Investcorp isn't the only show in town for private-credit firms hunting buyers. Deutsche Bank's asset manager DWS Group and Janus Henderson Group both say they're looking to buy. In an interview with Bloomberg News, Janus Henderson CEO Ali Dibadj says he's weighed up about 100 opportunities since taking the top job in June last year, without buying any firms. About half involved alternative assets such as private capital.
While the past 18 months have been pretty miserable for M&A bankers, the recent surge in interest in private-credit deals is a rare bright spot. This once niche market has become a $1.5 trillion behemoth, and the fund-management giants — attracted by bumper fees and the retreat of banks from corporate lending — want in. At the same time smaller credit firms are finding it hard to raise funds lately. Many want to cash out.
"The key thing is what's driving the M&A," says Ghose. "It's consolidation, it's big asset managers coming into the space and also consolidation among the alternatives firms. It's been very active."
William Barrett, managing partner at Reach Capital, a private-market fundraising firm, says there's a "great alignment between asset managers that are late to the party and private-debt general partners who realize they can make a couple of million through selling their stake."
Private-debt titans, such as Apollo Global, Ares Management and Oaktree Capital, may consider high-quality additions, too, according to some industry executives. The firms declined to comment.
But most deals so far involve large traditional players: T. Rowe Price bought Oak Hill for $4.2 billion at the end of 2021; late last year Nuveen agreed to acquire control of Arcmont; this summer Man Group agreed to buy Varagon Capital and BlackRock bought Kreos.
"We're seeing traditional asset managers drive a large component of M&A demand for private-credit capabilities," says Damian Hourquebie, a partner at EY who leads its wealth and asset-management transactions practice in Europe. "This is in response to competition from alternative asset classes, in addition to a demand from investors."
The ballooning size of the market is forcing the established money managers to get involved, alongside the promise of lucrative returns as a way of juicing profits and avoiding investor outflows. Apollo reckons private credit could replace as much as $40 trillion of the debt markets eventually.
DWS, which has €859 billion ($922 billion) under management, is looking to buy smaller firms, according to the head of its alternatives business, Paul Kelly. "Private corporate credit in Europe is our largest area of focus for growth," he says in an interview. "We're really digging in here."
