AW Manager September Scorecard: Alts firms prep for 2021 deals with $33 billion haul

Alternative investment managers raised capital over the summer via virtual cap intro events, leveraging the hunt for yield by institutional investors to the tune of more than $33 billion in new fund launches/closes tracked by Alternatives Watch last month. A total of 25 new funds was tracked by AW in September, with new mandates spanning private equity, debt, infrastructure/real estate and hedge funds. All told, alternative investors are rolling up their sleeves and getting ready to put money to work in a difficult environment as a second wave of COVID-19 begins. BDO’s recent Private Capital Pulse Survey found that roughly 75% of all fund managers surveyed expect the economy to improve next year. “With the road to recovery shrouded in uncertainty, deal makers are grappling with an unfamiliar landscape,” said Scott Hendon, national leader of Private Equity at BDO. “Deal flow will remain comparatively muted for the balance of 2020, but, in line with industry expectations, we believe M&A will pick up as the economy turns around in 2021.” At the same time, private equity and venture capital fund managers are preparing for a potential second wave of the novel coronavirus in various ways, including by conducting a business continuity risk assessment (55%), by making changes in forward-looking valuation metrics (47%), and by activating a crisis response task force (40%). Roughly 36% said they are considering applying for a government loan and another 32% said they are assessing EBITDA for asset impairments (32%). That said, given the economic fallout of the pandemic, funds today are decidedly more bearish on pursuing new deals than they were last winter. BDO found that only 23.5% of fund managers will direct the most capital toward new deals or investments in the next six months and that figure represents nearly a 20% decline from BDO’s last survey released in December 2019. But investor capital continues to pour in, as indicated in recent Alternatives Watch industry coverage. The largest fund closing for September was the Blackstone Real Estate Debt Strategies IV fund with $8 billion in capital commitments. Blackstone said that the fund was the largest real estate credit fund ever raised. “This fundraise reflects the significant demand for capital in the real estate debt markets and the continued confidence in our business from our limited partners,” said Jonathan Pollack, global head of Blackstone Real Estate Debt Strategies. “The breadth and scale of our global real estate platform allow us to see a wide range of opportunities while bringing Blackstone’s expertise to every investment decision.” While debt has been popular in recent months, private equity buyouts continue to steadily build too. Chicago-based private equity firm GTCR was reportedly looking to raise $6.75 billion for its latest buyout fund, which if achieved would be the largest fund raise in the firm’s history, according to Bloomberg. Our September AW Investor Scorecard indicated continued interest in the private capital asset space, as five large institutional investors took on the due diligence challenges and allocated more than $7 billion across infrastructure, private debt and private equity mandates across various managers and funds. Below is a full listing of the alternative investment fund launches and closings as gathered by Alternatives Watch in September 2020. Source: Alternatives Watch

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