Sector developments and company hires

Alternative credit acquisitions hit record AUM
The AUM of acquired alternative credit managers hit a record US$326bn across 37 transactions in 2022, according to Gapstow Capital Partners figures, with acquisitions of private lending firms accounting for nearly half of this activity (15 acquisitions at US$161bn in target AUM). In comparison, the tally for the prior two years was US$140bn in 2021 and US$150bn in 2020, while 2018 was the previous largest year on record (at US$278bn).

“These levels of activity were well above historical averages and significantly account for 2022 being a record year. Among the acquired private lenders, the biggest increase in activity was in those specialising in corporate lending, which saw eight deals for US$133bn target AUM, as compared to two deals for US$4bn last year and the annual average of US$37bn from 2017 to 2021,” Gapstow notes.

CLO-centric acquisitions also dwarfed the historical average last year. While the number of acquisitions (six) was in line with the historical average, acquired AUM of US$33bn far exceeded the historical average of US$5bn - largely as a result of Carlyle’s acquisition of CBAM (US$15bn), as well as Investcorp’s acquisition of Marble Point (US$8bn) and Owl Rock’s acquisition of Wellfleet (US$7bn).

Overall, the Gapstow analysis shows that the three largest transactions accounted for over 40% of 2022’s target AUM: Guardian Life’s minority purchase of and partnership with HPS (at US$80bn of AUM); Franklin Templeton’s acquisition of Alcentra (US$39bn); and First Eagle’s acquisition of Napier Park (US$19bn).

Meanwhile, minority ownership purchases accounted for about 32% and 25% of deal count and acquired AUM respectively. Gapstow believes this level of acquisition activity should continue in 2023, as alternative credit managers will be under pressure to build scale and scope, with more managers with current minority owners considering new partnerships.

“Growth in demand for alternative credit, while slowing, is still exceptionally strong relative to other asset classes. Both traditional and alternative investment managers believe that gaining and/or building exposure here is a strategic imperative. We predict an increase in acquisitions of firms who currently have minority owners, with the minority owners being bought out in the process,” the firm observes.

Over the last 11 years, it has tracked over 445 minority purchases, with most of the firms considered unlikely to be purchased because the managers had used the proceeds of the sale to address critical strategic issues. “In fact, to date, only four of these 44 firms have been subsequently sold outright. However, to reach their next set of strategic goals, many more will consider a re-sale,” Gapstow suggests.

The Gapstow analysis is based on the firm’s proprietary acquisition database, which begins in 2012 and covers 284 transactions, for which the target firms had over US$1.6trn in AUM.

In other news…

EMEA
Channel Capital Advisors has appointed Bhoomika Kesaria as head of investor relations, responsible for the firm’s fundraising efforts across all products, including its fintech lending strategy. With over 13 years of experience in capital introductions, private debt and structured finance, she joins from Lendable and will report to Channel cio Paul Wilson.

Vedanta Bagchi has joined Revolut as portfolio manager and global head of structured credit, based in London. He was previously director and portfolio manager within Commerzbank’s investment office, having joined the bank as vp - M&A advisory in January 2012. Before that, Bagchi worked at UBS.