The Unicrunch — Private credit reaches for the high note on the fundraising front

Peter Benson

7 March 2024•3 min read

Open Arms

This time last year we were discussing how the denominator effect was depressing private markets fundraising. Today, the tune has changed, as institutional investors now fall into the open arms of managers. It’s been quite a journey.

This week, 9fin reported Platinum Equity has raised $12.5bn for its latest buyout fund, not far from the overall targeted sum of $15bn. And the firm is also in the early stages of raising an opportunistic credit fund, though no target has been disclosed.

Perhaps private credit is feeling the uptick in sentiment among LPs and sensing now is a good time to launch new vehicles.

The Missouri State Employees’ Retirement System and the New Hampshire Retirement System both plan to double their allocations to private credit from 5% of their portfolio to 10%, as 9fin reported. It is time for private credit managers to hit the fundraising road.

And as 9fin reported last this week, the Teachers’ Retirement System of Louisiana is gearing up to invest $225m into two private credit funds, targeting a total of $4bn.

The LP is looking to commit $100m to Comvest Credit Partners Fund VII. Comvest is looking to raise $2.5bn for a direct lending strategy. TRSL is also looking to commit up to $125m to Castlelake Asset-Based Private Credit III. Castlelake’s fund is targeting $1.5bn. (For more on news on LP’s investment strategies, here is 9fin’s rundown of February activity.)

The market fundraising is starting to feel a little warmer and fuzzier. The coffers of funds managers are being filled up by LPs sensing that today’s tough times for private equity and private credit firms will soon pass.

Holding out for a hero

After almost a decade of ownership, it was unusual for Silver Oak Services Partners to hold on to this one hero. For certain investors, they may be happy to have held out for this particular hero.

For 9fin reports that Hero Practice Services, a dental, vision and orthodontic provider for children, is being sold. At a mid-$20m EBITDA, it is truly within the sights of many private credit firms and with a history of being highly acquisitive should suit those lenders that like roll up-style strategies. Solomon Partners is running the sale process.

It follows the recent news that Pediatric Home Service, another children’s healthcare provider, is in the early stages of an auction process run by Lincoln. It’s a welcoming sign of deal activity for private credit lenders, and proof that notwithstanding headlines about BSL taking a bigger share of the market, there is always plenty of deals for private credit firms to do. Namely, those deals below the $50m EBITDA line.

November pain

This week’s Super Tuesday results all but confirmed we are heading for a showdown. Donald Trump’s overwhelming victory in 14 of the 15 states on offer forced his only remaining challenger, Nikki Haley, to withdraw from the race.

Yet despite the win, the picture is not so rosy for Trump. The former president and real estate tycoon faces some whopping legal bills. But one Columbia law professor has a novel idea how to stave off any liquidity crunch.

Eric Tulley, a professor at Columbia Law School, said that Trump might want to look to the private debt markets. He could tap them by collateralizing his real estate portfolio in order to foot the bill which stands above $500m.

We asked the market — and some were, shall we say, not so excited by the idea — see here.

But for a couple of respondents, there was a belief that someone, somewhere would do this. It would be one of the most notable examples of the famed private credit flexibility. But what low number must the LTV go before you do work with 45?

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