Private Equity Wire Newsletter

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NEWSLETTER | 23 Oct 2020

De-globalisation and the rise of leveraged loan defaults

Over the next ten years there will be two key challenges for investors, according to Emily Pollock, alternatives director at Schroders. The first is that economic growth will be uneven globally, and dependent on local dynamics. The second is that the trend toward de-globalisation – which took root in the US-China trade standoff, but accelerated with Covid-19 – will persist.

PEWire aired a podcast this week to find out more about these trends, including how consumption patterns will change in the "new normal", as well as Pollock’s view on the potential for “buy-and-build” strategies in Europe and why she believes European private equity is well positioned for some of the shifts in the current environment.

The new normal series featured a Q&A with Kris Ring, a debt finance equity partner at Goodwin Procter LLP in the law firm’s Santa Monica office, focusing on corporate finance. He represents private equity groups, as well as hedge funds, public and private companies and other financial institutions.

Ring shared his views on the relationship between PE firms and direct lenders during the pandemic, the ways this downturn has been different to previous downturns, how the upcoming election will impact business in the US, and what a potentially contested election result could mean for market volatility.

Meanwhile, the MedTech investment trend continues with one of its latest deals seeing the world's largest online angel investment platform -the Angel Investment Network- supporting the raise of more than GBP1 million in UK-based disease screening and diagnosis startup Occuity.

In an op-ed for PEWire Kinson Lo, founder of London-based online investment platform Dot Investing, explains how he believes technology can streamline the investment process and why it's particularly important during times like these.

“For too long the best investments have been out of reach, even for the majority of sophisticated investors. Investment technology platforms can democratise access to private investments, helping investors to build more diverse, resilient, and higher performing investment portfolios,” says Lo.

In James Williams' latest feature he explores the fact that the second quarter of this year saw two potentially worrying trends in US corporate credit: the number of public filers carrying debt of more than 7x going into Q3 had risen to 35 per cent (compared to 14 per cent in Q4 2018), while the percentage of leveraged loan defaults rose sharply from 2 per cent at the start of the year to above 4 percent by March.

In the words of Rachelle Kakouris, director of Leveraged Commentary & Data at S&P Global Market Intelligence: “You can’t have a 23 per cent decline in EBITDA, and leverage soaring, and not expect to see elevated default rates going forward.”

Karin Wasteson
Editor, Private Equity Wire

In conversation with Emily Pollock, Alternatives Director at Schroders

Fri | 23 Oct 2020, 13:07

Listen in to PEWire's podcast with Emily Pollock (pictured), alternatives director at Schroders, to find out how consumption patterns will change in the "new normal", as well as her view on the potential for “buy-and-build” strategies in Europe and why she believes European private equity is well positioned for some of the shifts in the current environment.

Fri | 23 Oct 2020, 13:07

Kris Ring, debt finance equity partner at Goodwin Procter in Santa Monica, on the relationship between PE firms and direct lenders during the pandemic, the ways this downturn has been different to previous downturns, how the upcoming election will impact business in the US, and what a potentially contested election result could mean for market volatility.

Fri | 23 Oct 2020, 13:07

The world’s largest online angel investment platform, the Angel Investment Network, has supported the raise of more than GBP1 million in UK-based disease screening and diagnosis startup Occuity.

Fri | 23 Oct 2020, 13:07

“For too long the best investments have been out of reach, even for the majority of sophisticated investors. Investment technology platforms can democratise access to private investments, helping investors to build more diverse, resilient, and higher performing investment portfolios,” says Kinson Lo, founder of London-based online investment platform Dot Investing. In this op-ed Lo explains how he believes tech can streamline the investment process and why it's particularly important during times like these.

Fri | 23 Oct 2020, 13:07

The second quarter of this year saw two potentially worrying trends in US corporate credit: the number of public filers carrying debt of more than 7x going into Q3 had risen to 35 per cent (compared to 14 per cent in Q4 2018), while the percentage of leveraged loan defaults rose sharply from 2 per cent at the start of the year to north of 4 per cent, by March.