Crisis induces demand for private credit
This week, UK-based alternative asset manager Bridgepoint agreed to acquire EQT Partners’ EUR3.9 billion credit business, in a deal that will result in a total AuM of close to EUR7 billion for the combined group, as pandemic hit companies seek fresh financing.
Bridgepoint managing partner William Jackson said that the deal will “broaden Bridgepoint Credit's geographic exposure with an enhanced presence in the Nordic region, Germany and the US, adding to our existing teams in London and Paris”.
In May, the Financial Times reported that some of the largest pension funds in the US are looking to allocate capital into private credit in order to benefit from the fallout of the crisis, as companies seek financing to keep operations going around the world. At the same time, private credit funds currently need to navigate the overhanging risk of defaults from existing borrowers affected by the pandemic.
On Thursday, London-based VC firm Hoxton Ventures held the final close of its second fund, an early stage European VC fund, which includes seed investments in health app Babylon Health, food delivery app Deliveroo and AI cyber security company Darktrace. British Patient Capital, the largest investor in UK venture capital, was a new LP in the fund.
According to a recent evaluation by data sharing platform Dealroom, Hoxton’s first fund has the highest ratio of unicorns to investments in Europe. The new fund will focus on the US, either by opening offices or building a sales presence there, and will “act as a bridge” between the US and Europe.
"Entrepreneurs choose to work with us because we act as a bridge between the US and European markets. We focus on making sure our companies are well connected in Silicon Valley for partnerships, follow-on funding and eventual acquisition or IPO,” said Rob Kniaz, one of Hoxton’s founding partners.
Close to one-sixth of the fund’s investments were made after the start of the pandemic. Hussein Kanji, Hoxton’s other founding partner, commented that some of the best companies are built in a downturn.
The coronavirus crisis and subsequent national lockdowns have given clarity on how to evaluate companies’ ability to tackle social issues, “crystallising” what the S in ESG stands for, according to Bas NieuweWeme, CEO of Aegon Asset Management.
More broadly in terms of the economy, NieuweWeme commented that the current crisis was a clear catalyst for change. He said: “From an investment perspective, if there is any good to come from this episode, it is the fact it has created greater awareness about Environmental, Social and Governance issues.”
Neuberger Berman’s announced that it closed its new Luxembourg-domiciled euro denominated fund structure with EUR 260 million of commitments in March, surpassing its EUR200 million target. The vehicle is diversified across four asset classes: small and mid-cap buyout, large-cap buyout, growth & venture capital, and special situations.
Investors include pension funds, insurance companies and family offices from continental Europe and the Nordics. “We identified demand in Europe for a Luxembourg domiciled euro denominated structure,” said Dik van Lomwel, head of EMEA and Latin America.
The beginning of the week also saw investment company Kinnevik agreeing to sell 23.2 per cent of the shares in Nordic digital commerce group Qliro Group to Swedish VC fund Rite Ventures. The deal is expected to close in the third quarter of 2020.
Editor, Private Equity Wire