PE's Role in Capital Markets

What would be a PE firm's role in a Capital Markets transaction? Simply purchasing ABS as a source of capital for the firm, or are they in charge of securing loans for the company to initiate LBOs, or do they do the analysis for purchasing equity shares of a company?

 

I read somewhere that the Capital markets analyst at a PE role will often negotiate with banks and try to bring value by getting financing at the best terms.

In terms of your comment about legal docs, your models are worthless if the language in the legal docs are weak.

Example: I generate 5 dollars worth of cash flow every month forever, and you decide to invest in my company.. But somewhere in my legal docs I have language stating that I can raise capital through senior bond offering and increase my leverage by 1,000, and that those senior bond holders they have a priority interest on my cash flows.

In my scenario, you as the equity investor are fucked, regardless of all of the modeling that you did.

Very oversimplified scenario but I hope it helps.

 
Most Helpful

Just think of it as a regular capital markets team (ECM/DCM) on a smaller scale (which isn't a bad thing) and mostly servicing the firm's portfolio companies. PE capital markets offer a different batch of investor list than banks and have a differentiated angle as a broker whose interest is actually aligned. This group isn't really for a traditional IB coverage group-type training, and this probably isn't the experience that most college students are looking for in terms of buyside recruiting. Having said that, they get to work on some of the most interesting deals on a global scale. The team is usually pretty small, so you'd get a lot of responsibilities from a junior level.

 

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