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ALTERNATIVES

Buyout leverage nearing pre-crisis levels, MB Global CEO tells Milken attendees

MB Global Partners Founder and CEO Maria Boyazny says, 'Institutional memory has been very short.'

Buyouts “are on fire,” with leverage levels approaching pre-crisis volumes, said Maria Boyazny, founder and CEO of private equity firm MB Global Partners, speaking on a panel Wednesday at the Milken Institute Global Conference in Beverly Hills, Calif.

“Institutional memory has been very short,” Ms. Boyazny said. Leverage is on the rise, and deals are getting riskier, she said.

Ms. Boyazny said roughly 80% of her firm's $500 million in assets under management is aimed at investing in special situations, including so-called loan-to-own that invest in company debt in order to eventually own the company.

The panel — “The Road Less Traveled: Investing in Special Situations” — was moderated by Julian Salisbury, head of the global special situations group at Goldman Sachs Asset Management, and the conversation also turned to infrastructure.

Panel member Justin Chang, senior partner at real estate firm Colony NorthStar, recounted that in conversations he had at the conference with Transportation Secretary Elaine Chao, a conference speaker, Ms. Chao said the Trump administration wants to reduce the time it takes to get approvals for new infrastructure projects to two years from 10 years.

Mr. Chang said there's no shortage of capital to invest in U.S. infrastructure from U.S. and non-U.S. investors. “There just isn't enough deal flow,” he said. “The new administration recognizes that.”

It will be the private sector and not the government that will fill U.S. infrastructure needs, Mr. Chang said.

Colony NorthStar is currently expanding its infrastructure business. The firm is focusing on technology and data-related sectors such as telecommunications and fiber networks. Ms. Boyazny said it is important to involve institutional investors such as pension funds and sovereign wealth funds that are long-term investors “that certainly do not need the capital back for years or even decades.”

“The duration of the (infrastructure) deal needs to match the size opportunity,” Ms. Boyazny said.