Current Trends in Permanent Capital: What Alternative Managers Need to Know Now

More than 125 senior executives gathered in Dechert’s New York offices last Thursday for our inaugural Permanent Capital Seminar, which featured Dechert partners from various practice groups and Managing Directors from leading financial institutions such as Deutsche Bank, ING Capital, Wells Fargo, Stifel Nicolaus and McGladrey. The following is a summary of what the panels discussed at the event.

“So You Think You Want Permanent Capital? Options for Permanent Capital Vehicles”

Allison Harlow Fumai, Partner, Dechert LLP
Richard Horowitz, Partner, Dechert LLP
John Key, Managing Director, UBS Investment Bank
Allen Laufenberg, Managing Director, Keefe, Bruyette & Woods, A Stifel Company
James Lebovitz, Partner, Dechert LLP

This panel discussed the various wrappers in which financial institutions can house permanent capital and their advantages and disadvantages. In particular, the panelists addressed the different types of structures and options being contemplated, the types of permanent capital investment strategies we can expect to see in 2015 and the related pros and cons, and what is driving managers and investors to these vehicles. The panel also discussed BDC capital raising and what that might look like in 2015, and where the non-U.S. permanent capital market is headed.

“Financing a Permanent Capital Vehicle”

Jay Alicandri, Partner, Dechert LLP
Patrick Frisch, CFA, Managing Director, ING Capital LLC
Kevin Sunday, Managing Director, Wells Fargo Securities
John Timperio, Partner, Dechert LLP

2014 was another interesting year for permanent capital vehicles in terms of the amount and types of leverage provided to these vehicles. This panel discussed what they see ahead for 2015 concerning the amount and types of leverage; trends, such as JV arrangements; valuations and their related frequency. The panel also discussed the various financing arrangements that BDCs enter into, how they fit within the capital structure and strategies that BDCs utilize to pursue these various forms of leverage. Finally, the panelists explained the recent guidance on leverage lending and the recently finalized risk retention rules and how they might impact the types of leverage being provided.

“Hot Topics: What Was New in Permanent Capital in 2014, and Why?”

Carlos Alvarez, Managing Director, Deutsche Bank
Thomas Friedmann, Partner, Dechert LLP
David Harris, Partner, Dechert LLP
Jon Waterman, CPA, Assurance Partner, McGladrey LLP
Ken Young, Partner, Dechert LLP

This panel looked at different structures, vehicles and transactions in the permanent capital space that were interesting and unique in 2014, what was driving these trends and what it may mean for 2015. In particular, the panelists discussed the rise of the JV structure, spin-outs and restructurings, M&A transactions and the first listing of a non-traded BDC. The panel also talked about innovative structures in 2014, such as spin-outs, split-ups, and conversions from operating companies to BDCs, what drove them and how the market reacted to them.

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