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.

AI hyperscaler CoreWeave, which operates data centres in the US, has secured a $7.5bn debt financing facility led by funds managed by Blackstone with participation from Magnetar, as co-lead investor, and Coatue Management.

Other firms to participate in the financing include Carlyle, CDPQ, DigitalBridge Credit, funds and accounts managed by BlackRock, Eldridge Industries and Great Elm Capital.

In a press statement, CoreWeave said it would use the new financing to further develop its “growing fleet of high-performance compute to execute existing contracts with leading enterprise customers and AI innovators”.

CoreWeave has raised over $12bn from equity and debt investors over the last 12 months, including a $1.1bn Series C funding round earlier this month led by Coatue, and a $2.3bn debt financing facility led by Blackstone and Magnetar last August.

The company also recently opened its headquarters in London and said it planned to invest $1.25bn in the region.

Private equity major KKR is poised to propose a package of commitments in a bid to secure early approval from the European Union for its proposed €22bn acquisition of Telecom Italia’s landline network, according to a report by Bloomberg.

The report cites unnamed sources familiar with the matter as indicating that the commitments, which are expected to be filed next week, will likely appease EU concerns over possible price increases in the wholesale telecoms market, allowing the deal to be approved next month.

While the European Commission has been conducting a preliminary investigation into the possible effects of the deal on competition in the Italian telecoms market, KKR is keen to avoid an in-depth “phase 2” investigation which could delay completion by several months.

According to Bloomberg’s sources, if KKR’s commitments are formally offered and deemed acceptable, the EU would push back its decision on the deal by 10 days from its current 31 May deadline, allowing for approval in mid-June. A final decision has yet to be made though and there is no certainty that the deal will be approved.

The winners of the Private Equity Wire European Credit Awards 2024, which recognise fund performance and service provider excellence across credit funds, were announced at an exclusive ceremony and networking event today (16 May), at etc.venues, County Hall, London.

Voting for the awards was conducted via an online poll of the entire Private Equity Wire userbase, with participants asked to make their choice from a short-list of firms in each category.

Pre-selection data for the managers awards was provided by Bloomberg, based on annualised returns over the 12 months from 1 January – 31 December 2023, and for the service provider awards, on a survey of more than 100 credit fund managers and other key industry participants.

The winners are:

Managers

Credit Hedge Structured Credit Fund of the Year – Alegra Capital AG (PvB Alegra CLO Fund)
Credit Hedge Direct Lending Fund of the Year – Altana Wealth Ltd (Altana Specialty Finance)
Credit Hedge Multi-Strategy Fund of the Year – Axiom Alternative Investments Sarl (Axiom Alternative Funds SICAV-RAIF – Axiom Credit Opportunity)
Credit Hedge Credit Long/Short Fund of the Year – Blueglen Investment Partners Ltd (Blueglen European Credit Fund I)
Credit Hedge Emerging Market Debt Fund of the Year – GML Capital LLP (Growth Credit Fund IC)
Performance of the Year – Over $1 Billion Debt/Loans – Hayfin Capital Management LLP (Hayfin Direct Lending Fund III SCSp)
Credit Hedge Long/Short Fund of the Year under $500M – Hellebore Capital Ltd (Hellebore Credit Arbitrage)
Performance of the Year –  Debt/Mezzanine – ICG (ICG Europe Mid-Market Fund SCSp)
Performance of the Year – Over $1 Billion Debt – Pemberton Capital Advisors LLP (Pemberton Strategic Credit Opportunities Fund II)
Performance of the Year – Under $1 Billion Debt – Pantheon Ventures Ltd (Pantheon Credit Opportunities Fund II)
Performance of the Year – Under $1 Billion Debt/Loans – Pantheon Ventures Ltd (Pantheon Credit Opportunities Fund II)
Distressed Debt/Special Situations Fund of the Year – Shiprock Capital Management Ltd (Shiprock Capital Master Fund LP)
Performance of the Year – Debt/Special Opportunity – Signal Capital Partners Ltd (Signal Alpha II Fund LP)
Best Performance of the Year – Axiom Alternative Investments Sarl (Axiom Alternative Funds SICAV-RAIF – Axiom Credit Opportunity)
Credit Hedge Fund of the Year under $500M – Axiom Alternative Investments Sarl (Axiom Alternative Funds SICAV-RAIF – Axiom Credit Opportunity)
Best RE Debt Fund – Frux Capital (Frux Debt Fund II)
Best Mezzanine Fund – ICG (ICG Europe Fund VII)
Best Other Private Debt Fund – Inveready Asset Management (Inveready Venture Finance III)
Best

Blackstone’s credit unit is planning to sell around $450m of loans at a discount, as it looks to provide liquidity to investors in an older fund, according to a report by Bloomberg citing unnamed people with knowledge of the mater.

Blackstone has been working with Evercore to find a buyer for the loan portfolio, which was acquired for $2.4bn from NewStar Financial in 2017 and includes debt from travel rewards program Arriva, American Achievement, BMC Software and Charter Communications, according to one of Bloomberg’s sources.

With the fund now past its reinvestment window, Blackstone is selling off the remaining loans and has reportedly selected a bid that valued the portfolio at around 60 cents on the dollar, although the transaction has yet to close.

Carlyle’s global credit platform has provided a financing package of over $400m to support the growth of Big Bus Tours, a global provider of hop-on hop-off sightseeing bus tours and portfolio company of private equity firm Exponent.

Big Bus Tours operates across Europe, North America, the Middle East and Asia Pacific.

Carlyle’s global credit platform manages $186bn in AUM as of 31 March 2024.

Website-building platform Squarespace will be taken private by private equity firm Permira in a $6.9bn all-cash transaction, with Ares Capital, Blackstone and Blue Owl providing a $2.65bn private credit package to help finance the acquisition.

Under the terms of the deal, Permira has agreeing to purchase shares at $44 each, approximately 30% more than Squarespace’s unaffected share price.

Blackstone meanwhile, will hold half of the private credit package, which consists of $2.1bn term loan, a $300m delayed draw loan and a $250m revolving credit facility, with Blackstone and Ares and Blue Owl taking a quarter each.

Squarespace’s founder and CEO Anthony Casalena, along with current investors Accel and General Atlantic, who control 90% of Squarespace’s voting shares, have approved the transaction. They will remain investors following completion of the deal.

Squarespace has faced challenges in gaining support in the public market in recent years, with its shares opening below the reference price of $50 in 2021 and never trading above the opening price of $48.

The company’s shares increased by nearly 13% to $43 per share in pre-market trading.

Squarespace’s decision to go private follows the spin-off of Qualtrics from SAP in 2021, later going private again in 2023 with Canada’s pension plan and Silver Lake in a deal worth $12.5bn. Similarly, Japanese electronics multinational company Toshiba also went private in 2023 in a deal worth $13.6bn, following years of speculation including engagement with activist investor Elliott Investment Management.

Centerview, JP Morgan, Skadden and Richards, Layton & Finger advised Squarespace while Goldman Sachs and Latham & Watkins advised Permira.

Oak Hill Advisors is leading a group of private credit lenders in discussions to provide about $1bn of debt to support Vista Equity Partners’ acquisition of revenue management solutions business Model N, according to a report by Bloomberg.

Vista Equity Partners revealed its plan to take Model N private in an all-cash transaction valued at about $1.25bn on 8 April.

The report cites unnamed people with knowledge of the matter in confirming that the deal is expected to close in mid-2024.

Brinley Partners, KKR & Co, Morgan Stanley’s direct lending arm and New Mountain Capital are also participating in the financing package, which consists of a $735m loan, a $150m delayed-draw term loan and an $80m revolving credit facility, according to one Bloomberg source.

Pricing is expected at 5 percentage points over the Secured Overnight Financing Rate, at a discounted price of 99 cents on the dollar, its leverage at around eight-times based on roughly $90m of EBITDA.