Great read, as always! The irony is that back in 2015, KKR’s global head of energy and infrastructure had a couple of deals blow up. It was Marc Lipschultz, who later left and co-founded Blue Owl, which now sits at the epicenter of SaaS lending.
Apollo backed several midstream and upstream teams on the equity side during this time too. The space was over levered and undergoing a generational spend in capex... similar to AI today. In many ways, the AI capex treadmill is similar to a shale well.
Excellent case study! I appreciate the balanced insider perspective and drawing parallels with an era of PC that predates most journalists' and current investors' collective memory of the space.
Wonderful article. Relatedly, I am trying to size whether the drawdown in public BDC's are too far.
Here is my math to see if you or other experts agree. Let's say you have 30% software exposure. I will assume 30% cumulative default rate over the full loan cycle (GFC type losses). So that is 9% of NAV at risk. then i assume they get 20% of that back ultimately - (low level) 7.2% losses now. if p/nav is 1.2x (or whatever mutliple one likes), that is 8-10% stock price hit. BDCs have priced in way worse. Any reactions ?
Great read, as always! The irony is that back in 2015, KKR’s global head of energy and infrastructure had a couple of deals blow up. It was Marc Lipschultz, who later left and co-founded Blue Owl, which now sits at the epicenter of SaaS lending.
Interesting, didn’t make that connection.
Great article and recount of history The conclusions are very sensible and not unexpected.
Apollo backed several midstream and upstream teams on the equity side during this time too. The space was over levered and undergoing a generational spend in capex... similar to AI today. In many ways, the AI capex treadmill is similar to a shale well.
Very true.
Excellent case study! I appreciate the balanced insider perspective and drawing parallels with an era of PC that predates most journalists' and current investors' collective memory of the space.
Wonderful article. Relatedly, I am trying to size whether the drawdown in public BDC's are too far.
Here is my math to see if you or other experts agree. Let's say you have 30% software exposure. I will assume 30% cumulative default rate over the full loan cycle (GFC type losses). So that is 9% of NAV at risk. then i assume they get 20% of that back ultimately - (low level) 7.2% losses now. if p/nav is 1.2x (or whatever mutliple one likes), that is 8-10% stock price hit. BDCs have priced in way worse. Any reactions ?