The yearning for more deal flow has been a prevailing thought in the market for pretty much the entirety of this year. Lenders are generally getting bored of deploying capital into refinancings and other incrementals over fresh LBO financings, of which there aren’t many in the market. In fact, ARCC actually added no new names to its portfolio in the past quarter.

“I think getting the election behind us will help and then we'll obviously be getting into year-end, but I expect a busy year next year for sure,” Kip DeVeer, director and CEO of ARCC, said.

While it does feel like the market will thaw at some point this year, it hasn’t yet. And that is what is concerning about hoping the election solves some of the M&A market’s problems. What if it doesn’t?

We can only wait and see. Hercules Capital Corporation (HTGC) is more concerned about a likely third outcome. Scott Bluestein, the venture debt specialist’s CEO and CIO, said that not having an outcome on Wednesday morning is what he is most concerned about.

“The most important thing is we hav clarity in terms of who is the winner of the election come next Tuesday,” Bluestein said. “The scenario that we’re most concerned about, that we keep hearing a lot of anxiety about, is the scenario where it’s a disputed election, there is no winner and we’re all in sort of a period of paralysis where you’re just waiting to see what’s going to happen.”

A bleak scenario for sure but not unrealistic after 2020 when it took days for most media outlets to declare Joe Biden the winner.

Investors hope is that Tuesday will be smoother and there will be a clear path forward for the US, regardless of who wins. Until then, the market will have to wait for a changing of the season.

Banking woes

It’s not easy being a bank these days. Between regulators constantly looking over your shoulder to alternative asset managers trying to gobble up market share, it’s hard to keep pace and begin to redefine priorities. Inevitably, there’s a chance of a potential slip.

At least, that seems to be the case with MUFG, whose US corporate lending arms recently re-entered the market following nearly four months away after getting dinged by regulators. The step back from the market, which we reported earlier this week, resulted from concerns from the OCC about the risk rating methodology on individual loans and the monitoring of outstanding loans. The bank was still able to complete some repricings and a refinancing during that time but did not originate new loans.

And, while the bank was on hiatus, its broadly syndicated loans and private credit team also found themselves losing numerous members.

It’s a rough spot to be in for MUFG, which was hoping to potentially re-acquire a portfolio of assets and cement a relationship with private credit firm Evolution to bring its direct lending capabilities to a whole new level.

Still, the Japan-based bank is finally back in the market, and will likely have its hands full getting back into the flow of deals while hiring new personnel. Stay tuned as we keep track of the next moves here.

This week on the 9fin platform

Private Credit Connect East — Bank, private credit partnerships face hurdles to success

Odyssey looks to BSL and private credit to back acquisition of Honeywell’s PPE unit

Private Credit Connect East — Lower middle market lenders feel the pressure

Blackstone raises $22bn for evergreen direct lending fund

MUFG lending took hiatus following regulatory scrutiny

Midwest Transit Equipment is put on the block

Alacrity kickstarts restructuring talks

Ares Capital Corporation — Q3 24 BDC earnings review

What’s in market

Midwest Transit Equipment — the BrightWater-backed distributor of new and used buses is exploring a sale with the help of investment bank Harris Williams

Amerit Fleet Solutions — the Brightstar-backed maintenance provider for delivery vehicles is exploring a potential sale with the help of advisors Moelis & Company

GoHealth — the public company is seeking a refinancing of around $500m in privately placed debt

Anaqua — the Astorg-backed IP software firm is up for sale with the help of Jefferies and Arma Partners

MRI Software — in the market for a repricing of its existing $2.5bn debt and is seeking a $250m incremental loan for additional M&A

From around the web

BlackRock talks to buy private credit firm HPS advance (BBG)

Move over, banks. Alternative asset giants plunge into private credit (Barron’s)

Ex-Goldman partners amass $1.6 billion for direct lending effort (BBG)

Brookfield unit reportedly looks to sell $1.5bn of private credit (Mergers & Acquisitions)

US private debt firm Monroe Capital could open Saudi office (Zawya)

Looking for more private credit content? Then make sure you download our US Private Credit review for a look at the latest market trends through Q3 2024.