DEER ISLE: Insights, Views & Investment Trends

Is China “In” or “Out” of the US Capital Markets? 

We have direct knowledge that capital is flowing “in”.  We know of a large state entity that has moved its US allocation from 5% to 7% of its portfolio with a longer-term target of 10%.  Still a very small percentage of its portfolio but it represents a sizable amount of USD.

Capital Provider Interest – We have interest from Chinese investors for private capital interval funds.

Private Capital Funds – How much of the existing portfolio has PIK? Is converting current pay into PIK a problem for these funds?  We are hearing about more and more instances.  The economy seems to remain strong so maybe not. 

Venture Capital Companies – Funds with dry powder to spare can pick and choose their opportunities.  If a Venture Capital company has revenue and pipeline, it should be able to get funded even though conditions are tough

Private Equity Middle Market – Robust demand from both debt and equity for strong companies.  Debt may be expensive now but capital for these opportunities is available.  Need to judge outcomes with and without capital infusion to determine capital value.