With Japan already the destination for about 40% of its investment activity in Asia, private investment major KKR & Co is now weighing up a move into the country’s private credit market, according to a report by Bloomberg.

The report quotes Hiro Hirano, Head of KKR Japan, in an interview: “It will be a medium to long-term initiative. I think it is very important in Japan that we do it ourselves.”

While the private credit industry has in the US and Europe has swelled to around $1.7tn — with lenders focusing on companies with high credit risk and private equity funds that need help financing acquisitions — in Japan, most direct lending has been conducted overseas and the domestic loan market is dominated by major banks.

The firm sees Japanese companies as being increasingly willing to sell non-core businesses that can do better as individual entities in carve-outs that often provide higher returns than other investments.

Golden Goose, the Italian luxury sports brand owned by British private equity firm Permira, is planning to raise €100m by floating at least 25% of the business on the Milan Stock Exchange, according to a report by the Financial Times.

As well as raising cash from the sale of new shares, Golden Goose is also set to sell an unspecified number of existing shares. The cash raised will be used to strengthen the firm’s capital structure and pay down debt.

The brand’s “Superstar” sports shoes retail for around €500 a pair and are popular with celebrities including Taylor Swift and Selena Gomez.

Despite a slowdown in the global luxury sector, Golden Goose reported revenues of €587m for the year ended 31 December 2023, with an operating margin of 25.4% and is expecting its revenues to grow to €1bn by 2029 while significantly reducing its debt load.

In an interview with the FT, Chief Financial Officer Paolo Del Ferro said that the aim was to “grow organically and deleverage the company while keeping [its] operating margin stable”.

Permira selected banks to work on a float of Golden Goose late last year, which is expected to value the company at about €3bn including debt.

Permira, which will remain the company’s largest investor after the listing, bought the brand in 2020 for about €1.3bn from rival Carlyle, which maintains a minority holding. The IPO is expected to value the business at around €3bn including debt.

Goldman Sachs Alternatives has held the final close of West Street Loan Partners V, its latest large-cap senior direct lending vehicle, with $13.1bn of total capital, plus more than $7bn in related managed accounts and $550m of co-investment vehicles.

The fundraise is the largest Loan Partners fund raised since the inception of the strategy in 2008, according to a press statement. The capital was raised from existing and new investors as well as commitments from Goldman Sachs and its employees.

Institutional investors in the strategy include US and international pension plans, insurance companies and sovereign wealth funds, as well as investors from Goldman Sachs Private Wealth Management, family offices and third-party wealth channels.

Loan Partners V will be the first fund in the series to make disclosures under Article 8 of the European Sustainable Finance Disclosure Regulation.

To date, Loan Partners V, which is managed by the private credit business within Goldman Sachs Alternatives, has already invested or committed $4bn across 37 portfolio companies.

In the statement, James Reynolds, Global Head of Direct Lending for Goldman Sachs Alternatives, said: “The market for senior direct lending continues to benefit from the growing demand from financial sponsors. While we expect the syndicated markets and private credit markets to continue to co-exist, we are seeing an increase in attractive opportunities for alternative lending sources that can provide size, structural flexibility and certainty of execution to borrowers.”

A consortium led by US private investment firm KKR and Singapore Telecommunications is leading the race to acquire a $1bn minority stake in Asian data centre provider ST Telemedia Global Data Centres, according to a report by Reuters.

The report cites unnamed sources in revealing that the KKR-SingTel bid for the 20% stake faces competition from New York-headquartered alternative investment firm Stonepeak.

The competition reflects growing interest and demand for data centres across the Asia-Pacific region on the back of the recent boom in the artificial intelligence sector.

According to one of Reuters’ sources, a deal could be sealed or announced in early June, although a final decision has yet to be made.

New York-based KKR bought a 20% stake in SingTel’s regional data centre business last year for SGD1.1bn ($816m), while in February, the firm revealed it had raised $6.4bn for a fund focused on Asia-Pacific infrastructure and energy-related assets.

Private equity’s challenges in returning capital to clients are increasingly affecting hedge funds, which depend on the same pool of institutional investors including pension plans, foundations and endowments, for their fundraising efforts, according to a report by the Financial Times. 

Hedge funds attempting to secure funds from these institutional investors are encountering difficulties as these institutions report insufficient cash availability. The Financial Times partly attributes this issue to a significant slowdown in distributions from private equity funds. 

Michael Monforth, global head of capital advisory at JPMorgan Chase, said: “The lower rate of distributions from private equity, [private] debt and venture funds is having a knock-on effect, leading some allocators to pause on new investments into illiquid funds and reduce new investments in more liquid hedge funds.” 

According to Bain & Co’s annual private equity report, buyout-backed exits plummeted to $345bn last year, marking their lowest level in a decade, resulting in the private equity industry holding a record backlog of 28,000 companies valued at over $3tn. The slowdown in dealmaking has made it increasingly difficult for private equity firms to return capital to their investors. 

“Private equity distributions have gone down, the IPO market has been very thin, and M&A has been held back,” said Nick Moakes, chief investment officer of the £36.8bn Wellcome Trust. “If you’re not going to get bought and can’t get listed, PE is scratching its head on how to do distributions.” 

Hedge funds and private equity managers often compete for the “alternatives” allocation from institutional investors, which also includes private credit, infrastructure, and real estate assets. The recycling of distributions from existing holdings into new commitments is a critical component of this allocation strategy. 

Sunaina Sinha Haldea, head of private capital advisory at wealth manager Raymond James, said: “For the vast majority of institutions, private equity and hedge funds come out of the alternatives bucket. 

“The lack of distributions out of private markets portfolios is going to impact the ability to make new commitments in other parts of the alternatives portfolio, including hedge funds.” 

The Bain & Co report highlights that assets in the global private capital industry surged to $14.5tn last year, more than triple the $4tn managed a decade earlier. In contrast, hedge fund inflows have been muted over the past decade, with

New York-based banking giant JPMorgan Chase & Co is actively seeking to acquire a private credit firm to strengthen its private capital operations within its $3.6tn asset management division, according to a report by Bloomberg. 

Earlier this year, JPMorgan engaged in talks to purchase Chicago-based Monroe Capital, but the negotiations did not result in a deal, according to Bloomberg’s sources. 

Last January, Bloomberg reported that JPMorgan’s investment bank had allocated over $10bn of its balance sheet for direct lending and was focused on forming partnerships with asset managers to collaborate on private credit deals. 

JPMorgan’s asset management arm manages funds for high-net-worth individuals and institutions such as endowments and pension funds. At the end of last year, it managed $17bn in private credit assets, slightly less than Monroe Capital’s nearly $19bn in committed and managed capital as of 1 April. 

According to one of Bloomberg’s sources, a takeover would enable JPMorgan’s asset management arm to scale up rapidly, though the firm may choose to grow its private credit offerings organically. 

At an investor day on Monday, Troy Rohrbaugh, JPMorgan’s co-chief executive of commercial and investment banking, described private credit as an “important growing space”. 

The Australian Retirement Trust, a pension fund valued at AUD260bn ($174bn), plans to increase its private credit allocation over the next year, targeting opportunities in Europe and North America. 

In an interview with Bloomberg, Andrew Fisher, Head of Investment Strategy at ART, Australia’s second-largest pension fund, said that it aimed to raise its position from just under 1.5% to 2.5% within the next six to twelve months, though he did not specify the target value of the exposure. 

To build its exposure to the asset class, ART plans to blend external managers with its internal team. 

The firm is adopting a “disciplined” approach to building its allocation, directing funds towards the lower-risk, unlisted segment of the credit market. Fisher said: ““There’s a lot of money chasing the space. 

“We are competing with banks, which is why there’s a tendency to be offshore, because the banks have a pretty dominant position here.” 

He added that there were opportunities in global credit for small-to-medium size businesses. 

Other leading funds in Australia’s rapidly expanding AUD3.7tn pension industry are also showing an increased interest in private credit. Cbus, which manages AUD90bn, plans to triple its global allocation to this asset class, while Hostplus, with AUD104bn, is seeking to expand its already substantial private credit holdings. Last December, the country’s largest pension fund AustralianSuper increased its partnership with private credit specialist Churchill Asset Management to $1.5bn. 

Last month, ART opened an office in London, joining AustralianSuper and Aware Super’s expansion into the UK. Fisher added that ART, which already owns a stake in Heathrow Airport, is looking to expand its infrastructure and real estate portfolio in the region. 

The private credit market can be expected to double in growth over the next five years, according to Michael Arougheti, Co-Founder, CEO and President at $429bn global alternative investment manager Ares Management. 

Speaking on a credit opportunities panel at the SALT iConnections conference in New York on Tuesday, Arougheti highlighted a 10-year compound annual growth rate for the private credit markets of approximately 15%. He added that about 75% of Ares’ investments are in some form of credit instruments. 

Another panellist, Daniel S Loeb, CEO at $10.4bn hedge fund Third Point, described the current environment as “a bond and credit pickers market”, noting that while distressed opportunities have been less consistent, there are numerous stressed opportunities to consider. Third Point plans to launch a private credit fund later this year. 

Arougheti also emphasised opportunities ahead of an ongoing balance sheet cleanup: “There are liquidity induced cracks that have already emerged as rates stay higher for longer. That will continue. 

“So I don’t want to give anybody the impression that there’s not opportunities to invest because of rates.” 

Ty Wallach, Managing Director and CIO of credit at $1.3bn global investment firm Atlas Merchant Capital, noted that higher interest rates have resulted in good companies with bad balance sheets. He mentioned opportunities in the $2bn-and-below space, as capital chases large deals and smaller middle-market companies are left behind in need of capital. 

As with his fellow panellists, Wallach anticipated further growth for private markets, pointing out that “so much of the capital being raised is for private markets” and highlighting the development of the secondaries market in private credit. 

Israel-based identity security company CyberArk has agreed to acquire Venafi, a machine identity management company backed by software-focused private equity firm Thoma Bravo, for approximately $1.54bn — to be paid in $1bn cash and $540m in CyberArk shares. 

The transaction is expected to close in H2 2024.

In a statement on Monday, CyberArk highlighted Venafi’s capabilities in certificate lifecycle management, private public key infrastructure (PKI), IoT identity management and cryptographic code signing. The company said that the acquisition is expected to add approximately $150 million in annual recurring revenue, as well as boost margins.

Matt Cohen, Chief Executive Officer, CyberArk, said that the acquisition of Venafi would “empower Chief Information Security Officers to defend against increasingly sophisticated attacks that leverage human and machine identities as part of the attack chain”.

Chip Virnig, a Partner at Thoma Bravo, added that his firm had “accelerated SaaS growth, expanded margins, and successfully created a best-in-class SaaS offering” at Venafi.

Morgan Stanley & Co and Latham & Watkins are advising CyberArk, while Piper Sandler and Kirkland & Ellis are advising Thoma Bravo.