What's gonna be hot next?
Private credit started out ~10 years ago post GFC with banks moving out of the space and is now "maturing" depending how you look at it, people who started there 10 years ago probably MDs now and made a great space for themselves.
What do you think are going to be the next "hot" areas in high finance to look out for?
I would say crypto? Seems like a good space to develop expertise as crypto becomes more relevant and fades away from being considered a “scam” like it was a few years ago.
Crypto is big gay
How much did you lose?
Show me on the doll where the shitcoin touched you
Make distressed great again!
Personal thesis is more distressed / value based SaaS investing. Current trend in software is focus 100% on growth and sell to a strategic or go public.
Not every company can grow forever, so think we’re going to see a bunch of tech companies start to flat line / decline and opportunities to scoop them up for next to nothing. Haven’t heard of a single SaaS investment that’s been actually run for cash flow, but a lot of these business have great retention so you can massively cut costs, bring up margins really high, and distribute cash flows while holding revenue close to flat.
Have already seen this playbook a few times. Pretty sure it's is why Advent / Permira bought McAfee.
Yes this is nothing new lol like literally a normal buyout play (Thoma bravo and qlik for example)
You're wrong about SaaS companies not being run for cash flow. Currently working with a 3bn+ vertical SaaS asset with 50%+ EBITDA
Yeah exactly - have you ever done tech m&a? So many of the sponsor sell sides are lower growth companies / carve out of hardware type WholeCo
This is the Thoma Bravo playbook
Personally think Infra is going to be huge. Real assets will likely take a larger portion of portfolio asset allocation as they offer diversified and differentiated returns that are uncorrelated with other asset classes, resilience, and inflation-protection
Agreed! Especially digital infra assets and renewables
Opportunistic digital infra is roaring, especially fiber atm and data centers in the near term
Perhaps GP-led opportunities in the secondary private equity market.
The secondary PE market is already filled with talented folks but given the growth trajectory of this market, there is definitely going to be a prolonged talent shortage. There already is a shortage of capital to address all the liquidity needs of LPs in the market, and there are a plethora of sponsors that would love to have more time to manage stronger portfolio companies that need more time for further value creation. Seems like comp levels are at/similar to direct PE as well (with strong carry allocations).
Definitely still time for new entrants to the secondary market to make a name for themselves
Biotech
Asia, especially Chinese private market and asset management industry. Lots of uninvested capital and opportunities available to those who are able to navigate the complex capital markets game there.
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