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- Private Credit Boom, Space Race Investments, $8B Bet On Subs
Private Credit Boom, Space Race Investments, $8B Bet On Subs
This week we explore the $2.1 Trillion Private Credit Market with its main trends, drivers and risks.
Happy almost Thanksgiving
This week we explore the $2.1 Trillion Private Credit Market with its main trends, drivers and risks.
Tender Offer Funds offer PE firms a mechanism to align their long-term investment objectives with the liquidity requirements of their investors.
In other news, Blackstone is diving into the fast-casual dining boom with an $8 billion acquisition, including debt.
PE firms are joining superpowers in the space race, driven by the cost to reach orbit downtrend.
Here’s to navigating another week of disruption and opportunity!
— Gaston Brizuela and Santiago Morazzani Senior PE Analysts
In this Issue:
📚 Data Dive
Private Credit: Opportunity or overstretch?
The private credit market has experienced exponential growth, soaring to $2.1 trillion in 2023 from $1.84 trillion in 2022, with a remarkable 15% compound annual growth rate (CAGR) over the past decade. This rapid expansion underscores the rising demand for alternative financing solutions that offer flexibility and high yields. North America continues to dominate, accounting for $1.25 trillion—60% of the global market—while Europe follows with a $0.27 trillion market size, reflecting a 17% CAGR. Investors’ confidence in the sector is further evidenced by the rise in "dry powder" reserves, reaching $0.49 trillion, signaling readiness to seize opportunities amid tightening credit conditions and elevated interest rates.
This impressive growth reflects a global shift toward private credit as a critical source of capital for mid-market and corporate borrowers. The sector’s balance of low annual credit losses (0.9%) and customizable loan structures has solidified its appeal among institutional investors like pension funds, insurance companies, and sovereign wealth funds. The report delves into the driving forces behind this growth, the regional dynamics, and the growing reserves of undeployed capital, highlighting both the immense opportunities and the potential risks in navigating the next phase of private credit’s evolution.
Want to learn more?
🥂 Special Edition: Thanksgiving
Thanksgiving hosts, take note
Your wallet may get a breather this year! While the average cost of a classic feast for 10 guests has dropped down 5% from 2023 and 9% from the inflation-heavy highs of 2022—the price tag still looms 19% higher than pre-pandemic levels in 2019. For those opting to expand the table spread with ham or russet potatoes, the bill climbs but it still reflects a solid 8% dip from last year. Much of this savings stems from cheaper staples like turkey, where prices dropped 6%, aided by cooling inflation. That said, the bird flu and reduced demand have kept turkey farming at its lowest since 1985, which might explain why some are swapping the centerpiece entirely.
Interestingly, according to a survey by Statista, spending habits vary sharply by generation, as shown in the latest survey. Gen Z and Millennials are expected to spend $491 and $483, respectively, on Thanksgiving hosting, vastly outpacing Gen X’s $385 and Baby Boomers’ comparatively thrifty $292. Is it the avocado-toast generation channeling their flair into lavish holiday spreads, or just soaring expectations for Instagram-worthy tablescapes? Either way, cost-conscious shoppers may find solace in picking private-label brands for side dishes or desserts, which could cut nearly $17 off a 10-person feast. For now, pass the stuffing (and maybe hold the extra dinner rolls—up 8% this year).
📈 Trend of the week
US vs Russia or China? No More: The Space Race Hits Private Equity
The space industry isn’t just about billionaires and governments launching rockets; it’s a magnet for private equity dollars. With the cost to reach orbit down 8x since 2008, startups are seizing on cheaper launches to innovate everything from satellite tech to propulsion systems. Total U.S.-licensed launches skyrocketed from single digits in 2010 to over 130 this year. Why does this matter? Satellite proliferation is rewriting how companies monitor assets, manage risk, and enhance operations in industries like defense and environmental mapping.
The big picture: Space infrastructure is now a PE frontier, with surging investment in applications ranging from industrial mapping to climate monitoring. Think of it as the ultimate emerging market—one that’s 62 miles above your head.
💰Liquidity Corner
Flexible Alternatives: Unlocking Private Equity Liquidity with Tender Offer Funds
Tender offer funds provide private equity (PE) firms a way to balance long-term investment goals with investor liquidity needs. These funds allow periodic buybacks of investor shares, offering flexibility compared to traditional closed-end PE structures. The allocation of assets, as shown in the chart, emphasizes PE/VC investments (51.6%), while credit (16.6%) and real estate (6.3%) offer diversification and stable cash flow to support redemptions. This structure helps PE managers maintain adequate capital for growth while addressing liquidity demands.
The periodic redemption process is key to these funds’ appeal, as it aligns liquidity provisions with cash flow cycles. The inclusion of income-generating assets, like credit and real estate, and liquid strategies, like fund-of-hedge-funds (21.8%), provides flexibility for managing investor redemptions. This diversified approach, highlighted in the chart, makes tender offer funds an attractive option for investors seeking exposure to private equity with improved liquidity access.
🤝 Deal of the Week
Blackstone’s $8B Bet on Jersey Mike’s
Blackstone is sinking its teeth into the fast-casual boom with an $8 billion (including debt) acquisition of Jersey Mike’s Subs. The sandwich chain, founded in 1956 and franchising since 1987, has grown to 3,000+ locations and is poised for more. The deal, set to close in early 2025, includes an earn-out tied to Jersey Mike’s hitting its 4,000th store—an increasingly common structure in today’s cautious M&A landscape.
This marks another notch in Blackstone’s food franchise belt after recent investments in 7 Brew Coffee and Tropical Smoothie Cafe. The world’s largest alternative asset manager sees franchise operations as a high-growth theme, leveraging its expertise in scaling global brands like Hilton Hotels. Founder Peter Cancro will retain an equity stake and continue leading the chain, positioning Jersey Mike’s for both domestic and international expansion. The takeaway: Blackstone isn’t just investing in sandwiches—it’s betting on a resilient, scalable franchise model.
📊 Macroeconomics Corner
Americans Want Trump to Focus on Inflation in his First 100 Days
Inflation is back in the spotlight as President-elect Trump prepares to take office, with 35% of Americans identifying it as his top priority. The irony? Inflation, driven by pandemic-era disruptions, helped propel Trump’s victory after it plagued the Biden administration. Now, his pro-tariff agenda could stoke the very flames he’s expected to extinguish. Economists warn that tariffs on Chinese imports might hike prices further as businesses pass costs to consumers—rekindling the inflationary pressures voters just rejected.
🏆 This Week in History
This Week in History: House Passes NAFTA, November 18, 1993
On November 18, 1993, the U.S. House of Representatives passed the North American Free Trade Agreement (NAFTA) by a margin of 234-200, marking a pivotal moment in U.S. trade policy. The vote followed months of heated debate, reflecting sharp divisions within Congress and the nation over the trade pact’s implications for jobs, wages, and America’s role in a globalizing economy.
NAFTA, championed by President Bill Clinton, sought to eliminate trade barriers among the U.S., Mexico, and Canada. Clinton hailed the decision as a “defining moment,” emphasizing competition over retreat in a rapidly evolving economic landscape. While Republicans broadly supported the agreement, it deeply divided Democrats, with labor unions and Rust Belt lawmakers warning of job losses and wage suppression.
Despite its critics, NAFTA’s approval symbolized a bold U.S. commitment to free trade and economic leadership, reshaping North American commerce and setting the stage for globalization’s next chapter.
🐣 Tweet of the week
European AI is lagging far behind the US.
US startups have raised 3.3x the amount of European VC overall this year, but 5.5x the level of AI investment.
Even in a good year, with megarounds for @wayve_ai@HelsingAI@MistralAI@poolsideai@DeepLcom, Europe trails by a distance.
— Dealroom.co (@dealroomco)
1:58 PM • Nov 19, 2024
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