NEWSLETTER of March 15, 2024

The following content has been added at finexpert:

Deutsche Bank Research
SYNCHRONER ABSCHWUNG VON KONJUNKTUR UND UNTERNEHMENSFINANZIERUNG IN Q4 2023
The lending business with companies and the self-employed stagnated at the end of the year; 2023 as a whole saw the lowest growth since 2014 (+0.9%). Almost all sectors, maturities and bank groups are affected, with the associations holding up better than the major banks. Overall demand is suffering from the increased financing costs - capital market issues also performed very weakly. An improvement is not expected until interest rates are lowered. >more

FTI Andersch | Center for Corporate Transactions and Private Equity (CCTPE) at HHL Leipzig Graduate School of Management
DIE WIDERSTANDSFÄHIGKEIT DER PRIVATE EQUITY-BRANCHE: AUSWIRKUNGEN VON KRISEN AUF DIE LEISTUNGSFÄHIGKEIT VON PORTFOLIO-UNTERNEHMEN
Only just under one in four private equity funds surveyed in Germany (23%) reported rising earnings (EBITDA) from their portfolio companies in the last twelve months. A large proportion had expected a different economic development: almost 40 percent of the funds stated that the EBITDA of their portfolio companies was below their own expectations. For almost half of the funds surveyed, the liquidity of the portfolio companies also developed worse than expected. This is the result of a recent study by management consultancy FTI-Andersch and the Center for Corporate Transactions and Private Equity (CCTPE) at HHL Leipzig Graduate School of Management. >more

Bain & Company
GLOBAL PRIVATE EQUITY REPORT 2024
The year 2023 was one of portent. Deal value fell by 37%. Exit value slid by almost half. Fund-raising dropped across private capital, and 38% fewer buyout funds closed. Interestingly, dollar commitments in buyouts surged as a number of high-performing funds came to market. But it was truly a year of haves and have-nots. Just 20 funds accounted for more than half of all buyout capital raised. The word for this market is stalled. The culprit was the sharp and rapid increase in central bank rates, which caused general partners to hit the pause button. The good news? Interest rates appear to have stabilized. Record dry powder is stacked and ready for deployment. Nearly half of all global buyout companies have been held for at least four years. In short, the conditions appear to be shifting in favor of hitting the go button. We will see what 2024 brings. >more

Antares Capital
2024 OUTLOOK: PERSPECTIVES ON PRIVATE AND LIQUID CREDIT
As we enter 2024, we believe the read on most key middle market loan metrics suggests the opportunity for prudently deploying new private debt capital remains quite favorable. All-in yields and the middle market yield premium remain at the high end of their long-term range; total debt-to-EBITDA leverage has declined below its long-term average; PE sponsor LBO equity contributions are near record highs; and first-lien yield per unit of leverage (excluding unitranche) remains near the highest it has been since at least 2013. Less constructive is LBO EBITDA-to-cash interest given the spike in interest rates. >more

USE OF PROCEEDS IN PRIVATE EQUITY-BACKED INITIAL PUBLIC OFFERINGS
Benjamin Hammer, Nikolaus Marcotty-Dehm, and Jens Martin
2024
This paper provides the first empirical investigation of the disclosure of use of proceeds in private equity (PE)-backed initial public offerings (IPOs). We find that PE-backed issuers primarily use the IPO as a means of repaying claimholders. The subset of PE-backed issuers that disclose “repay debt” as the use of proceeds have high ex-ante debt-to-total assets ratios and use the IPO proceeds to reduce them by approximately 31 percentage points post IPO. Further results suggest that the need to repay claimholders in PE-backed IPOs conflicts with the implementation of other stated use-of-proceeds categories related to M&A and R&D. Finally, we provide evidence that PE backing reduces the adverse impact of an uninformative use-of-proceeds disclosure on underpricing. >more

EQUITY RETURN EXPECTATIONS AND PORTFOLIOS: EVIDENCE FROM LARGE ASSET MANAGERS
Magnus Dahlquist, and Markus Ibert
2023
Collecting large asset managers' capital market assumptions, we revisit the relationships between subjective equity premium expectations, equity valuations, and financial portfolios. In contrast to the well-documented extrapolative expectations of retail investors, asset managers' equity premium expectations are countercyclical: they are high (low) when valuations are low (high). We find that asset managers' portfolios reflect their heterogeneous expectations: allocation funds of asset managers with larger US equity premium expectations invest significantly more in US equities. The pass-through of expectations to portfolios seems to be muted by investment mandates and is smaller than the one predicted by a standard portfolio choice model. >more