Status for sekundære markeder

[Rory] Hej, og velkommen til State of Secondaries, en webcast-serie fra Nasdaq Fund Secondaries. Jeg er Rory Maben, og jeg leder den institutionelle side af vores team her hos Nasdaq. I denne serie sætter vi os ned med ledere på tværs af private markets for at diskutere nøgletemaer, der former dagens landskab. Og i dag er vi sammen med Olga Kosters, Managing Director af Liquidity Solutions og Head of Credit Secondaries hos Antares Capital, for at diskutere den seneste vækst af private kredit inden for det sekundære marked. Velkommen, Olga.[Rory] Hello, and welcome to the State of Secondaries, a webcast series from Nasdaq Fund Secondaries. I'm Rory Maben, and I lead the institutional side of our team here at Nasdaq. In this series, we sit down with leaders across private markets to discuss key themes shaping today's landscape. And today we're joined by Olga Kosters, Managing Director of Liquidity Solutions and the Head of Credit Secondaries at Antares Capital, to discuss the recent growth of private credit within the secondaries market. Welcome, Olga.

[Olga] Thank you for having me, Rory. Nice to be here.

[Rory] Det er så godt at have dig med os. I dagens samtale vil vi fokusere på udviklingen og accelerationen af kreditsekundærmarkedet, stigningen af GP-ledede kreditsekundærer. Vi vil overveje indflydelsen af de nuværende finansielle forhold på markedstendenser, og vi vil vurdere de nøglefaktorer og risici, der sandsynligvis vil bestemme kreditkontinueringskøretøjets ydeevne i de kommende 12 til 24 måneder. Vi starter med lidt kontekst. Så private kreditsekundærer er gået fra en nichestrategi til en hurtigt voksende del af sekundærmarkedet. Fra dit perspektiv, hvilke strukturelle skift har drevet accelerationen, og hvordan har markedsvæksten påvirket din personlige involvering i dette område?[Rory] It's so great to have you with us. In today's conversation, we'll focus on the evolution and acceleration of the credit secondaries market, the rise of GP-led credit secondaries. We'll consider the influence of current financial conditions on market trends, and we'll assess the key factors and risks that will likely determine the credit continuation vehicle performance in the coming 12 to 24 months. We'll start with a little bit of context-setting. So private credit secondaries has moved from a niche strategy to rapidly growing segment of the secondary market. From your perspective, what structural shifts have driven the acceleration, and how has the market growth influenced your personal involvement in this space?

[Olga] Jeg har været investor i over 26 år, og de seneste seks år har jeg fokuseret på kreditsekundærer. Da jeg fik startkapital i 2019 og lancerede min første kreditsekundærer fond, var det første spørgsmål fra investorerne, "Er der et marked?" Nu er det spørgsmål ikke længere relevant. Ifølge statistikker fra mæglere var sidste års volumen af lukkede handler på markedet omkring 20 milliarder, hvilket viser betydelig vækst. Jeg mener, at markedet nu går ind i en interessant fase, hvor det modnes og tiltrækker flere institutionelle investorer. Det interessante er de tendenser, der har ført os hertil, og hvad der vil ske fremover. De tendenser, der har ført os hertil, inkluderer først og fremmest væksten i privat kredit, som nu ligger på omkring 1,5 til 2 billioner. Det er en meget illikvid aktivklasse, så der er naturligt en søgen efter likviditet, hvilket er en fordel for kreditsekundærer. Derudover følger kreditsekundærer udviklingen i private equity sekundærmarkedet, hvor der er skabt juridiske rammer og værktøjer. Kreditsekundærer adopterer nogle af disse juridiske værktøjer fra private equity. Med hensyn til fremtidig udvikling mener jeg, at succesfulde kreditinvestorer og kreditsekundærer investorer har brug for to ting: erfarne teams med avanceret kreditvurdering og dybe kapitalpuljer. Da muligheden for at slutte sig til Antares opstod for halvandet år siden, fandt jeg det meget interessant. Antares har over 30 års erfaring med kreditvurdering og private markeder, hvilket giver en stærk rygrad. De er også stærke partnere med CPP Investments, en velkapitaliseret og sofistikeret investor. Disse faktorer skaber en solid basis for succesfulde investeringer i kreditsekundærer.

[Rory] Ja, jeg synes, det giver meget mening, og det er selvfølgelig et fantastisk område at være i i dag, og vi vil fortsætte med at fokusere på udviklingen først, og derefter vil vi tale lidt mere om den nuværende kontekst. Fra dit perspektiv, hvordan skaber udviklingen af privat kredit betingelserne for voksende interesse fra investorer? Og hvorfor er kredit et så overbevisende område inden for sekundære markeder?[Rory] Yeah, I think that makes a lot of sense and obviously this is a great space to be in today and we'll continue to kind of focus on the evolution first and then we'll talk a little bit more about the current context. From your perspective, how does the evolution of private credit create the conditions for growing interest from investors? And why is credit such a compelling area within secondaries?

[Olga] Rory, jeg tror, investorer har været interesserede i kreditsekundærer siden jeg havde de samtaler. Og årsagen er dobbelt. I meget stabile miljøer giver kreditsekundærer diversificering, giver en meget stabil basis for indkomst og giver et meget godt perspektiv på underwriting af eksisterende porteføljer og aktiver. Og i mere volatile markeder kan denne likviditetspræmie høstes. Så i stabile markeder får investorer stabil indkomst, og i volatile markeder får de potentielt en upside fra likviditetshøstning. stabil indkomst, og i volatile markeder får de potentielt en upside fra likviditetshøstning. Fordi når likviditetsfasen bliver til højere pris for likviditet, tror jeg, dette giver kreditinvestorer en pude til at beskytte kapital og potentiel overpræstation.[Olga] Rory, I think investors have been interested in credit secondaries since I had those conversations. And the reason is twofold. In very stable environment, credit secondaries provide diversification, provide very stable basis for income and provide a very good lens on underwriting existing portfolios and assets. And in more volatile markets, this liquidity premium can be harvested. So in stable markets, investors get stable income, and in volatile markets, they potentially get an upside from liquidity harvesting. stable income, and in volatile markets, they potentially get an upside from liquidity harvesting. Because when liquidity phase turns into higher price for liquidity, I think this provides credit investors with a cushion for protecting capital and potential outperformance.

[Rory] Ja. Det giver meget mening. Og hvis vi fokuserer på forskellige segmenter af det sekundære marked, lad os se på GP-ledede kreditsekundærer. Vi ser en stigning i GP-ledede kreditfortsættelseskøretøjer. For eksempel, din nyligt annoncerede aftale med Ares. Kan vi tale lidt mere om, hvad der skabte betingelserne for flere GP-ledede CV'er i dette område? forskellige segmenter af det sekundære marked, lad os se på GP-ledede kreditsekundærer. Vi ser en stigning i GP-ledede kreditfortsættelseskøretøjer. For eksempel, din nyligt annoncerede aftale med Ares. Kan vi tale lidt mere om, hvad der skabte betingelserne for flere GP-ledede CV'er i dette område?[Rory] Yeah. That makes a lot of sense. And if we focus on kind of different segments of the secondary market, let's take a look at GP-led credit secondaries. So we're seeing a rise in GP-led credit continuation vehicles. So for example, your recently announced deal with Ares. Can we talk a little bit more about what created the conditions for more GP-led CVs in this space? kind of different segments of the secondary market, let's take a look at GP-led credit secondaries. So we're seeing a rise in GP-led credit continuation vehicles. So for example, your recently announced deal with Ares. Can we talk a little bit more about what created the conditions for more GP-led CVs in this space?

[Olga] Jeg mener, at markedet er blevet mere institutionaliseret gennem årene. Så GP-leds, GP står for general partners, leder aftalerne, og disse continuation vehicles, i det væsentlige nye fonde, der bliver dannet, hvor en portefølje af aktiver bruges som frø til at flytte ind i disse fonde. Og i de sidste flere år har GP-leds taget en løveandel af alle credit secondaries-markederne. Så hvorfor er det sket? På den ene side var der meget kapitaldannelse. Så igen, mange institutionelle investorer kommer ind på markedet, meget kapital til rådighed for potentielle continuation vehicles og aftaler. Og fra et GP-perspektiv ønsker de ikke at lancere en aftale, medmindre de har et relativt godt syn på markedets dybde. Og de vil virkelig sikre, at aftalen bliver en succes. Så det var en faktor. De andre faktorer var mere med, igen, tilbage til modenhed, der er en meget stor interesse i credit secondaries, og det driver mæglernes interesse. Så de forsøger virkelig at være mere aktive, og CVs kan imødekomme forskellige behov og tilbyde forskellige løsninger. Nogle GPs ønsker at give likviditet til LPs. Nogle GPs ønsker at styrke momentum i fundraising. Nogle af dem ser på at fusionere flere subscale fonde til en større fond. Så alle disse behov kan skræddersyes. Og mæglere har udviklet en meget aktiv engagement med forskellige GPs. Og sidst men ikke mindst, vil jeg sige til dit punkt, du nævnte aftalen med Ares. Der var en række blue-chip, meget velrespekterede GPs, der kom på markedet. Så jeg tror, det er en meget stor faktor for andre GPs, der følger trenden. Og det har vist sig at være et meget succesfuldt deal-making miljø. Så jeg tror, at fra det perspektiv, banede det vejen for flere GP-leds i fremtiden.[Olga] I think the market has become more institutionalized over the years. So GP-leds, GP stand for general partners, are leading the deals, and those continuation vehicles, essentially new funds that are being formed, where a portfolio of assets is used as a seed to move into those funds. And in the last several years, GP-leds took a lion's share of all the credit secondaries markets. So why has it happened? On the one hand, there was a lot of capital formation. So again, a lot of institutional investors coming into the market, a lot of capital provided for potential continuation vehicles and deals. And from a GP perspective, they don't want to launch a deal unless they have a relatively good view on depth of the market. And they really want to ensure that the deal is going to be successful. So that was one factor. The other factors were more so with, again, going back to maturity, there is a very large interest in credit secondaries, and that drives brokers' interest. So they really try to be more active, and CVs can answer different needs and provide different solutions. Some GPs want to provide liquidity for the LPs. Some GPs want to enhance the momentum in fundraising. Some of them are looking to merge several subscale funds into a bigger fund. So all of those needs can be tailored. And brokers have developed a very kind of active engagement with various GPs. And the last but not least, I would say to your point, you mentioned the deal with Ares. There was a number of blue-chip, very well-respected GPs coming to the market. So I think it's a very big factor for other GPs following the trend. And it's proven to be a very successful deal-making environment. So I think that from that perspective, that sort of paved the way for more GP-leds to be done in the future.

[Rory] Ja, det giver meget mening. Du berørte flere emner. Vi vil tale mere om økosystemet om et par minutter, men vi vil virkelig fokusere på dagens nøgleord for LP'er, som er 'alignment', ikke sandt? Så når du overvejer disse typer af handler i kredit GP-ledede transaktioner, hvor vigtige er aktivvalg og strukturelle elementer for at drive resultaterne i transaktionerne? Og hvordan ændrer denne optionalitet dynamikken i handlen sammenlignet med en traditionel LP-ledet sekundær?

[Olga] Så jeg startede min karriere som analyst inden for private equity team, finansielle institutioners gruppe. Så det vi gjorde, var i bund og grund det samme som jeg gør nu, men i en anden kontekst. Vi kiggede på banker, både aktiver og passiver, og forsøgte at finde ud af, hvor meget vi skulle betale for andele i disse banker. Så fast-forward til nu, hver GP-ledet aftale og faktisk LP-ledet aftaler, inkluderer to specifikke aspekter af en underwriting. På den ene side er vi meget interesserede i at forstå, hvordan aktivsiden ser ud, altså venstre side af balancen. På den anden side vil vi gerne forstå, hvordan strukturen ser ud på højre side af balancen. Det du påpegede er meget vigtigt. Har vi en valgmulighed for at vælge aktiver? Har vi denne valgmulighed for at konstruere porteføljen? Og hvis ikke, hvordan kan vi prissætte de aktiver, vi præsenteres for. Ikke? Så dette er en meget dyb underwriting due diligence proces på aktivsiden. Passivsiden er lige så vigtig, og det er tilbage til dit spørgsmål om strukturelementerne. For hvis passivsiden ikke matcher det, vi har på aktivsiden, kan det skabe suboptimal ydeevne for køretøjet som helhed. Så jeg tror, at i vores due diligence proces, vil vi se på begge dele. Og jeg tror, det er sådan, vi driver overbevisningen. Og for nogle af de høj-overbevisning aftaler, skal både venstre og højre side fungere. Så vi har talt lidt om deltagerne på markedet, både GPs og LPs, som er det direkte forhold, samt de sekundære købere. Hvordan driver slags de indbyrdes forhold, hvordan driver forholdene i deres kerne virkelig omformningen af kreditsekundærernes økosystem? Historisk set var fund of funds førende i at drive sekundærer, og det var meget logisk, ikke? De havde mange investments og fonde. De havde en informationsstrøm for fonde. De har forhold til limited partners og GPs, LPs og GPs, så de var i en meget god position til at drive væksten i traditionelle LP-ledede kreditsekundærer. Ja. Hvad der er sket siden da er, at GPs som Antares har fundet ud af, at de også kan underwrite ikke kun fondene, men også linje-for-linje aktiver inden for disse fonde, og det spiller til deres styrker. Så i den henseende er folk som Antares og andre GPs, der kom ind på markedet, fokuseret på underwriting, og de har forhold, som de har dannet på tværs af forskellige markedsdeltagere, måske ikke som en LP, men de har et bredt netværk af forhold, som de har dannet over tre årtier i branchen. Så jeg tror, både underwriting og forholdsaspekter fungerer. Hvad der er vigtigt for general partners, der overvejer at lancere CV, er, at deres information er beskyttet. Så hvad vi har gjort, og mange andre markedsdeltagere har gjort, vi har skabt en mur. Så vi har skabt Antares Liquidity Solutions forretning som en selvstændig forretning, og vi beskytter den information, vi modtager fra at lække uden for vores team, vores gruppe, vores forretning. Dette er bordindsatser for kreditsekundærer, private equity sekundærer. Dette er ikke noget, vi har opfundet, men vi forstår, hvor vigtigt det er at beskytte informationen. Og derfor bruger vi meget tid og opmærksomhed på at bygge muren, så vi kan besvare dette spørgsmål og ikke bringe vores omdømme eller vores forretning i fare.[Olga] So I started my career as an analyst within the private equity team, financial institutions group. So what we were doing, we were essentially doing what I'm doing now but in a different context. So we were looking at banks, both assets and liabilities, and trying to figure out how much we were going to pay for stakes in those banks. So fast-forward to now, every GP-led deal and actually LP-led deals, so includes two specific aspects of an underwriting. So on the one hand, we're very keen on understanding what the asset side is like, so the left side of the balance sheet. On the other side, we do want to understand what the structure looks like on the right side of the balance sheet. What you pointed to is very important. Do we have an optionality to select assets? Do we have this optionality to construct the portfolio? And if not, how we can price the assets that we're presented with. Right? So this is a very deep underwriting due diligence process on the asset side. The liability side is just as important, and that's back to your question on the structuring elements. Because if the liability side does not match what we have on the asset, that may create suboptimal performance for the vehicle overall. So I think in our due diligence process, we'll look at both. And I think that's how we drive the conviction. And for some of the high-conviction deals, both left side and right side have to work. So we've talked a little bit about the participants in the market, both the GPs and the LPs, which are the direct relationship, as well as the secondary buyers. How do kind of the interrelationships, how do relationships at their core really drive the reshaping of the credit secondaries ecosystem? Historically, fund of funds were leading the drive for secondaries, and that was very common sense, right? They had a lot of investments and funds. They had an information flow for funds. They have relationship with limited partners and GPs, LPs and GPs, so they were in a very good position to drive the growth in traditional LP-led credit secondaries. Yeah. What has happened since then is that GPs like Antares have figured that they can also underwrite not just the funds but also line-by-line assets within those funds, and that plays to their strengths. So in that regard, people like Antares and other GPs who entered the market, they're focused on underwriting, and they do have relationships that they formed across different market participants, maybe not as an LP, but they do have a wide network of relationships that they formed over three decades of being in the business. So I think both underwriting and relationship aspects work What's important for general partners who are considering launching the CV is that their information is protected. So what we have done, and many other market participants have done, we've created a wall. So we've created Antares Liquidity Solutions business as a standalone business, and we protect the information we receive from leaking outside of our team, of our group, our business. This is table stakes for credit secondaries, private equity secondaries. This is not something we invented, but we understand how important it is to protect the information. And hence, we spend a lot of time and attention building the wall so that we can answer this question and not jeopardize our reputation or our business.

[Rory] Selvfølgelig. Ja, det giver meget mening.[Rory] Sure. Yeah, that makes a lot of sense.

[Olga] Og igen, det handler om at sikre integriteten af disse relationer.

[Rory] So let's kind of turn our focus to what's happening in the current market. There's been a lot of talk about credit in private equity in the last six-plus months. So how are current market conditions, from your perspective, really influencing the types of credit assets being brought to the secondary market and the way that these deals are structured? In the current market there's been a lot of talk about credit in private equity in the last six-plus months. So how are current market conditions, from your perspective, really influencing the types of credit assets being brought to the secondary market and the way that these deals are structured?

[Olga] Sure. Well, we're recording this on 31st of March. Yeah. So without going into every specific headline, there's quite a lot. Sure. I would put them in two broad buckets. So one bucket is to do with valuations, and the other one is with liquidity. So when, as a credit secondaries investor, we assess a pool of assets, a portfolio, a specific loan that sits in the fund, we approach it from a perspective of how we value it. And if there is any delta and a difference between the valuations that we see and where we assign the value to it. So I think in that regard, having an ability to look through and underwrite loans in the portfolios that we see is a very important feature. And sometimes, our assessment differs from the valuations that we see. So that drives the price. So the other aspect of it is the liquidity. As we talked about, private credit is an illiquid asset class, so people searching for liquidity in the current market, in the past, in the future, is something that, what we were designed for. That's right. This is what credit secondary strategy is for. So I think providing liquidity in times like this is something that we will look forward to do for both GPs and LPs. So from our perspective, depending how it's going to play out, there is a lag, but that will lead to more interesting opportunities coming our way, hopefully where we can provide liquidity solutions. So without going into every specific headline, there's quite a lot. I would put them in two broad buckets. So one bucket is to do with valuations, and the other one is with liquidity. So when, as a credit secondaries investor, we assess a pool of assets, a portfolio, a specific loan that sits in the fund, we approach it from a perspective of how we value it. And if there is any delta and a difference between the valuations that we see and where we assign the value to it. So I think in that regard, having an ability to look through and underwrite loans in the portfolios that we see is a very important feature. And sometimes, our assessment differs from the valuations that we see. So that drives the price. So the other aspect of it is the liquidity. As we talked about, private credit is an illiquid asset class, so people searching for liquidity in the current market, in the past, in the future, is something that, what we were designed for. This is what credit secondary strategy is for. So I think providing liquidity in times like this is something that we will look forward to do for both GPs and LPs. So from our perspective, depending how it's going to play out, there is a lag, but that will lead to more interesting opportunities coming our way, hopefully where we can provide liquidity solutions.

[Rory] Jeg mener, det er meget fornuftigt. Fra vores perspektiv tror vi også stærkt på, at GPs fremover vil blive mere opmærksomme på deres likviditetsstrategier. Dette er en ideel overgang til at fokusere på fremtiden. Jeg afslutter gerne disse segmenter med et blik på, hvad der venter forude. Selvom det stadig kan være tidligt at vurdere den endelige præstation af kreditkontinueringskøretøjer, hvilke faktorer mener du vil fortsætte med at understøtte stærke resultater på kort sigt? Og hvad bør investorer være mest opmærksomme på de næste 12 til 24 måneder?

[Olga] Meget gode spørgsmål på begge fronter. Så når vi ser tilbage, hvilke faktorer hjalp med at få aftalerne til at klare sig godt? Valgmulighederne ved aktivvalg. I fraværet af det, en meget, meget disciplineret prissætning. Og det er på aktivsiden, venstre side af balancen. Kombineret med en struktur, hvor vi ikke er i positionen som en presset sælger. Jeg tror, det er en vigtig overvejelse, og vi stresstester det, så det er sådan, vi går igennem vores proces. Så jeg tror, at have en stærk overbevisning på både aktivsiden og selve strukturen betyder meget. Og de aftaler, efter min erfaring, klarede sig bedre. Fremadrettet tror jeg, det vil være interessant at se, hvordan markedet metaboliserer nogle af værdiansættelsesudfordringerne. Og der er en selvregulerende mekanisme. Hvis en del af markedet skal købe aktiverne til NAV, tror jeg, folk overser pointen med selvregulering, fordi GPs er motiverede til at bringe værdiansættelserne i overensstemmelse med, hvad de anser for reelt. Så jeg tror, dette er en slags selvforstærkende, selvregulerende proces. Den anden ting, der kan være interessant at følge, og jeg har nævnt, at der er en forsinkelse mellem markedsvolatiliteten og hvad der sker på kreditsekundærer, men det vil være interessant at følge strømmen af LP-ledede aftaler. Sidste år var LP-ledede aftaler en meget minimal del af markedet sammenlignet med fortsættelseskøretøjer. Vi vil se, om det tager fart. Jeg tror, dette er noget, vi følger. Og vi vil se, hvordan det udvikler sig.[Olga] Very good questions on both fronts. So looking in the past, what factors helped for the deals to perform well? The optionality on asset selection. In the absence of that, a very, very disciplined pricing. And that's on the asset side, the left side of the balance sheet. Coupled with a structure where we're not in the position of a stressed seller. I think that's an important consideration as well, and we stress test it, so that's how we go through our process. So I think having the high conviction on both asset side and the structure itself matters a lot. And those deals, in my experience, outperformed. Looking forward, I think it will be interesting to see how the market metabolizes some of the valuation challenges. The other thing that may be interesting to watch, and I've mentioned that there is a lag between the market volatility and what happens on credit secondaries, but what will be interesting to watch is a flow of LP-led deals. Last year, LP-led deals were a very minimal fraction of the market compared to continuation vehicles. We'll see if that picks up. I think this is something that we're watching. And we'll see how it plays out.

[Rory] Virkelig, virkelig interessante dynamikker sker her, og det vil være meget interessant for os og sandsynligvis endnu mere for Dem at fortsætte med at se disse dynamikker udvikle sig. Mange tak for at deltage i samtalen i dag-[Rory] Really, really interesting dynamics happening here, and it will be very interesting for us and probably even more so for you to continue to see these dynamics evolve. Thank you so much for joining us for the conversation today-

[Olga] Tak fordi De havde mig[Olga] Thanks for having me

[Rory] Olga. It was our pleasure. And if viewers would like to learn more about Antares Private Credit Secondaries offerings, you can find more information at the links below.