Secondaries Surge as Liquidity Crunch Drives Innovation | Weekly Pulse

📊 Must Know: Credit Secondaries Market Explodes

• Bottom Line: 🔄 Private credit secondaries volume is set to exceed $18 billion this year, up from $11 billion last year, as firms desperately seek liquidity amid stalled exits.

• Why It Matters: 📈 Many private credit funds formed in 2020 or later show median distribution-to-paid-in-capital (DPI) of less than 0.6, meaning investors haven't even received 60% of their original investment back.

• Big Picture: 🔄 With M&A markets sluggish and fewer opportunities to cash out, private credit funds are turning to secondary sales to improve investor returns and avoid the dreaded capital call without distributions problem.

🧠 Industry Insights: Strategy & Outlook

• Goldman's Hybrid Capital Strategy 💡 Goldman pitching $10 billion fund offering debt-equity combinations to help cash-strapped PE firms distribute cash to investors

• Wellington's Private Markets Push 🚀 Nearly century-old firm aggressively moving into private markets and hedge funds, building 40-person unit while also courting retail investors

• Private Credit Risk Concerns ⚠️ Industry watchers including JPMorgan's Jamie Dimon warn of potential "recipe for financial crisis" as private credit reaches $2 trillion in assets

• Asian Education Investment Boom 🎓 Apollo and KKR fuel rush into Asian schools, with 72% of planned global international school openings slated for Asia

• Distribution Pressure 📉 Private credit funds facing liquidity challenges as many vehicles formed eight years ago still lag on distribution-to-paid-in capital metrics

• Manager Consolidation 🔄 Nearly all managers (96%) surveyed globally anticipate industry-wide consolidation in the next five years, with 72% expecting it to be significant

• Traditional Asset Manager Pivot 🎯 Traditional asset managers under pressure from outflows and fee compression striving to break into more lucrative private markets

🔮 Trends to Watch

• Secondary Market Expansion 🔄 Credit secondaries becoming fastest-growing segment with buyers raising dedicated capital pools

• Retail Private Markets Push 👥 Traditional asset managers forming partnerships to bring private investments to 401(k)s and wealth channels

• Infrastructure Investment Boom 🏗️ Massive scale needed for AI, defense, and energy transition driving infrastructure fund growth

• Geographic Expansion 🌐 Private markets firms expanding into Middle East, Asia Pacific, and emerging markets for growth opportunities

• Consolidation Acceleration 🤝 Industry-wide consolidation expected within five years as regulatory pressures mount and talent thins

• Technology Integration 💻 AI and automation driving efficiency gains in private markets operations and investment processes

• ESG and Defense Pivot 🛡️ Shift in ESG considerations opening opportunities in defense sector investments

• Wealth Channel Development 💰 Major firms building retail distribution capabilities and hiring public relations teams for brand awareness

🤝 Deal Spotlight: Transactions & Strategies

• Oracle Data Centers 💻 $38 billion debt package for Oracle-tied data centers to power OpenAI, with 4.5 gigawatts of capacity across Wisconsin and Texas

• Wealthspire Acquisition 💼 Madison Dearborn pays $2.7 billion to reacquire $31 billion Wealthspire and $345 billion Fiducient from Aon in all-stock transaction

• Bridge Investment Group 🏢 Apollo finalizes $1.5 billion purchase of Bridge Investment Group, doubling Apollo's real estate AUM to $110 billion

• Zentiva Sale 💊 Banks and private credit firms compete to offer up to €3 billion financing for generic drugmaker Zentiva sale, with GTCR and TPG among interested buyers

• Syndigo Refinancing 💻 BlackRock leads $550 million private credit package to refinance software platform Syndigo's bank debt

• Corient Wealth Expansion 💰 Mubadala-backed Corient acquires UK wealth firms Stonehage Fleming and Stanhope Capital, creating $430 billion independent wealth manager

• Xylem Kendall Continuation 🌱 StepStone and HarbourVest back over $1 billion continuation fund for vegetation-management company backed by Sterling Investment Partners

• Goldman-T. Rowe Partnership 🎯 Goldman Sachs to invest up to $1 billion in T. Rowe Price stock for private markets collaboration targeting retail investors

• ElmTree Acquisition 🏗️ BlackRock completes acquisition of $7.3 billion net-lease specialist ElmTree Funds for private financing platform

🎯 Fundraising Focus: Capital Formation

• Peak Rock Capital 🎯 Closes $2.5 billion flagship PE fund (above $2 billion target) and $500 million third credit fund, nearly doubling predecessor sizes

• Carlyle AlpInvest 📊 Raises $20 billion for secondary investing program, with $15 billion commingled fund closing at upper limit

• Blackstone Infrastructure 🏗️ Closes world's largest dedicated infrastructure secondaries fund at $5.5 billion

• Benefit Street Partners 🔄 Collects $2.3 billion for credit secondaries fund to extend hold on loan portfolio from prior flagship vehicle

• Allocate Series B 💼 San Francisco-based private market operating system raises $30.5 million Series B led by Portage Ventures

• Beach Point Opportunistic 💰 Announces over $1.25 billion raised for opportunistic credit investing

• Partners Group Performance 📈 Reports 94% increase in performance fees to 314 million Swiss francs, expecting 25-40% of revenue from performance fees in 2025

• Coller Capital Credit 💸 Pools $6.8 billion for second private credit secondaries platform, up from $1.4 billion debut fund

• Ares Credit Secondaries 🔄 Collects over $3.5 billion for inaugural credit secondaries fund and related vehicles

• HSBC Private Equity 🏦 Launches evergreen private equity strategy with exposure to 10,000 underlying companies from launch

🌍 Market Spotlight: Regional Developments

🇺🇸 United States

Goldman Pushes Into Middle East Private Credit - Goldman Sachs is relocating top private credit executive Deb Dutt to the Gulf region, betting on growing demand for non-bank lending, especially in Saudi Arabia where local banks face tightening liquidity.

🇦🇺 Asia Pacific

AustralianSuper Pledges $26 Billion Locally - The A$385 billion fund earmarks A$40 billion for local investment over five years, targeting housing, health, energy transition, and AI infrastructure.

🇯🇵 Japan

Real Estate Fund Boom - Multiple Japanese institutions launching property funds as interest rates rise, with MUFG's 100 billion yen fund targeting mid-sized offices, residential properties, and hotels in Tokyo, Osaka, and Nagoya.

🇪🇺 Europe

Private Credit Market Growth - Moody's reports European private credit market gaining ground on the US, with six largest firms accounting for 59% of all fundraising in European private markets, tripling their share from 2019.

🇸🇬 Singapore

Asian Credit Expansion - Oaktree hires Roger Zhang to lead new private debt strategy in Asia Pacific, targeting high-single to low-teen returns in performing credit space.

🇬🇧 United Kingdom

Private Equity Fund Launch - HSBC Asset Management launches open-ended private equity strategy focused on secondaries and co-investments for wealth and institutional investors.