The Institutional Limited Partner

This is the story of the most profitable private equity buyout of all time and it’s French 🇫🇷 Company : Polyplus-Transfection Sector : Healthcare 💊 Sponsor : Archimed Here is a thread on how Archimed achieved a 300x MOIC on its initial investment 🧵👇

@DutchmanCapital @junkbondinvest It’s the first sector of both

@junkbondinvest I didn’t realize software was the largest sector of the loan market. Are you taking BSLs or PC?

Every cycle, distressed funds raise early and wait. The Fed intervenes. The opportunity never comes. This time: $1.2T in leveraged debt maturing 2027-2029. AI disrupting the largest sector in the loan market. Lenders pulling back on software. No Fed put. Maybe this time the dry powder actually gets used.

@pvtcreditguy On my side, I have been rather disappointed with real recoveries in the last 24/36 months for restructured deals

This is just my opinion and anecdotal but it looks like the European private credit managers are starting to take a much more conservative view on marks for restructured credits.

@Bruce_Markets All the data I have doesn’t suggest that spreads are wider. They might be in the future but recent new issues are not.

Direct Lending’s First Industry Correction: Direct Lending has seen tremendous growth until recently. 2026 is the reset year, some fund gates are up, seeing capital outflows for the first time. While open-ended fund structures are generally well constructed, redeeming investors who are gated are unhappy. Investors focused on risk within the underlying portfolios, now recognize the heavy concentration of leveraged software companies. Prior to the GFC (2008-2009), DL was a cottage industry with just $100 billion AUM. Over the past 18 years, DL has grown 18-fold, to $1.8 trillion ($1.5T invested, $300B dry powder). Europe does not have this issue, since the software industry is less than 50% of the U.S., and fund managers showed greater discipline. In the U.S., software is ~26% for many of the leading DL managers (52% of investor capital assuming 1x leverage). BDC and Fund investors may seek greater clarity on performance, which is simply a function of time. The good news is that spreads are wider, documentation and covenants will be tighter, and the industry is here to stay. The correction for DL has arrived. Corrections are healthy, they serve to cleanse the excesses. Direct Lending is an essential component of finance, is here to stay, and will be better from the learnings of this correction.

@PITTI_FI We are LPs of Fund I, and honestly, they have done a pretty good job. The first one was $ 2.5 bn deployed and recycled in a bit more than 4 years. But they offered tons of co-invest capacity.

17capital raised $7.5bn for NAV financing. I can see it deployed in a couple of years (I used to do 1bn/year on a subsegment of this market… five years ago). I don’t think the retail investors who are just finding out about liquidity engineering are quite ready for what’s coming

@plsfix4life @Will_Schryver The average opt out rate is 90%, most initially LPs take liquidity and do not roll into the CV

@Will_Schryver Any sense of selling volume by existing LPs? Assume this varies quite a bit based on vintage. MOIC pre-CV is shocking unless there’s very little DPI baked in.

Private Equity secondary market volume hit a record $226 billion ~50% of the market is GP-led volume Average MOIC ~4.3x prior to CV with an average ~93% GP carry roll The supply of opportunities exceeds capital chasing these deals Creating a buyer’s market filled with high quality deals Data suggests GP-led deals are not filled with inherently bad companies and GPs attempting to kick the can down the road Source: Hamilton Lane

It's bad, and it shouldn't be the feature of a secondary fund. These are mainly problems with the large secondary funds, which take 5/6 years to deploy and use NAV financing at the fund/deal level with cash sweeps that can delay LPs' distributions. There are alternatives to that type of fund in secondaries with people with smaller/niche funds

What do we think of a secondaries fund that has a 1.0x DPI after 9 years?

The market is so bad that they are organizing a private equity Mass in Paris 🤣 « Good Lord, offer us crystallized carried on unrealized gains, forgive us our 2% management fees, keep us away from adjusted EBITDA, and deliver us from add-backs. Amen.”

🚨As we prepare the launch of our Private Equity Secondaries fund dedicated to small deals (target Sept 2026) and given the current prolific deal flow, I’m looking for a partner able to provide ~€10 to 15m of warehousing capacity to seed initial transactions. These deals would be transferred into the fund at launch (avoiding a blind pool for incoming investors and making it more appealing). Economics are negotiable but ideally: pre-agreed yield and exit through inflows or option to convert into the fund with no fees and no carry. DMs open, feel free to reach out

@BigJohn043 Isn’t it a bit skewed by the large funds that collect the majority of fundraising nowadays and generally have lower management fees?

Thought this was the most interesting slide from the Bain PE annual report. Fees are coming down in PE both in terms of raw level of fees and the amount of co-invest that is offered (generally without fees).

@AsAllocated LMAO 😂 they just need to deploy quicker because the capital is fully drawn day 1

@holistic_pm It's possible that evergreen appears to be overpaying since they could be targeting assets of higher quality

Another good report from Campbell Lutyens on secondaries. Some stats that caught my attention 👇 1. Average pricing and size by underlying strategy 2. Trend in pricing by underlying strategy 3. Evergreen still overpaying 330bps on average vs traditional closed funds 4. GP-led activity by sector and valuations

@JCassidyHogan Yeah, effectively, you need a strong co-investor base. Generally speaking, it’s family offices that are prone to taking the risk because they are more used to take concentrated bets or FoF which have a dedicated bucket

@holistic_pm Interesting. There are pros and cons to both models. If you have access to a reliable set of co-investors and can make the fee arrangement work then it can be GP friendly / preferred to stick with SPVs.

The independent sponsor model is gaining traction, with deal value increasing tenfold over the last 7 years. The current state of the PE market is prone to the formation of this type of structure, and I believe we will see more and more going forward

@JCassidyHogan While I don’t disagree, I am seeing more and more experienced IS with a good track without any desire to converge to a fund structure.

The rise of independent sponsors includes a fundraising story. Many emerging managers follow this approach to build track record + some fundraising experience (raising for each SPV). It can be long-term approach but typically GPs are hoping to move to a Fund structure to 1. remove execution risk (corralling cats into each SPV can be a risk) and 2. secure a diversified portfolio. A fund model is optimal for both LPs and GPs (if you assume constant fees...).

@investing_law Blackstone acquired Moonbug for 30x

@investing_law But most trade a 5-7x

YouTube videos are wild for marketing. Our videos get like 14 views each. But 5 of those become clients. Making videos is difficult, stressful, and time-consuming. But the ROI is there.

@hookem242 Headway CP

@holistic_pm Source for this deck?