Happy hump day, !

This week we dive into the huge and always promising PE backed real estate market.

T-Mobile is stepping up its advertising efforts with a ~$600M purchase of Vistar Media, moving the three of the Middle-Market this week.

Co-investing continues to be a key strategy, addressing liquidity challenges amid slower exits and tight capital markets, and private credit has risen in European transaction financing, doubling its share from 27% to 56% between 2020 and 2023.

Here’s to a great rest of the week!

— PE 150 Team

In this Issue:

• Data Dive

• Trend of the Week

• Liquidity Corner

• Deal of the Week

• Private Credit Corner

• Macro View

• This Week in History

• Interesting Articles

• Tweet of the Week

📚 Data Dive

Private Equity and Real estate

The private equity and venture capital-backed real estate market has seen a notable shift since the record-breaking activity in 2021.

Both the number of deals and aggregate transaction values have declined, signaling a new phase shaped by changing economic dynamics and investor caution.

The data highlights this trend clearly: in Q4 2021, aggregate transaction values peaked at $34.77 billion across 203 deals, marking a high point in the market.

By Q1 2023 however, transaction values dropped to just $3.14 billion with 77 deals, a stark contrast to the previous highs. This downward trajectory has continued into 2024, with Q2 figures showing $3.10 billion across 39 deals.

This decline reflects broader market challenges coming from the usual suspects of rising interest rates, persistent inflation, and tightening credit conditions that has increased the cost of capital, making real estate investments less attractive.

Additionally, uncertainties surrounding global economic growth, geopolitical tensions, and sector-specific disruptions have led investors to rethink their strategies.

Despite these challenges, real estate remains a key area of focus for private equity, particularly in niche segments like residential housing, logistics, and hospitality. However, recent data suggests that investors are proceeding more cautiously, focusing on long-term value creation while navigating short-term headwinds.

Want to learn more?

Premium Perks

Since you are an Executive Subscriber, you get access to all the full length reports our research team makes every week. Interested in learning all the hard data behind the article? If so, this report is just for you.

Want to check the other reports? Access the Report Repository here.

📈 Trend Of The Week

PE’s New Balancing Act

Private equity is ditching its lean-and-mean playbook to chase new asset classes—from private credit to infrastructure funds—but the pivot isn’t without pain. Expanding into these areas means more compliance headaches, greater regulatory scrutiny, and pressure to upscale operations. Legacy back-office processes, largely manual, are ill-suited for today’s complexity. Regulators, meanwhile, are poised to start asking tougher questions, especially as firms lean into products that touch public markets. The cost-benefit analysis is clear: adapt or risk losing LP interest. This shift may lead to PE firms operating more like asset managers than the swashbuckling buyout shops of old.

💰Liquidity Corner

Co-investing deals alternative for liquidity crunch

Co-investing deals have emerged as a powerful tool for addressing liquidity challenges in the private equity sector, particularly in a landscape marked by slower exit activity and tightening capital markets. By allowing LPs to invest directly in specific portfolio companies, midlife co-investments provide a dual advantage: they offer a pathway for PE firms to raise fresh capital while simultaneously enabling existing investors to access liquidity outside the traditional fund cycle. Sovereign wealth funds (SWFs), for instance, have dominated these transactions in value, participating in nearly half of global co-investing deals in early 2024, typically favoring larger, high-value investments. On the other hand, corporates, which accounted for 66% of co-investing deals by volume, leaned toward smaller, more frequent transactions. This flexibility underscores the appeal of co-investments in creating bespoke solutions for diverse investor needs, strengthening relationships between GPs and LPs while maintaining the focus on long-term portfolio value creation.

In the broader liquidity framework, co-investments serve as an innovative response to investor demands in a constrained market. The global co-investing market, which peaked at $260 billion in 2021, remains a significant avenue for both capital growth and liquidity generation, even as deal volumes have slowed. As private equity firms navigate an environment of rising interest rates and competition for capital, offering co-investing opportunities enhances their ability to retain and attract investors while providing quicker access to returns compared to traditional fund structures. Furthermore, the ability to tailor these deals—such as including delayed-draw options or bespoke repayment terms—ensures alignment with both the financial goals of LPs and the operational strategies of portfolio companies. In a landscape where GPs must innovate to maintain momentum, co-investments represent a versatile and impactful solution to the sector's liquidity challenges.

🤝 Deal of the Week

T-Mobile's $600M Bet on Vistar Media

T-Mobile is dialing up its advertising game with a $600 million acquisition of Vistar Media, a leader in digital out-of-home (DOOH) technology. This strategic move aims to enhance T-Mobile's Advertising Solutions by integrating Vistar's platform, which manages over 1.1 million digital screens worldwide. With DOOH ad spending projected to comprise more than a third of the nearly $10 billion U.S. out-of-home advertising market in 2025, T-Mobile is positioning itself to offer more targeted and measurable advertising solutions. The deal is expected to close in the first quarter of 2025, marking a significant step in T-Mobile's evolution from telecom giant to advertising powerhouse. Advisors from Allen & Co and Cleary advised T-Mobile, while Canaccord Genuity and Lowenstein advised Vistar Media.

🏦 Private Credit Corner

Private Credit: Europe focus

Private credit in Europe has undergone a dramatic transformation over the past few years, emerging as a dominant force in transaction financing. Between 2020 and 2023, the share of transactions financed by private credit more than doubled, rising from 27% to 56%. This surge was driven by the inability of broadly syndicated markets to function effectively during periods of heightened economic uncertainty. Private credit, with its certainty of financing and bespoke structures, became the go-to solution for leveraged buyouts, bolt-on acquisitions, and refinancings. Borrowers found assurance in private credit’s ability to deliver financing at predictable terms, particularly in volatile market conditions where bank-arranged financing often posed risks of unexpected costs. Flexible lending structures further enhanced its appeal, allowing private equity sponsors to focus on value creation and operational improvements rather than simply leveraging assets

The resurgence of syndicated markets does not diminish private credit's newfound prominence. Instead, it highlights the complementary roles of public and private credit markets. While lower costs may draw some issuers back to syndicated solutions, private credit remains a critical tool for borrowers seeking tailored financing solutions. Direct lending offers the flexibility to structure deals that align with strategic growth plans, including delayed-draw features, deferred interest payments, and currency-matched financing. As European markets adapt to a new normal, private credit’s ability to provide certainty and customization ensures it will remain indispensable, thriving alongside the revived syndicated market to sustain the buyout industry and beyond.

📊 Macro View

Anatomy of Economic Growth: The Role of Investment Rates

An analysis of the period from 2013 to 2023 reveals a clear correlation between investment rates—both private and public—and GDP per capita growth. Countries that experienced higher investment rates have demonstrated stronger economic performance, fostering wealth creation and improving the standard of living for their populations. Notable examples include Ireland, China, India, Vietnam, and Ethiopia. These nations share a common trait: proactive efforts to enhance their policy environments, streamline business regulations, and attract significant levels of Foreign Direct Investment (FDI).

Conversely, countries that have made limited progress in creating a conducive business environment during this period have encountered persistently low investment rates, resulting in stagnation or even contraction in economic growth. Examples of such underperformance include Ukraine, Argentina, and Brazil, where structural challenges and policy inertia have hindered economic advancement.

Advertise In PE 150!

Every week PE 150 directly reaches the email inboxes of 10K+ private equity sponsors, 50K+ investment bankers and 15K+ consultants/technologists.

We boast the best open rates and click through rates that are double and triple the industry average.

If you’d like to consider advertising in PE 150, click the button below to answer three quick questions to plan a campaign and get a quote in one hour or less!

🏆 This Week in History

The Breakup of AT&T’s Monopoly

Forty years ago this week, the federal government reached a monumental settlement with American Telephone & Telegraph Company (AT&T), marking the breakup of one of the most powerful monopolies of the 19th and 20th centuries. Known as the Bell System, AT&T had dominated telecommunications in the U.S., reaching 90% of households by the mid-20th century. The company’s vertical integration spanned local and long-distance services, manufacturing, research, and even telegraph operations, giving it unprecedented control over the industry. However, mounting antitrust concerns culminated in a 1974 lawsuit by the Justice Department, and in January 1982, AT&T agreed to divest its local telephone operations into seven regional entities known as the "Baby Bells." By 1984, the divestiture was complete, leaving AT&T with long-distance services, Bell Labs, and Western Electric, while creating a fragmented yet competitive telecommunications landscape.

The breakup had far-reaching consequences. Over the next two decades, the Baby Bells and other regional providers underwent a wave of mergers and acquisitions, culminating in the formation of several powerful national networks. The passage of the 1996 Telecommunications Act fueled this consolidation, allowing local providers to compete in long-distance markets, and paving the way for today’s telecommunications giants offering wireless, broadband, and cable services. Beyond its impact on the industry, the AT&T case serves as a regulatory touchstone, often cited in discussions about breaking up modern tech monopolies like Google and Meta. While the industry has evolved into a competitive arena of major players rather than a singular monopoly, the AT&T breakup remains a pivotal moment in the history of antitrust enforcement and innovation in the United States.

Special Event by Private Capital Global

Private Capital Global invites you to an exclusive event on January 23rd at the Wolf Point Ballroom at the Voco Chicago Downtown.

This event will dive into the implementation of AI, with a focus on the risks and threats these platforms pose to private capital organizations and their portfolios.

Don’t miss the chance to enhance your understanding and network with industry peers! Registration is open through January 22nd—use discount code Insights150Jan25 at checkout for $100 off your ticket.

Event Page: AI-Powered Risk Management: Reduce Exposure, Secure Returns

📰 Interesting Articles

🐣 Tweet of the week

"Do not be embarrassed by your failures, learn from them and start again"

Richard Branson