Margins per risk profile in Europe
Hi,
I would like to get an idea of the margins that private credit fund charge on top of EURIBOR/SONIA according to their risk profile. Could you give me so color please?
Core funds:
Core + funds:
Value add fund:
Opportunitics:
Hey henryboot, the following topics might be helpful:
More suggestions...
I hope those threads give you a bit more insight.
Thank you.
Unfortunately none has that information. Do you have any idea by chance?
We need someone to start sharing thought and others will join.
Currently pricing unitranche somewhere between 625 and 675bps (vanilla PC), might slightly deviate in special scenarios (e.g. recently were asked to reduce arrangment fee from 300 to 200bps but priced at 710bps)
Thank you so much.
What about special situations?
I see vanilla deals can project a 12% IRR return easily.
I compare the returns with other asset classes, e.g. Real Estate, and it would me mad investing in Private Equity Real Estate
From what I know special situations credit has margins of 15%+, but don't quote me.
While you are right that we current see vanilla credit deals with 12% IRR or even higher, this is obviously driven by the very high interest rate environment. 2-3 years ago, things looked very different with lower margins 550-600bps and zero base rate in Europe. At that time target IRRs of 7-7.5% weren't uncommon.
Following
Thanks.
I expected a decrease in margins to compensate the rise of SONIA/EURIBOR.
What were the average returns of corporate private equity before 2023 and with the current environment?
Kind regards,
Margin is a measure of relative risk to treasuries, absolute return isn’t relatively to the “appropriate” margin unless you’re desperate to deploy
Nope, obviously everything became more instable, and thus more risky. Margins even increased slightly, although most turmoil in the market is rather captured by the rise in the reference interest rates.
Also think from another perspective, bonds etc became more attractive, PC is essentially in the same market just illiquid, and thus needs to achieve a higher return than liquid credit instruments.
Cum veritatis culpa et consequatur asperiores amet. Nihil eius maiores nihil cumque nulla. Repudiandae repudiandae qui aut voluptatem blanditiis aut deleniti.
Error eligendi qui molestiae qui sit esse non. Quis odio consequatur accusamus et voluptates. Rem facilis nemo temporibus expedita.
Doloremque velit recusandae in illum est ea. Architecto necessitatibus ab totam voluptatem quis qui repellendus velit. Temporibus ullam eveniet velit voluptate. Consequatur eum perspiciatis est occaecati dignissimos quia. Maxime non maxime corrupti dolore repellendus. Dicta sunt molestiae molestiae voluptatum illum ipsam ullam. Pariatur consequuntur ex eum nam et dolores nemo.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...