How rising rates are impacting the deal environment; Thoma Bravo closes latest fundraising

Thoma Bravo raises $24.3 billion for its fifteenth fund.

Morning Hubsters!

This is Chris, on for Wire Wednesday. Hope the week is going well. It’s the season of holiday parties and last minute deals. Anything changing out there with the deal environment, fundraising or anything?

We have a special feature starting today. Today the first episode of our podcast series Private Markets and the End of Cheap Money drops, focusing on M&A. Check it out here on PE Hub.

Here’s the intro: Central Banks around the world have been raising interest rates to combat inflation, making borrowing more expensive for everyone. That includes private equity firms, which for years have enjoyed historically low borrowing costs to finance leveraged buyouts.

How are PE firms coping with the end of cheap money? To find out, reporters and editors across several PEI Group titles have spent the last few months speaking to dozens of PE industry participants to get their perspectives.

In this first episode of our podcast series, we look at how higher interest rates are playing out in private equity transactions, and why certain areas of M&A, in particular deals in the mid market, may be facing outcomes different from what you might expect.

Mary Kathleen Flynn, editor-in-chief of PEI Group title PE Hub, spoke with a wide range of dealmakers, including PE firm leaders, lenders and investment bankers, about the impact of high interest rates and other factors, such as high inflation, on PE-backed transactions.

Featured in this episode: Norm Alpert, founding partner, Vestar Capital Partners; Greg Belinfanti, senior managing director, One Equity Partners; Marc Leder, co-founder and co-CEO, Sun Capital Partners; Ignacio Jayanti, CEO, Corsair Capital; Milwood Hobbs Jr., managing director and head of North American sourcing and origination, Oaktree; Michelle Handy, managing director and head of portfolio and underwriting, First Eagle Alternative Credit’s Direct Lending platform; and Peg Jackson, managing director, software, Internet and digital media, Stifel.

In the episodes to come, we’ll speak to LPs about the changes to their portfolio allocations.

We’ll ask whether the “L” in “LBO” becoming more expensive means private credit becomes a more attractive asset class to investors. We’ll look at how private markets professionals in different parts of the world are navigating this new environment. And we’ll find out some of the key indicators that industry professionals monitor in these uncertain times.

Late-breaking: Thoma Bravo is announcing this morning it’s closed its fifteenth fund on $24.3 billion, its middle-market focused fourth fund on $6.2 billion and its second small-cap Explore fund on $1.8 billion. The firm raised the fund in quick-time, bringing the pools back to market quickly after closing its previous fundraising in 2020.

The firm managed to get the funds raised as the private equity fundraising market has gradually slowed, with LPs pulling back on commitment pacing amid escalating exposures and drying up distributions.

Thoma Bravo has had an active year on both the buy and sell side, with buyout fund investments and realizations representing approximately $38 billion in combined enterprise value. Read more here on Buyouts.

That’s it for me. Have a great rest of the day. Reach me with tips n’ gossip, feedback or Scotch recommendations at cwitkowsky@buyoutsinsider.com or find me on LinkedIn.