Scribd Logo
Upload

Welcome to Scribd!

  • 126 views

    Private Capital: Myths and Reality

    Uploaded by

    Jose M Alayeto
    The document discusses the impact of the Great Recession on private capital markets. Stricter banking regulations following the financial crisis have reduced bank lending. This has led to higher returns available from private debt compared to private equity. Private capital strategies like lending, mezzanine financing, and minority buyouts can generate value through debt and equity interests. The experience discussed shows diversified private capital access across sectors can generate strong risk-adjusted returns through various economic cycles.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Private Capital: Myths and Reality

    Uploaded by

    Jose M Alayeto
    126 views15 pages
    The document discusses the impact of the Great Recession on private capital markets. Stricter banking regulations following the financial crisis have reduced bank lending. This has led to higher returns available from private debt compared to private equity. Private capital strategies like lending, mezzanine financing, and minority buyouts can generate value through debt and equity interests. The experience discussed shows diversified private capital access across sectors can generate strong risk-adjusted returns through various economic cycles.

    Original Title

    03_Quilvest_Private_Banking_Myth_and_Reality.pdf

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document discusses the impact of the Great Recession on private capital markets. Stricter banking regulations following the financial crisis have reduced bank lending. This has led to higher returns available from private debt compared to private equity. Private capital strategies like lending, mezzanine financing, and minority buyouts can generate value through debt and equity interests. The experience discussed shows diversified private capital access across sectors can generate strong risk-adjusted returns through various economic cycles.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    126 views15 pages

    Private Capital: Myths and Reality

    Uploaded by

    Jose M Alayeto
    The document discusses the impact of the Great Recession on private capital markets. Stricter banking regulations following the financial crisis have reduced bank lending. This has led to higher returns available from private debt compared to private equity. Private capital strategies like lending, mezzanine financing, and minority buyouts can generate value through debt and equity interests. The experience discussed shows diversified private capital access across sectors can generate strong risk-adjusted returns through various economic cycles.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 15

    PRIVATE CAPITAL:

    MYTHS AND REALITY

    NOVEMBER 2017
    AGENDA

    1. GREAT RECESSION
    1.1 FINANCIAL CRISIS
    1.2 REGULATORY DISLOCATION
    1.3 ECONOMIC DISLOCATION
    1.4 COST OF CAPITAL DISLOCATION

    2. PRIVATE CAPITAL
    2.1 VALUE CREATION
    2.2 STRATEGIES

    3. ACCESS
    3.1 OPPORTUNITY SET
    3.2 OUR EXPERIENCE
    Great
    Financial Crisis Recession

    Political Pressure: Regulations

    3
    Great
    Regulatory Dislocation Recession

    Global regulatory environment (TLAC, Basel III capital rules, Basel III Re-securitization rules, Dodd-
    Franck,… STRICTER REGULATORY CAPITAL REQUIREMENTS

    BANKING SECTOR SHRINKING CONSIDERABLY … €4.5trn in bank deleveraging expected in Europe

    Entrepreneurs have difficulties getting


    Impact
    financing from banks

    4
    Great
    Economic Dislocation Recession

    Monetary Policies have inflated asset prices

    Public Debt/Equity Market


    Impact
    are expensive

    5
    Great
    Cost of Capital Dislocation Recession

    FIRST TIME IN HISTORY WE CAN EXPECT HIGHER ABSOLUTE RETURN FROM PRIVATE DEBT THAN FROM PRIVATE EQUITY

    Source: Preqin Global Private Equity


    returns are an end-to-end
    calculation based on data compiled
    from 2,022 global private equity
    funds formed between 1986-2013

    6
    AGENDA

    1. GREAT RECESSION
    1.1 FINANCIAL CRISIS
    1.2 REGULATORY DISLOCATION
    1.3 ECONOMIC DISLOCATION
    1.4 COST OF CAPITAL DISLOCATION

    2. PRIVATE CAPITAL
    2.1 VALUE CREATION
    2.2 STRATEGIES

    3. ACCESS
    3.1 OPPORTUNITY SET
    3.2 OUR EXPERIENCE
    Private
    Value Creation Capital

    Private Equity vs Private Debt

    Private Equity Private Debt /Mezzanine Private Debt

    interests

    Debt

    Debt

    Debt Debt
    100 100
    Equity
    210
    Equity
    100

    Invested capital
    10yr Various terms, rates and covenants
    Debt Ebitda 5x5
    EV/ Ebitda 9.8x

    8
    Private
    Strategies Capital

    9
    AGENDA

    1. GREAT RECESSION
    1.1 FINANCIAL CRISIS
    1.2 REGULATORY DISLOCATION
    1.3 ECONOMIC DISLOCATION
    1.4 COST OF CAPITAL DISLOCATION

    2. PRIVATE CAPITAL
    2.1 VALUE CREATION
    2.2 STRATEGIES

    3. ACCESS
    3.1 OPPORTUNITY SET
    3.2 OUR EXPERIENCE
    Opportunity set Access

    Low-middle market Trade Finance Bridge / Receivables


    secured Lending Finance

    Opportunistic
    Asset Based Lending
    Growth Capital Real Estate Insurance linked
    Acquisition Minority
    Buyout

    11
    Our experience Access
    Not an Asset Class but an Access Class
    Short - Medium Term
    Bridge Finance Real Estate: Opportunistic Asset Based Lending
    Senior UK, US; Mez Australia with contractual equity upside: 20% IRR; 2x MOIC
    10-15% IRR

    Medium Term Non Performing Loans REO 15-20% IRR


    Europe 15-20% IRR

    Short Term Nursing Home Germany


    Senior secured working capital: Levered IRR 15%
    Receivables US 10% IRR
    Trade Finance 6-9% IRR
    Supply Chain Financing 7-8% IRR Bridge Equity Australia
    IRR 23-28%

    Medium Term Senior secured


    Sponsorless
    Low-middle market US Equity Turnaround &
    Activism
    11-13% IRR UK AIM
    30%+ IRR; 2-3x MOIC

    Medium Term Opportumnitic


    Sponsorless growth capital
    Europe 15% IRR; 1.7x MOIC
    US 20% IRR; 2x MOIC

    12
    Our experience Portfolio Performance past 3yr
    Diversification and alpha generation benefit

    13
    Our experience Portfolio Performance past 3yr
    Diversification and alpha generation benefit

    14
    Thank you:

    Bruno Fuchs [email protected]

    Ricardo Guth [email protected]

    Sandro Anchisi [email protected]

    15

    You might also like