credit firms like to say that boring is beautiful for a reason (or as Golub says it likes “Good Boring”) — it is easier to get comfortable with companies that don’t live or die by whoever is in office every four years or may be at the mercy of reputational risk from picky consumers.

Nevertheless, Black Rifle has found success cultivating a customer base on one side of the political spectrum. Maybe that means a ceiling to its long-term growth, but for now it is working. At least enough to get the attention of private credit lenders.

Even if private credit firms are not interested in politics, politics is interested in private credit. Fundraising figures reported by Preqin showed a slight tempering in commitments from LPs to the asset class last year, thanks to uncertainty around how the 2024 elections would play out. As one commentator said in 9fin’s recent piece on fundraising, “the US elections dampened demand for meetings” over the period of the campaign. (For a wider discussion on the issue of fundraising, do listen to the latest episode of Cloud 9fin here.)

With the second Trump inauguration scheduled for 20 January, the wider LevFin market may begin to see what participants have been speculating on: The de-regulation instincts of the GOP could potentially be a boon to the banks, lifting or removing the cap on any leveraged lending. This could squeeze opportunities for private credit. But also, this could turbocharge M&A activity again if as some expect rates come down at a faster pace than predicted. That would be much to the relief of buyout shops and lenders alike.

It’s a far cry from last year’s regulation rumblings for a market close to $2trn in size by some estimates that is increasingly chasing retail capital. But in today’s world politics is more and more being felt across industries — coffee, for example!

The morning coffee used to be served with a dose of politics on the side in the morning newspaper, now it is as intimately stirred in with the milk and sugar. For some, it’s a bittersweet reality.

Meet and greet

We’re now less than two weeks away from 9fin’s first in-person private credit event. Join senior private credit reporter Shubham Saharan, who will be in conversation with Richa Tandon, co-head of origination at Benefit Street Partners and Jennifer Daly, head of private credit and special situations at Paul Hastings.

They’ll be covering all of the big topics of a market that is today at a critical juncture. Spaces are filling up fast, so if you are interested the event please do register here as soon as you can.

The event, hosted in partnership with Benefit Street Partners, is scheduled for 28 January between 4:30pm-7pm and will be at Corkbuzz in Union Square.

We’d love to see you there!

This week in 9fin

Scan.com in talks with private credit funds for asset-backed debt raise

Cloud 9fin — How many private credit managers does an LP really need?

Colbeck raises $700m for strategic lending fund

Berkshire and Court Square agree $1.5bn Thrive deal with private credit backing

PCI Pharma weighs up $4bn Blue Owl-led private credit loan

Fundraising figures show investors gravitating to favored private credit funds 

What’s in market

One Call — private credit firms are being called up to refinance the healthcare coordinator’s $1.3bn public debt. The company currently has backed from KKR and Blackstone

Neptune Retail Solutions — after first sounding out the BSL market, the retail advertisement company is turning to private credit for a $675m debt package

Frazier & Deeter — the accountancy firm is being marketed on a $20m LTM EBITDA and is proving to be a popular asset as sponsors are bidding up to 15x

Encyclopedia Britannica — Bank of America has been brought on to advise on the sale of the $40m-plus EBITDA company.

From around the web

Florida State Board Sells $2 Billion of Private-Credit Pension Assets (WSJ)

Goldman Sachs creates new division to boost focus on financing (RTRS)

Accidents waiting to happen’ in private credit, says Wellcome Trust (FT)

Blackstone Private Credit Fund Starts to Win Over Europe’s Rich (BBG)

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