Deer Isle Insights, Flows & Investment Trends

“Green shoots” with Uncertainty is 2024’s Theme

As 2024 begins, we are hearing from our contacts that there is much hope for liquidity to improve in the (private) capital markets which would contrast sharply with 2023’s lack of liquidity (and all of the resulting consequences). 

The “green shoots” is that there is clearly capital for the “right” deals. 

But Capital Providers continue to be selective because they can be, and because of uncertainty driven by domestic and international politics, multiple wartime activities with potential to spread, and global interest rate policies.

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Capital Provider Interest: $25 to 150+ million interest in complex debt transactions (either corporate or real asset (real estate). 

Venture Capital Companies: AI is the name of the game.  Heard that 70+% of Y Combinator’s current investments incorporate AI as part or all of their strategy.

Private Credit Funds: Lower middle market credit is competitive, and spreads are starting to come down as more well-funded Private Credit Funds look for transactions to put their capital to work.Real Estate: Hearing that some cracks in the bank leverage drought are starting to break.  Banks are considering going back to requiring 80% LT Cost rather than the recent 75%.  This would start to make RE development more attractive.