Private credit to sustain competition in $1bn+ deals 

Termgrid’s survey also shows improved deal outlook for 2024 

LONDON, U.K. & NEW YORK, NY – January 5, 2024 – —Termgrid’s inaugural private capital sentiment survey shows  that a resounding 82% believe that private credit can sustain competition in $1bn+ deals. An improved macroeconomic outlook, plenty of dry powder and the five year investment cycles of private equity sponsors are seen driving the improved outlook for 2024. 

Other key findings from the survey include: 

• More than two thirds of respondents (70%) expect deal opportunities to increase
• Q2 and Q3 seen as the most likely periods for deal uplift (45%) amd (29%) respectively 
• Deal timelines have increased with price mismatch expectations being cited by 59% as the cause 
• A majority (56%) believe private credit will embrace technology for day to day tasks with deal execution being a particular focus 

While M&A activity was largely muted for 2023, it is expected to be a significant driver of deal activity in 2024. More than one third of all respondents (35%) cite it as the major factor for growth, while sponsors are even more bullish with 46% citing it as a driver of activity. However the market is always competitive with respondents split on whether underwriting terms will be more (33%) or less (40%) lender friendly.  

It is clear that private credit is experiencing growing pains with many looking for technology as a solution. While there are technologies such as virtual data rooms, the number of different technologies not necessarily suited to private credit in itself causes a problem. Pain points for the industry include deal execution (40%), visibility into current terms (33%), portfolio management (30%) all cited as issues as well as single source of truth (26%) and working across different platforms (22%). 

“As our survey shows, private credit is seen as a viable alternative to traditional funding routes – even in the largest deals. Additionally, the majority of respondents see M&A returning from Q2 which will be welcomed by the whole market,” said Termgrid co-founder & CEO Dipish Rai. 

“Our work with our Sponsor clients has clearly resonated and shows that technology can solve some of the biggest pain points for the sector. The momentum that we have built with Sponsors will be an important springboard as we continue to develop our product for the Lender and Advisor communities,” added Rai. 

To read the full survey, click here.

About the survey 

Select private capital professionals were invited to take part in the survey from the end of November to mid-December. The results reflect a broad range of views drawn from private credit funds (34%), sponsors (33%), advisors (18%) and bank lenders (15%). Some of the largest funds are represented in our sample with 74% having more than $5bn in assets under management. The survey reflects an experienced audience with most (69%) having above 10 years experience with many at partner, principal and managing director level. All responses were verified but were individual so do not necessarily reflect the view of the institutions they work for.