PitchBook News - Private debt braces for stormy seas

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The Weekend Pitch

January 22, 2023

Presented by Masterworks

(Drew Sanders/PitchBook News)

Welcome back to The Weekend Pitch. I'm Andrew Woodman, and you can reach me at andrew.woodman@pitchbook.com or on Twitter @adwoodman.

The private debt market, itself the result of a global financial upheaval, potentially faces its biggest test yet amid 2023's uncertain economic outlook.

After nearly a decade of rapid growth, private debt could be in for a rude awakening as higher interest rates threaten companies' abilities to service their borrowing costs—which in turn will force investors to think twice about their private debt exposure. Meanwhile, aggressive monetary tightening and the very real prospect of a global recession could also stifle the deal pipeline for alternative lenders, much as it has for private equity firms.

Yet, investors are raising large amounts of capital for the strategy. Earlier this month, Muzinich & Co. said it has hit an €800 million (around $870 million) close on its pan-European debt fund, which has already made 18 investments. Other big-name PE firms also remain bullish on their private credit strategies. In December, KKR was urging its limited partners to increase their allocation to private debt, and Blackstone’s credit arm has more than doubled its AUM over the past five years.

The hope is that investors that are adequately diversified, and sufficiently disciplined, will be better placed to navigate their private debt ambitions through stormy seas.

A message from Masterworks

Which platform delivered tens of millions to investors in 2022?

In the same year that retail investors lost a whopping $350 billion, Masterworks had its best year ever. Its nine art sales returned over $25.8 million to investors—a record amount.

How is this possible? Well, the art market isn’t the stock market, making it an effective hedge to market volatility. Its prices can skyrocket—like they did in 2022—even while financial markets crater.

All of Masterworks’ offerings are qualified with the SEC, making it incredibly simple for investors with no experience in fine art to benefit from this $1.7 trillion asset class.

To kick off the new year, Masterworks is now inviting PitchBook readers to claim a complimentary, no-obligation account today. Isn't it time you checked it out?

See important Regulation A disclosures.

Trivia

Last year was difficult for US private equity exits, according to our 2022 Annual PE Breakdown. By what percentage did US PE exits decline?

A) 66.3%
B) 53.4%
C) 37.4%
D) 47.7%

Find your answer at the bottom of The Weekend Pitch!

Venture into Europe

Mirroring the US, European-based VCs and investors had a wild ride in 2022. Exit values remained historically high, but valuations saw huge cuts all around. Some sectors flourished while others faced difficult headwinds.

What does this all mean for 2023 and beyond? Our 2022 Annual European Venture Report has all the information you need to make sense of the year that was, from the blockbuster deals to the data that puts it in perspective.

13 takeaways from JP Morgan's 2023 healthcare conference

PitchBook analysts Rebecca Springer and Aaron DeGagne have recapped JP Morgan’s annual healthcare conference, highlighting key deals and announcements and providing analysis on several big themes for healthcare investors to watch—such as behavioral health, fundraising, care navigation, genomics and the ongoing primary care chess game.

Our analyst note also includes predictions for 2023 and beyond: Behavioral health consolidation will likely heat up as point solutions fall out of favor; an acceleration of partnerships could occur between value-based care enablers and health systems; and the employer self-insured market will increasingly participate in the shift to value-based care.

Secret (placement) agent man

(bogdanhoda/Shutterstock)

Private markets fund managers are bracing for a rough year ahead, with rising interest rates and a continual freeze in the IPO market. A few shaken martinis could be in the mix with this forecast. Your mission, should you choose to accept it, is to read our analyst note about the role of placement agents for general partners. These professionals have a very particular set of skills to help lift the burden of onerous tasks during the fundraising process.

Stay tuned

Keep an eye out for these insights and research reports coming out this week.

What the Future Holds for Private Capital

2022 Annual Global M&A Report

Takeaways from Recent E-Commerce Deal Activity

When Dry Powder Stays Dry

Quote/Unquote

UN Secretary-General António Guterres
(Anadolu Agency/Getty Images)

"Their business model is inconsistent with human survival."

—UN Secretary-General António Guterres said in an address at the World Economic Forum in Davos, Switzerland, in which he criticized the fossil fuel industry.

Trivia

Answer: A.

US PE exits declined sharply compared to last year, dropping 66.3% Learn more in the 2022 Annual US PE Breakdown.

This edition of The Weekend Pitch was written by Andrew Woodman, Emily Burleson and Jacob Robbins. It was edited by Alexander Davis and Clarinda Simpson.

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Key phrases

Other bigname PE firms private equity firms The Weekend Pitch uncertain economic outlook higher interest rates aggressive monetary tightening past five years panEuropean debt fund global financial upheaval private debt exposure private credit strategies private debt market

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PitchBook News - Private debt braces for stormy seas

Trivia

Venture into Europe

13 takeaways from JP Morgan's 2023 healthcare conference

Secret (placement) agent man

Stay tuned

Quote/Unquote

Recommended Reads

Trivia

Key phrases

Older messages