Shifting Tides as Universities Sell, Retail Investors Enter, and PE Markets Reshape | Weekly Pulse

🔥 Must Know: Elite Universities Shed Private Equity Stakes Amid Funding Pressures

• Harvard and Yale are seeking to sell billions in private equity fund stakes as elite universities face financial uncertainty from liquidity constraints, sluggish exit markets, and political pressure from the Trump administration.

Why It Matters

• 🔍 These sales signal a potential turning point for institutional investment in private markets, as even the pioneers of the "endowment model" – which emphasizes illiquid alternative investments – are reassessing their exposure amid challenges in monetizing these holdings.

Big Picture

• 📊 Harvard, with almost 40% of its $53 billion endowment allocated to private equity, is in advanced talks to sell about $1 billion of fund stakes to Lexington Partners in a secondaries transaction facilitated by Jefferies.

• 📊 Yale is exploring sales of up to $6 billion of its private equity portfolio, advised by Evercore, despite CIO Matthew Mendelsohn's previous commitment to maintaining the endowment's "ability to be patient with long-term, illiquid assets."

🔮 Key Trends to Watch

• 📈 Private Credit Growth | Despite concerns about systemic risk, Goldman Sachs experts suggest private credit serves as a "solid line of defense" against credit crunches during banking stress, with the asset class growing from under $100 billion in 2010 to approximately $2.1 trillion today.

• 🇨🇳 Chinese Investment Pullback | Chinese state-backed funds are cutting off new investment in US private equity and seeking exclusion from PE investments in US companies, even if made by non-US buyout groups, reflecting escalating tensions from Trump's new tariff policies.

• 🌐 Accounting Consolidation | The arrival of private equity is reshaping the accounting sector, with one in three of the top 30 US firms having sold to financial buyers in four years, and now driving international consolidation as demonstrated by Grant Thornton's expansion.

• ⚡ Climate-Focused PE | Thematic investing targeting resource efficiency and tech-enabled transformation is delivering superior returns while tackling environmental challenges, with Summa Equity building one of Europe's largest impact funds by focusing on transforming high-emission industries.

• 💰 Pension Direct Investment Retreat | Top pension funds like CDPQ and Omers are stepping back from competing head-on with private equity groups, instead opting for partnerships to secure access to the best deals as direct ownership becomes increasingly challenging.

• 🚫 Tax Compliance Scrutiny | UK tax authorities are taking a tougher stance on carried interest reporting by private equity executives, particularly affecting US-based firms with UK operations due to misalignment between US calendar tax year and UK's April-to-April schedule.

• 🏦 Retail Access Expansion | Private markets are increasingly targeting wealth management channels, with multiple firms including Apollo, Capital Group, KKR, Invesco, and Barings forming partnerships focused on private credit solutions for US wealth clients with minimums as low as $1,000.

• 💼 Infrastructure Appetite | KKR's infrastructure division targeting 10-15% annual returns is growing in importance amid macroeconomic turbulence, appealing to wealthy individuals through vehicles like its Luxembourg infrastructure fund that has recorded a 13.5% annualized return since its June 2023 launch.

• 🏀 Sports Investment Surge | Private equity firms are increasingly investing in professional sports franchises, with record valuations pushing team ownership toward institutional investors who can provide the capital needed for stadium development and other growth initiatives.

🌍 Market Spotlight: Regional Developments

• 🇺🇸 United States | Private credit has emerged as a crucial financing source for deals as PE firms increasingly turn to private lenders amid market volatility, with Thoma Bravo's $10.55 billion acquisition of Boeing's digital portfolio funded by a consortium led by Apollo and Blackstone, while KKR opted for a €1.1 billion unitranche loan for its Karo Healthcare acquisition.

• 🇺🇸 United States | Capital Group, KKR, and Apollo are leading the push to bring private markets to retail investors, with SEC approval for funds requiring only $1,000 minimum investments and Apollo launching a new "New Markets" division targeting the $60 trillion of individual investor wealth through four business lines.

• 🇪🇺 Europe | European private credit fund managers are seeing increased interest from global LPs seeking to hedge volatility in their US assets, with investors shifting allocations away from American investments and into Europe, which is viewed as more stable and less exposed to trade wars.

• 🇦🇪 Middle East | Sovereign wealth funds are increasing allocations to private credit, with Abu Dhabi's Mubadala deploying $1 billion through a strategic partnership with Fortress, focusing on private credit, asset-based lending and real estate strategies.

• 🌏 Asia-Pacific | Despite fundraising plunging to a 10-year low of $74 billion, private equity deal value increased by 11%, with India emerging as the region's star performer and Gaw Capital Partners targeting $2 billion for its new Gateway Real Estate Fund VIII focusing on both private credit and private equity deals.

💼 Deal Spotlight: Transactions & Strategies

• 🛫 Boeing Digital Aviation Solutions / Thoma Bravo | $10.55 billion acquisition of Boeing's digital portfolio including Jeppesen, ForeFlight, AerData and OzRunways, financed by a $4 billion private credit loan led by Apollo and Blackstone, with participation from Ares Management, Blue Owl Capital, KKR, and JPMorgan.

• 🧪 CenExcel Clinical Research / BayPine LP | Acquisition backed by a $600+ million financing package co-led by Blackstone.

• 📱 Rogers Communications | Received $5 billion financing from Blackstone as part of the firm's investment-grade private credit expansion.

• 💰 Mubadala / Fortress | Mubadala signed a strategic partnership with Fortress to deploy $1 billion in private credit, asset-based lending and real estate strategies, leveraging its earlier stake acquisition of roughly 90% in Fortress from SoftBank.

• 💧 Thames Water / KKR | KKR's £4 billion proposal to acquire the troubled UK utility as it struggles under £20 billion of debt, with senior bonds potentially facing 25% writedowns in the restructuring.

• 🏢 Grant Thornton International | Grant Thornton US, backed by New Mountain Capital, is acquiring sister firms in UAE, Luxembourg, Cayman Islands, with Netherlands next in its private equity-driven consolidation of the accounting network.

• 💼 Invesco / MassMutual | Strategic partnership formed to create joint private credit solutions for wealth management clients, alongside a $1 billion preferred stock repurchase agreement, with initial $650 million backing from MassMutual.

• 🏥 Karo Healthcare / KKR | €1.1 billion unitranche loan led by Apollo Global Management, also including Goldman Sachs Asset Management, CVC, JPMorgan Chase & Co., and KKR's own credit unit, instead of the previously arranged bank financing.

• 💊 OSTTRA / KKR | $1.7 billion debt package underwritten by Barclays, Citigroup, and KKR Capital Markets to support KKR's acquisition of the post-trade services provider.

• 🧭 Cliffwater LLC / TPG & Temasek | Substantial minority investment in the alternative investment adviser and fund manager from TPG, through its TPG Growth platform, and Temasek, joining existing investor TA Associates.

• 🏀 Boston Celtics / STG Partners | $6.1 billion acquisition by a consortium led by STG Partners and including Sixth Street, pending approval from the NBA Board of Governors, marking the largest sports deal ever.

• ⚾ San Francisco Giants / Sixth Street | Purchase of 10% stake to help fund upgrades for Oracle Park, the team's 26-year-old stadium, as professional sports valuations continue to rise.

• 🏈 Buffalo Bills / Arctos Partners | Acquisition of a 10% stake as part of a 20% sale by the Pegula family, providing liquidity as the team manages cost overruns on its new $2.1 billion stadium.

• 💰 UBS / General Atlantic | Advanced talks to form a strategic partnership focused on the $1.6 trillion private credit market, with UBS's investment bank originating loans for which GA Credit will receive preferred status.

📊 Fundraising Focus: Capital Formation

• 💵 BMACX | Blackstone plans to launch its fifth perpetual flagship fund on May 1, investing across the company's credit platform and offering daily subscriptions compared to monthly for existing perpetual vehicles.

• 🌏 Asia-Pacific | Fundraising declined 22% to a 10-year low of $74 billion, despite modest recovery in deal activity. Established managers continue to dominate fundraising as 77% of managers that raised funds in 2021-2022 have yet to close a new fund.

• 🌐 Global VC | Only $10 billion raised across 87 VC funds in Q1 2025, setting a pace for the lowest year of fundraising in a decade. Established managers continue to dominate, with 77% of managers that raised funds in 2021-2022 yet to close a new fund.

• 💰 Pan-Asia Funds | Continue gaining market share, reaching nearly 60% in 2024 (up from 36% in 2019) as investors seek to reduce market-specific risks.

• 🏛️ Private Credit Record | According to Aksia's presentation to the Nebraska Investment Council, private credit funds achieved record annual returns of 15.2% in 2023, with fundraising rebounding dramatically at a 37% compound annual growth rate since 2023.

• ⚖️ Canadian Pension Shifts | CDPQ is lowering the proportion of direct private equity investments from 75% to 65% over five years, while Omers will no longer invest directly in European opportunities, instead focusing on fund partnerships to secure better co-investment access.

• 💼 Climate Solutions Fundraising | Summa Equity has built one of Europe's largest impact funds by targeting companies aligned with solving environmental challenges rather than isolated industry sectors, finding that transforming high-emission industries represents half of required CO2 reductions needed to reach net zero goals.

• 🏦 Pimco European Fund | US bond giant Pimco is set to launch its first European private credit fund targeting wealthy retail investors, focusing on European asset-based credit backed by inventory or property.

• 💰 Retail Credit Funds | Capital Group and KKR received SEC approval for two new credit funds with 60% public debt and 40% private credit, requiring only $1,000 minimum investments with no performance fees, part of their joint push to democratize alternative investments.

• 🏛️ Private Credit Secondaries | Generali Investments and Partners Group launching a $1 billion fund focused on secondary transactions in private credit, aiming to capitalize on increased opportunities as market volatility forces some investors to sell stakes.

📈 By The Numbers

• 🔢 $107 billion | Blackstone's investment-grade private credit business, up 35% year-over-year

• 💰 $10.55 billion | Value of Thoma Bravo's acquisition of Boeing's Digital Aviation Solutions assets, financed by private credit

• 💵 $600+ million | Financing package co-led by Blackstone backing BayPine LP's buyout of CenExcel Clinical Research

• 📉 50 bps | Current default rate across Blackstone's non-investment grade credit portfolio

• 📊 40-45% | Typical loan-to-value ratio in Blackstone's direct lending loans, compared to 70%+ in 2006-2007

• 📈 200 bps | Excess spread generated by Blackstone's investment-grade private credit over comparably rated liquid credits

• 🔢 $1 trillion | Available private equity dry powder to deploy according to market data

• 💼 11% | Increase in Asia-Pacific private equity deal value in 2024

• 📉 22% | Decline in Asia-Pacific fundraising to a 10-year low of $74 billion

• 🏢 60% | Share of pan-Asia funds in 2024, up from 36% in 2019

• 💼 15.2% | Record net annual returns for 2023 vintage private credit funds

• 📊 $4.7 trillion | Total assets under management in private equity

• 🏦 $1.35 trillion | Assets managed by China Investment Corporation, with 25% in alternatives

• 📊 $36 billion | Assets under management by Cliffwater, with $80 billion in assets under advisement

• 🧮 $4.25 billion | Debt package being prepared by Goldman Sachs and other banks for Sycamore's Boots buyout

• 📉 10% | Average discount to NAV for buyout portfolios in the secondary market during 2024

• 🏛️ $53 billion | Harvard University's endowment, with nearly 40% allocated to private equity

• 🏫 $41 billion | Yale University's endowment, exploring sales of up to $6 billion in private equity stakes

• 💰 $6.1 billion | Record-breaking acquisition price for the Boston Celtics by STG Partners and Sixth Street