The main ways we are seeing private debt used are:
Special Situations and Turnaround Financing: Whether it's restructuring existing obligations, re-setting covenants, funding operational improvements, or navigating insolvency proceedings, private debt can offer a lifeline during periods of uncertainty.
Mergers and Acquisitions: Private debt is often used to finance mergers, acquisitions, and other corporate transactions. By leveraging private debt alongside businesses can execute M&A strategies and buyouts at a time when asset/enterprise valuations are depressed.
Recapitalisations and Refinancing: Private debt can facilitate corporate recapitalisations and debt refinancing initiatives, allowing businesses to optimise their capital structure, lower financing costs, and improve liquidity. Particularly useful for balance sheet light, cashflow strong operating models.
Capital products can include term debt, accordion functionality or a revolving credit facility. Current all in capital costs for lighter balance sheet, cashflow led businesses range from 8% pa through to low teens for greater sectoral risk or greater facility scale for M&A.