Dealmaking activity has recovered slightly in the first half of this year. However, the delay in interest rate cuts has complicated matters, partners at Goldman-backed private equity house Petershill Partners said today.
“Following a slower deployment year in 2023 for new Partner-Firm M&A, activity has picked up – we have closed three transactions in recent weeks and are continuing to evaluate opportunities,” partners Ali Raissi-Dehkordy and Robert Hamilton Kelly said.
“Crucially, we have maintained our high bar for new acquisitions as we seek out high performing sector specialist Partner-firms,” they continued.
After the end of the quarter end, Petershill acquired a stake in Kennedy Lewis for $150m (£118m), an alternative credit manager with over $14bn (£11bn) in assets under management (AuM).
However, the firm also noted that “industry-wide realisations continue to be muted, which may reflect macro uncertainty with less visibility on the path to a reduction in rates.”
“As we look forward, our Partner-firms’ robust capital raising and the Company’s dynamic approach to capital allocation underpins our ongoing confidence about our prospects for shareholders,” the partners said.
The comments came in a trading update covering the first quarter of the year. In the three months to March, AuM increased by three per cent compared to the quarter before, rising to $312bn (£245.2bn).
Partner fee related earnings were $51m (£40m) in the first quarter, four per cent higher than in the same period last year. This reflected the fact that net management and advisory fees were 13 per cent higher.
However, partner distributable earnings in the quarter were seven percent lower than last year’s at $57m (£45m), reflecting lower realised performance revenue.
Petershill re-iterated guidance given in its full year results in March.
“Whilst the broader industry continues to see constrained levels of activity, we see good value in Petershill,” analysts at Peel Hunt said.
Petershill’s shares have lost over 40 per cent since the firm was floated in September 2021. The firm was founded by Goldman Sachs Asset Management in 2007 and owns stakes in 25 alternative asset managers, earning a portion of their fee income.