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Oaktree Special Situations leverages ‘good company, bad balance sheet’; New Heritage finds swag

Happy hump day, PE Hubsters! Rafael Canton here with the US edition of the Wire from the New York newsroom.

First, we are kicking off the wire with insights from Oaktree’s Special Situations Group’s Matthew Wilson and Jordon Kruse about what types of companies the fund is looking to pursue and their outlook for private equity dealmaking.

Also today, we have a deep dive into a corporate gifting deal. New Heritage Capital made a majority investment in Brilliant, a provider of tech-enabled corporate gifting for national and global companies.

Finally, we have a couple of deals from this morning. First, is a franchising deal from Beach Point Capital which is acquiring Metro Franchising, the largest Dunkin’ Franchisee in the New York metro region from Quilvest Capital Partners.

Then, Godspeed Capital Management has invested in BNP Associates, a Denver-based air transportation design and engineering firm.

Under pressure

Oaktree’s Special Situations Group is continuing its pursuit of mid-market businesses. Led by managing directors and co-portfolio managers Matthew Wilson and Jordon Kruse, the Special Situations Group invests in mid-market businesses in the areas of expertise of sectors including consumer, industrials, business services and financial services.

Premium subscribers to the Wire can read Oaktree’s thoughts on trends in private equity dealmaking and how much of their Special Situations Fund III has been deployed.

Tech-enabled gifting

Corporate gifting has developed into a multi-billion dollar market. PE Hub reporter Obey Martin Manayiti has the story as New Heritage Capital is looking to take on the fragmented market with a majority stake investment in Brilliant, a provider of tech-enabled corporate gifting for national and global companies.

You can read more about Obey’s deep dive with a premium subscription.

Coffee and donuts

Beach Point Capital is acquiring Metro Franchising, the largest Dunkin’ Franchisee in the New York metro region from Quilvest Capital Partners.

Late last year, PE Hub covered why PE firms are attracted to franchising deals.

Upgrade to the premium version of the Wire for more details about the franchising deal.

Aerial design

In another deal announced this morning, Godspeed Capital Management has made an investment in BNP Associates, a Denver-based air transportation design and engineering firm.

Premium subscribers to the Wire can read more about the deal.

That’s it from me today. If you have any questions, thoughts, or want to chat, please email me at rafael.c@pei.group.

Tomorrow, Craig McGlashan will be with you for the Europe edition of the Wire, and Michael Schoeck will bring you the US edition.

Cheers,

Rafael

Read the full Wire commentary on PE Hub ...

Also of note (may require subscriptions)

Amberjack Capital Partners, a Texas-based PE firm focusing on the industrial, infrastructure and environmental sectors in the lower mid-market, has gained support from major secondaries investors in its latest energy continuation fund. (Secondaries Investor)

Proterra Investment Partners made the first investment from its Rural Growth fund to support a $3 million Series A for Lil Bucks, a Chicago-headquartered company offering snacks and toppings derived from buckwheat. (Agri Investor)

Manna Tree has no time for ‘consumer adoption risk’: The Colorado-based firm is working with retailers to figure out how portfolio companies can go from upstarts to must-haves for strategics and generalists. (Agri Investor)

Speaking at PEI Group’s Private Debt Investor New York forum this week, Steven Meier, chief investment officer of the New York City public pension funds, said he believes private equity’s fees are "too high." (Infrastructure Investor)

Private Equity International's latest in its 'Number Crunch' series, which uses data visuals to tell the story, notes how even as the global chemicals industry experienced a slump following the pandemic, PE's share of the market is holding steady.

How many PE funds are at risk of GP clawback? Research from Upwelling Capital Group suggests one in 14. (Private Equity International)

Investcorp’s GP stakes division and some of its portfolio companies are using AI software from a start-up founded by a former KKR executive to enhance their due diligence work. (Private Funds CFO)

They said it

“We’re also seeing the most ‘good company, bad balance sheet’ opportunities since the early 2000s. This trend is largely due to the adverse effects of rising interest rates on highly-levered capital structures of otherwise healthy, growing companies. Even with the Fed’s recent cut, we anticipate rates will remain elevated, and with over $3 trillion of non-investment grade debt outstanding, we expect this environment to persist for some time.”

— Jordon Kruse, managing director and co-portfolio manager of Oaktree’s Special Situations Group on deal flow expectations in 2025