Trump Tariffs Trigger PE Plunge as BlackRock Expands and Private Credit Targets Housing Market

🔎 Must Know: Markets Reel as Trump Tariffs Shock Global Economy

The Bottom Line: 📉 Private equity stocks plunged Th

ursday in one of their worst single-day performances on record after President Trump announced sweeping tariffs, threatening to upend global supply chains and economic growth forecasts.

Why It Matters: 💸 KKR and Ares Management both tumbled 15% (their largest one-day drops since IPO), while Apollo Global Management and Carlyle Group fell the most since March 2020. Blackstone, the world's largest alternative asset manager, slumped nearly 10%.

The Big Picture: 🌪️ Apollo President Jim Zelter warned the US now faces a 50% or higher chance of recession as tariffs risk accelerating inflation and constraining the Federal Reserve's ability to stimulate growth through rate cuts. "The unspoken assumption is that capitalism didn't work," BlackRock CEO Larry Fink wrote in his shareholder letter, "But there's another way to look at it: Capitalism did work — just for too few people."

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💹 By The Numbers: Key Metrics Shaping Private Markets

• $5.75 billion: 💰 Size of the 364-day bridge loan Clearlake Capital secured from banks to fund its leveraged buyout of Dun & Bradstreet, forgoing traditional underwriting guarantees to win the deal.

• $4 billion: 📊 Approximate valuation of Dun & Bradstreet in Clearlake Capital's pending acquisition, with the private equity firm offering about $9 per share.

• $1.6 billion: 💼 Size of a direct lending portfolio Coller Capital purchased from Brookfield Wealth Solutions, marking one of the largest such deals on record.

• $3.5 billion: ✈️ Size of the private financing Apollo and Citigroup are providing at razor-thin rates to back Boeing's carveout of navigation unit Jeppesen.

• $100 billion: 🇳🇱 Amount Dutch pension funds are expected to invest in riskier assets over the next five years, with the largest portion directed toward European opportunities.

• $70 million: 🏦 Amount AGL Credit Management has raised from new investors (excluding its $1 billion anchor from Abu Dhabi Investment Authority) almost a year after announcing its partnership with Barclays.

• $600+ billion: 🌐 Expected alternative assets under management at BlackRock once its HPS Investment Partners acquisition closes later this year.

• €3 billion: 🧪 Potential value of DSM-Firmenich's animal nutrition and health business, which has attracted interest from several private equity firms including Apollo, Bain Capital, CVC Capital Partners and Lone Star Funds.

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🌎 Market Spotlight: Regional Developments

US Tariff Shockwaves: 🌊 Trump's announcement of sweeping new tariffs has sent Wall Street into turmoil, pushing the Nasdaq 100 into bear market territory. Market volatility has stalled IPO plans for companies like StubHub and Klarna, while derailing refinancing efforts for companies like Finastra.

Private Credit in Housing Market: 🏘️ Private credit firms are eyeing the $50 trillion US housing market, with opportunities in home equity loans and lines of credit expected to reach $2 trillion. TPG Angelo Gordon estimates this market segment already hit $400 billion in Q4 2024 after eleven consecutive quarterly increases.

Goldman's Private Equity Access: 🔑 Goldman Sachs is expanding its private equity offering to wealthy individuals with at least $5 million in investments, launching an open-ended fund named G-PE that will offer access to deals from its buyout, growth, secondary and co-investment strategies.

AIG's Private Credit Push: 📈 AIG plans to increase its allocation to private assets, with the biggest boost going to private credit, aiming to allocate 12-15% of its general insurance investment portfolio to private credit, up from 8% currently.

Dutch Pension Reform: 🇪🇺 The Netherlands' €2 trillion pension industry is shifting away from defined benefits, allowing funds to boost private equity and credit investments by approximately 5 percentage points over the next five years, potentially directing €100 billion toward riskier assets including European defense initiatives.

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🤝 Deal Spotlight: Transactions & Strategies

Clearlake's Dun & Bradstreet Gamble: 🎲 Clearlake Capital secured a $5.75 billion, 364-day bridge loan to fund its D&B acquisition, eschewing traditional underwriting guarantees to move quickly as other bidders circled. The deal is expected to close in Q3, with a 30-day "go-shop" period in effect.

EQT's $4.5 Billion Fortnox Offer: 🇸🇪 A consortium including EQT AB made a $4.5 billion offer to take Swedish financial services firm Fortnox private, offering a 38% premium over its closing share price. The deal would mark the 10th investment from EQT's €22 billion fund, making it 50-55% deployed.

KKR-Backed Management Buyout: 🇯🇵 KKR is backing a $2.4 billion management buyout of Japanese optical and medical equipment maker Topcon, continuing its strong presence in Japan where it has approximately $18 billion in assets under management.

Vista's Finastra Refinance Failure: 🚫 Wall Street banks have shelved plans to refinance nearly $6 billion of debt for Vista Equity Partners' portfolio company Finastra. The deal would have helped Vista pay down $4.8 billion of high-cost private credit debt and recoup $1 billion in preferred equity it was forced to inject in 2023.

General Atlantic Adds Firepower: 🚀 Former Morgan Stanley CEO James Gorman is joining General Atlantic as a strategic adviser ahead of its anticipated IPO, helping evaluate acquisition opportunities and manage rapid growth as the firm expands beyond technology investments into private credit, infrastructure, and secondaries.

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💵 Fundraising Focus: Capital Formation Across Strategies

Blackstone's Flagship Buyout Fund: 🐢 Wrapping up its protracted fundraising campaign with just over $21 billion, below initial expectations of $25-30 billion after a three-year effort. High borrowing costs and a crowded field hindered the effort, though the firm plans to raise more than $10 billion for its next Asia fund.

Apollo's S3 Private Markets Fund: 🎁 Offering wealthy investors a 3% bonus if they invest early and stay for at least three years, with no performance fee despite a 6.6% all-in cost. The novel structure aims to attract a wider audience of wealthy clients as Apollo targets $150 billion in additional fundraising over four years.

BC Partners Credit: 📆 Raised over $1.4 billion for its third special opportunities fund, marking its largest vehicle for the strategy to date and about 20% larger than its predecessor.

Crestview Partners: ⏱️ Closed a continuation fund with nearly $600 million of commitments to hold two assets longer, joining a growing trend of PE firms using such vehicles amid challenges in the M&A environment.

Kotak Alternate Asset Managers: 🇮🇳 Aiming to raise up to $2 billion for a new private credit fund to tap growing demand in India.

Freeport Financial Partners: 💲 Amassed $2 billion in investable capital for its sixth direct lending fund.

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💡 Industry Insights: Strategy & Outlook

BlackRock's 50/30/20 Model: 📊 Larry Fink is proposing a new portfolio allocation model of 50% stocks, 30% bonds, and 20% private assets to replace the traditional 60/40 split, arguing private assets could bolster the average 401k over four decades by 14.5%, funding nine more years of retirement. "Assets that will define the future aren't available to most investors," he wrote.

Bank Financing of Private Credit: 🏦 US banks have more than doubled their lending to non-depository financial institutions over the past five years, exceeding $1 trillion by the end of 2024. Banks are effectively financing their own competition but making more money from the private credit boom than they're losing in direct competition.

Pandemic Investment Fallout: 🚲 Several private equity pandemic-era bets on stay-at-home winners have flopped as consumer behavior normalized. KKR's acquisition of Dutch cycling firm Accell Group required additional capital injections, and Platinum Equity's vacation rental business Awaze has seen revenues and earnings fall as international travel resumed.

Apollo on Reshoring Opportunities: 🏭 Apollo President Jim Zelter sees private markets playing a larger role in financing companies' manufacturing capacity moves as tariffs push companies to reshore production. "Who is going to finance this re-shoring, that's part of the master plan," he said.

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🔮 Trends to Watch

Traditional Asset Managers Partnering with Alts: 🤝 Traditional firms like Vanguard and Capital Group are partnering with alternative asset managers to enter private markets. Vanguard has held talks with Carlyle and Blackstone, while Capital Group partnered with KKR on two funds for wealthy people and State Street joined with Apollo to launch a private credit ETF.

Continuation Funds Rising: ⏳ Private equity firms increasingly use continuation vehicles to hold assets longer when exit routes are challenging, with the number and value of such funds rising in 2024. Critics say the method rewards PE firms for failing to exit investments within a typical fund lifecycle.

Retail Access to Private Markets: 👨‍👩‍👧‍👦 A coordinated push from asset managers, including BlackRock, Goldman Sachs, and Apollo, is underway to open private market investments to wealthy individuals and potentially 401(k) plans. BlackRock has launched model portfolios containing private assets, while Goldman's new G-PE fund targets individuals with at least $5 million in investments.

Asset-Backed Financing Expansion: 📝 Oaktree Capital Management sees ample opportunity for alternative asset managers in private asset-backed financing, as insurers face limitations in this market. Bank of America and Prudential's PGIM Fixed Income are boosting their capabilities in this space with new hires and specialized teams.

Regulatory Scrutiny of Private Market Access: 🔍 The SEC is closely examining efforts to bring private markets to retail investors, as evidenced by its questioning of the Apollo-State Street credit ETF partnership regarding liquidity, valuation rules, and even the use of Apollo's name in the product.