Ameetee’s Post

First it was #NAVloans, then #SRT, now its #capitalcall #ABS. The #structuredfinance alphabet soup is back on Wall Street. Taken individually none of these innovations seems particularly problematic, or remotely as risky as RMBS and CDS became before the #GFC. Buuuut ... in aggregate they set my spidey sense tingling. It's not so much the underlying credit risk that makes me go hmmmm, it's the interconnection between massive asset managers, asset owners and the banks through complex and opaque private transactions. None of that correlation is measurable by regulators, much less the market, right now Here's my latest attempt to connect the dots. Goldman Sachs, Blackstone Apollo Global Management, Inc., KKR, GIC, Abu Dhabi Investment Authority (ADIA), Texas Municipal Retirement System (TMRS) Kentucky Public Pensions Authority, U.S. Securities and Exchange Commission, Institutional Limited Partners Association (ILPA)

🤯 These numbers are much larger than what I've previously read through Preqin, but if Blackstone is correct and we see more private credit participation by pension funds and add in infrastructure investing, these figures are hard to ignore. 📈 #privatecredit #investing #finance #capitalmarkets #infrastructure #creditfund #privatedebt #directinvesting #directlending #management #growth #globalfinance https://lnkd.in/grS7RKZP

LPs are clamoring for two things these days. Liquidity and private debt investments. Consequently, one product is making its way to the top of LP shopping lists: evergreen funds. In response, Carlyle (Nasdaq: CG), KKR (NYSE: KKR), Blackstone (NYSE: #DirectLenders #DirectLending #Institutionalinvestors #Pensionfunds #Privatecredit #PrivateCreditFunds

'However, private credit is not the only product within alternative investments. On the contrary, real estate, private equity, and other assets complement and diversify portfolios. According to Toreigh Stuart, CFA, CAIA, this is due to two main reasons: return potential and diversification benefits." #PrivateWealth #WealthManagement #RealAssets #PrivateMarkets #AlternativeInvestments #Alts #UHNW #HNW #FamilyOffices #IBD #RIA #PrivateInvestments #PrivateCredit #PrivateEquity #RealEstate

There’s not much I enjoy more than financial structuring, which is why I always look forward to pieces from Matt Wirz at The Wall Street Journal (SRTs/CRTs have been another hot topic recently). Goldman Sachs recently issued $475 million in bonds backed by capital-call loans to fund managers. These loans, often compared to 'credit cards for private-fund managers,' provide quick liquidity while banks collect fees. While the bonds carry high ratings, it’s important to remember that this structure hasn’t been tested through different market cycles, so the associated risks shouldn’t be overlooked.

What Does 30 Years of Compounding at a 10% Return Look Like? It looks vastly different depending upon your management fee. As #uhnw #investors with long-term horizons, our clients usually don't notice the small differences in the first five years of investing. After just 20-years of #compounding #wealth the differences are large. Starting with $10 million investment, a 1.00% management fee vs. a 0.10% fee yields a $10 million difference after 20 years of compounding. You have lost $10mm of potential wealth compounding to fees. After 30-years of #compounding #wealth the differences are colossal. After 30 years, there is a $35 million difference -- I.E., you have lost $35mm of your wealth to your #financialadvisor or #multifamilyoffice due to their fees and your inability to compound a higher account balance at the end of every year. That is essentially $35mm of wealth that could have been transferred to your #nextgeneration that has been transferred to the revenue line of your #financialadvisor or #familyoffice instead. At Crockett Street Advisors, we help demystify #highnetworth investing.

Is Private Equity a ticking time bomb? For decades the private equity model seemed unassailable, transforming the industry’s image from Barbarians at the Gate to crucial pillar of capitalism. Funds raised money, bought businesses, loaded them with debt, exited at a profit and convinced happy investors to do it all over again — at ever greater scale. Surging borrowing costs have stalled that engine. Even though buyout firms say they see green shoots in the M&A market, they’re deep into a third year of higher rates and scant opportunity to sell assets at decent prices, and they’ve been forced into a host of wheezes to keep things going: “Payment in kind” (PIK) lets PE-owned companies defer crippling interest payments in exchange for taking on even more costly debt; “net asset value” loans allow cash-strapped buyout firms to borrow against their holdings. This endless kicking the can down the road — in the hope that rate-cutting central bankers will at some point ride to the rescue — is making the pensions, insurers and others who back PE firms uneasy. When buyout groups do look to sell, PIKs, NAV loans and other kinds of excess baggage are creating obstacles. Creative accounting, no mark-to-market and poor liquidity can lead to trouble when the inevitable black swan strikes back. #privateequity Image: institute for new economic thinking.

Interesting article on the margin compression in the Private Equity world and the more challenging sale process

Yann Robard’s entry into private equity financing brought a transformative approach to an industry known for its rigidity. Through Dawson Partners, he pioneered a method to offer liquidity to investors locked into illiquid private equity stakes, addressing a long-standing pain point for institutions like pensions and fund managers. By converting these illiquid assets into immediately accessible capital, Dawson capitalized on a booming private equity market that continues to exceed $1 trillion. However, the ambitious growth strategy and the inherent complexity of its financing structures are now being tested as economic conditions tighten and investor scrutiny intensifies. #PrivateEquity #Finance #InvestmentStrategy #Liquidity #CapitalMarkets #PrivateCredit #FundManagement #EconomicAnalysis #FinancialInnovation #InterestRates #DebtMarkets #AssetManagement #InstitutionalInvestors #StructuredFinance