A significant number of funds remain open for business and are actively seeking new investments.
We, at SPARK, spent lockdown speaking to both the mainstream and specialist fund community. Our objective has been to assess the desire of funders of all types to make investments in the current environment.
What is clear is that the pain or otherwise being experienced by portfolio clients in Covid-19 times is the determinant of whether a fund is looking internally or for new investment opportunities.
It is encouraging that there is a sizeable number of funds targeting the mid-market who are actively seeking new investments and believe the current environment has brought about opportunities. In terms of solutions, some are seeking simply to provide bridging funding until the worst of Covid passes and are offering flexible leverage facilities with non-cash pay interest or margin or equity kickers. Others are being opportunistic and looking to acquire controlling positions in heavily Covid impacted businesses which otherwise might not survive. Additionally, there are still many funds who are prepared to look at money out transactions across a variety of sectors and others whose focus remains on funding growth.
The private equity and leverage fund community is adapting to these unusual times. Funders are prepared to be far more flexible in the current environment and deviate from their investment policy to offer different kinds of funding than they perhaps have become known for. By way of example, funds who have sought control positions are now open to making minority investments, equity funds are prepared to offer short term leverage and family offices or evergreen funds are considering even longer hold periods.
The focus of diligence also appears to have moved and now is more likely to be focussed on historic trading and market potential rather than hockey stick business plans. No sector, with the possible exception of retail, appears to be off the table amongst those we have spoken to and some funds are actively seeking investments in sectors brought to a standstill by Covid, such as hotels or cinema assets.
If you are looking for funding to realise your investment, finance growth or simply seeking bridge funding back to more normal times we at SPARK know where to find the capital. Please contact Matt Davis if we can be of any assistance.