PE HUB Wire Highlights, 1.11.19


private equity, mergers, M&A
Private Equity Editor Chris Witkowsky reflects at home. Photo by Wendy Witkowsky

Genstar back in market with largest fund yet, BDCs explore options on secondary market

Happy Friday!

The holiday break seems like a distant memory at this point; this first full week of the year was so jam-packed. We can debate the state of the economy all day, but when things are this busy with deals, fundraising and promotions/new hires, it all looks healthy and vibrant from my POV.

Recap: Owl Rock ran a more than $600 million recap of SFW Capital-backed Gerson Lehrman Group, which allowed SFW to get most of its money back on the deal. That’s from our new reporter, Milana Vinn. Check out the story hereand reach Milana to say hi, or with deal tips, at [email protected]. Milana is covering tech M&A.

BDC: I recently wrote a piece saying KKR/FS Investments are shopping stakes in older BDCs on the secondary market. Several sources said BDCs are exploring the secondary market, generally trying to sell equity stakes out of older vehicles. BDCs pick up equity stakes through warrants or small equity allocations to help juice returns.

BDCs, business development companies, raise capital from public shareholders, and other borrowings, and lend to middle-market businesses. BDCs can use up to 2:1 leverage.

The KKR deal is one of several that are either on market or exploring possible secondary transactions. Hit me up if you’ve heard of other such deals, or have details of this one. I’m at [email protected].

I’m also hearing a recent secondary deal may include not only LP stakes in an older fund, but also co-investment stakes that certain existing LPs in the older fund want to unload. Are you seeing co-investment stakes hit the secondary market? Let me know.

Big deal: I’m expecting to see a bunch of high-profile GPs run secondary processes on older funds this year. By the holiday break, secondary advisers were introducing new processes into the market to allow buyers to get early looks and get prepared for the new year.

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