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Private equity remains resilient in the face of pandemic-induced volatility

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NEW YORK, Dec. 2, 2020 /PRNewswire/ — Published today, 2021 Global Private Equity Outlook, a report produced by global law firm Dechert LLP in association with Mergermarket, finds that private equity (PE) funds still have plenty of dry powder to invest and are far more agile and less risk averse than their corporate counterparts.

Key findings of the report, which examines how PE firms continue to successfully navigate unprecedented market volatility, include:

  • PE Industry Resilience – While the COVID-19 pandemic has caused widespread disruption across the global economy, the effect of the first wave on the private equity industry proved short-lived. After a short, sharp shock going into Q2 and many auction processes knocked off course, the sector rebounded impressively with total buyout activity in Q3 reaching US$148bn, exceeding levels in 2019 by 10%. The industry's resilience and ability to bounce back so rapidly should be a cause for optimism through the current wave of the pandemic alongside record sums of dry powder.
  • Private Credit – Private credit continues to grow in popularity, with 35% of firms having increased their use of these loans in the past 3 years, and almost half (49%) now using private credit as much as traditional bank financing in their buyouts. Greater flexibility on financing terms and ease of execution were cited as top benefits of this type of deal financing.
  • U.S. Election – While 58% of respondents believed a would-be second term for President Trump combined with Republican congressional control would have the most positive impact on the PE market, a clear electoral result for President Elect Joe Biden also is a relief for dealmakers.
  • Carve-outs – Carve-out activity looks set to spike, with 60% of respondents forecasting an increase in the number of carve-outs targeted by their firm. With current economic headwinds putting earnings under pressure, 33% of GPs cited corporates' need to pay down debt as the primary driver of this trend, with 21% pointing to a desire to conserve liquidity. Carve-outs are also a useful strategy for PE houses themselves— with 17% planning on carving out units of portfolio companies.
  • Getting Creative – 2020's challenging conditions have seen firms get creative across a range of deal types, with many options set to remain popular heading into 2021. 98% of respondents were likely to consider partnerships with strategic buyers, whereas distressed deals were being weighed up by 87% of firms. Structured equity investments also remain attractive, offering GPs flexibility, greater security and limiting downside risk.
  • Trade – Geopolitical concerns loom large for firms, particularly in Asia-Pacific. A quarter of APAC respondents cited the US-China trade conflict as the single greatest issue for the deal environment over the next 12-18 months, greater even than the COVID-19 pandemic. Beyond the trade war, new foreign investment rules set by countries including India, Japan and Australia look set to add new dimensions to trade considerations in the APAC region. Notwithstanding, Asia-Pacific saw an impressive 13% increase in buyouts compared to 2019.

U.S. and Germany-based Dr. Markus P. Bolsinger, co-head of Dechert's private equity practice, says, “GPs spent much of March through to June in 2020 in crisis management of their portfolios, making sure their businesses had sufficient capital, because people were initially fearing a potential capital crunch. However, once they put their houses in order and ensured that their portfolios were on a firm footing, things have returned to some degree of normality, especially on the transaction side. Funds are very active again. There was a shock, but it appears to have been relatively short-lived.”

UK-based PE partner Ross Allardice comments, “From a European perspective, in the second half of 2020, we have seen a strong appetite for healthcare and tech assets.  Some European Governments' actions to lock down early, along with aid schemes have helped soften the economic blow of the pandemic to some degree and enabled certain sectors such as healthcare and tech to cope with the economic disruption. Our view is that the European buyout market has held up well so far.  While major uncertainties and challenges remain, we anticipate that the private equity ownership model will prove its value across certain sectors in this crisis.”

Singapore-based PE partner Siew Kam Boon adds, “The Asia-Pacific region has been an outlier in terms of PE performance this year, with a well-managed and robust pandemic response across many nations resulting in a significant uptick in buyout activity compared to 2019. The top sector by considerable distance was TMT, followed by pharma, medical and biotech and this is expected to continue being the case through 2021, with a number of these being in the distressed and in the corporate carve-out space. There will also continue to be a push to expand into impact investments and growth investments for a number of the Asian sponsors.”

For private market fund managers, the mixed signals of an economic retraction and highly bifurcated market have presented a number of challenges, including revenue forecasting, making realistic portfolio valuations and pricing both acquisitions and exits. Nevertheless, a rise in activity in Q3 demonstrates how adaptive the PE industry can be.

Respondents showed a willingness on the part of respondents to diversify into other asset classes and embrace creative deal structures and this year is no different. Rather than retrench into comforting formulas, the PE industry recognizes the importance of responding to the market opportunistically—which bodes well for the asset class's resiliency during this uncertain period.

In the long term, PE stands to benefit from the sustained low rate, low-yield environment, as it has in the years following the Great Financial Crisis. The PE industry has been shown to outperform public markets in a downturn and this one should prove no different—especially considering the industry's war chest of US$1.7 trillion in dry powder.

Mergermarket surveyed 100 senior-level executives within PE firms with over US$500m or more in assets under management (and not first time funds) based in North America (45%), EMEA (35%), and Asia-Pacific (20%). The survey included a combination of qualitative and quantitative questions.

Click here to download the full report

About Dechert's Global Private Equity Practice
Dechert is a leading global law firm with 26 offices around the world. Our global team advises private equity, private credit and other alternative asset managers on flexible solutions at every phase of the investment life cycle. We form funds structured for market terms and tax efficiency; negotiate investments and advise on transactions and financings that maximize value; and structure and execute exits accomplished at the right time and delivering the best returns.

About Mergermarket 
Mergermarket is a business development and market intelligence tool designed specifically for the M&A sector and provides proprietary intelligence and analysis on corporate strategy across the world. With around 200 M&A journalists talking directly to senior executives, dealmakers and other key players in over 60 locations globally, Mergermarket reports on the whole deal life cycle, from mapping out companies' early stage strategic intentions to tracking deals before they develop and providing real-time news on live events, thereby creating a large window of opportunity. Subscribers can also mine for trends, patterns and deal ideas using Mergermarket's comprehensive deals database and regular data-driven editorial analysis and commentary. Visit www.mergermarket.com to learn more.

Contact Dechert LLP
Charlotte Sansom
Senior PR & Communications Manager EMEA
Tel: +44 20 7184 7415 Direct
[email protected]

Ashley Baldev
Senior Manager, Public Relations – US
Tel: (212) 649 8702
[email protected]

Contact Mergermarket
Lindsay Spivak
PR Manager, Americas
Tel: (212) 390-7853
[email protected]

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SOURCE Dechert LLP

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PenFed Credit Union Named 'Top Ten Military Friendly® Company for 2021' by VIQTORY Media

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TYSONS, Va., Jan. 25, 2021 /PRNewswire/ — PenFed Credit Union, the nation's second-largest federal credit union, today announced for the second year in a row it was selected by VIQTORY Media as a Top Ten Military Friendly® Company. PenFed is ninth on this year's list of Military Friendly Companies.

The independent list measures an organization's commitment and efforts in creating sustainable and meaningful career paths, community outreach, brand enthusiasm, and enduring partnerships for members of the military community. The full employers list and a profile celebrating PenFed will be published in the March 2021 issue of GIJobs Magazine®.

“PenFed is honored to once again be recognized by VIQTORY media for our commitment to the military community,” said PenFed Credit Union President/CEO and PenFed Foundation CEO James Schenck. “At PenFed, we celebrate the passion and resilience of veterans and military spouses. As our team of 2,700 financial professionals grows in 2021, we will continue our robust recruiting efforts within the military community.”

As part of an ongoing commitment to hiring and supporting the military community, PenFed operates a Military Employment Program focused on every phase of the employment lifecycle for all members of the military community – including veterans, military and surviving spouses, wounded warriors and their caregivers, Reservists and National Guardsmen.

In addition to spending 20% of its recruiting budget on hiring and retaining veterans and military spouses, PenFed collaborates with dozens of military employment organizations, as well as dozens of installation Transition Assistance Program offices, to enhance military employment efforts. Members of the military community interested in a career with a military-friendly company are encouraged to visit PenFed's designated Military Webpage. The military webpage allows members of the military community to join our military talent community and search for jobs based on their skillsets.

PenFed has a strong legacy of being a military-friendly company and donates 2% of its annual net income to charitable organizations, with the majority going to military charities. The PenFed Foundation, a national 501(c)3 founded by PenFed Credit Union, was created in 2001 and, since then, has provided more than $38.5 million in financial support to veterans, active-duty service members, families and caregivers.

About PenFed Credit Union

Established in 1935, Pentagon Federal Credit Union (PenFed) is America's second-largest federal credit union, serving over 2 million members worldwide with over $26 billion in assets. PenFed Credit Union offers market-leading certificates, checking, credit cards, personal loans, mortgages, auto loans, student loans, and a wide range of other financial services with members' interests always in mind. PenFed Credit Union is federally insured by the NCUA and is an Equal Housing Lender. To learn more about PenFed Credit Union, visit PenFed.org, like us on Facebook and follow us @PenFed on Twitter. Interested in working for PenFed? Check us out on LinkedIn. We are proud to be an Equal Employment Opportunity Employer.

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/penfed-credit-union-named-top-ten-military-friendly-company-for-2021-by-viqtory-media-301214097.html

SOURCE PenFed Credit Union

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INTENSE Cycles Adopts MSTS' Credit as a Service to Bolster Customer Payment Options

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OVERLAND PARK, Kan., Jan. 25, 2021 /PRNewswire-PRWeb/ — MSTS, a global B2B payment and credit solutions provider, today announced the launch of its Credit as a Service® (CaaS) solution for INTENSE Cycles, a leading manufacturer and retailer for mountain and racing bikes, parts, and gear. The technology will allow INTENSE Cycles to offer its dealers net terms and payment by invoice.

“In the past year, we've seen our customer base grow as more people take an interest in outdoor activities,” said Michael Ford, Director of Finance and Operations at INTENSE Cycles. “While flexible payments have always been top of mind for us, this increased demand further accelerated our need to extend credit. Given MSTS' deep expertise in serving business-to-business ecommerce and manufacturing customers, we knew they were the right trusted payments partner for INTENSE Cycles. We look forward to leveraging MSTS' technology to better serve our dealers and end customers now and into the future.”

Following the rise of stay-at-home advisories due to the COVID-19 pandemic in 2020, INTENSE Cycles saw an uptick in demand among bike enthusiasts and newcomers. Consequently, the company recognized the need for flexible payment terms and invoicing for its dealers that are increasingly purchasing larger quantities of bikes and parts. INTENSE Cycles adopted MSTS' white-labeled, payment solution which enables the extension of credit and invoicing at checkout on the company's ecommerce platform. As a result, dealers are able to bring a wider range of bikes, parts, and gear to store locations, ultimately improving the end-user purchasing experience.

“INTENSE Cycles' robust ecommerce platform showcases its true market leadership in the cycling industry,” said Brandon Spear, CEO of MSTS. “We're proud to provide the company with the technology necessary to free INTENSE Cycles from the logistics of payments processes, and instead, allow them to cultivate long-lasting relationships with its dealer network and end customers.”

To learn more about MSTS' credit and payment solutions, visit http://www.msts.com.

About MSTS

MSTS is a global leader in B2B payment and credit solutions, facilitating $6 billion in transactions per year in 17 currencies for customers in more than 190 countries. Our cutting-edge Credit as a Service® (CaaS) solution is setting the stage for the future of omni-channel B2B payments. The company specializes in payment and credit management for B2B companies across transportation, manufacturing and distribution, retail, eCommerce, and marketplaces. MSTS' Credit as a Service solution is a suite of applications and services that facilitates B2B payments by extending terms, handling invoicing and managing collections.

Media Contact

Sarah Erickson, MSTS, 312-561-2491, [email protected]

 

SOURCE MSTS

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Scholarships Available to Students in FCC Short-Term Workforce Training Programs

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FREDERICK, Md., Jan. 25, 2021 /PRNewswire-PRWeb/ — Students enrolling in non-credit courses at FCC leading to employment, licensure, or job skill enhancement are eligible to receive financial assistance through the Workforce Development Sequence Scholarship from the State of Maryland.

This scholarship is available to prospective students and those already registered in one of the specific course series for the spring semester (January 2021June 2021). Course sequences approved for these scholarships can be found here and include courses in automotive technology, child care, electrical, HVAC, welding, medical billing and coding, veterinary assistant, sterile processing, certified nursing assistant, and the Microsoft Foundation series. The maximum amount for the scholarship is $1,000.

To be eligible for this scholarship in spring 2021, students must fill out this online application and submit all required documents.

For more information, contact Treasure Mathis at [email protected].

Media Contact

Caroline Cole, Frederick Community College, (240) 629-7918, [email protected]

 

SOURCE Frederick Community College

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