Downmarket Dealmaking

On the face of it, the economy looks like it’s in really bad shape. The reality is there’s a lot of money still being put to work.

Private equity firms have been striking deals left and right, though not the classic takeovers. Instead, they’ve been making structured investments in public and privately held firms in search of funds.

Goldman Sachs Chief Financial Officer Stephen Scherr, in a call with analysts this week, cited winning work on convertible-note offerings by Wayfair and Twitter, which announced a $1 billion investment from Silver Lake last month. And Christina Minnis, Goldman’s head of Americas credit finance group, told me in a Bloomberg Television interview that private equity firms are increasingly eyeing PIPEs -- private investment in public equity, that is -- as they put to work record amounts of dry powder.

“It’s been $8 billion done since the crisis started, it’s a form of capital they’ve deployed in prior crises as well, there’s been a lot of capital raised,” Minnis said. “The private equity players will continue to be quite active.”

There have been more interesting private deals. Airbnb announced it lined up $1 billion in debt this week, and my colleagues broke that Silver Lake and Owl Rock -- a relatively new credit firm -- were among the investors. It’s put the IPO timeline in question for the company.

Our new reporter Katie Roof broke another spate of private financings, with Robinhood looking to raise money at an $8 billion valuation and financial technology firm Carta seeking funds as well, at a major valuation bump from its last round.

Some of Wall Street has even been beaming. Trading in the first quarter was the strongest in eight years, and underwriting held up as debt businesses gained. And come Friday, even the riskiest part of the debt markets began to open up again. In recent weeks, companies like Hilton, Marriott and Spirit Airlines were all able to tap markets despite concerns about travel.

For the traders, the big question is whether the boom times can hold up. Here’s a piece by Bloomberg Opinion’s Elisa Martinuzzi that breaks it down better than any other.

And while Wall Street gained, the consumer is still falling behind. JPMorgan, Bank of America, Wells Fargo and Citigroup posted billions in provisions for loan losses -- and expect matters to only get worse in the near term.

Scott Minerd, who runs $265 billion at Guggenheim Investments, said he believes the S&P can fall as low as 1,200, and that it will be a “long haul” before we get back to unemployment levels we saw before. Here’s the full interview, for Bloomberg Television.

More on Wall Street

• Morgan Stanley CEO James Gorman made the decision, by and large, not to cut jobs this year. “Psychologically, I think it would be a disaster,” he told analysts on a conference call this week. Hours later, my colleagues broke that Cantor Fitzgerald plans hundreds of job cuts.
• Credit managers are seeking billions for new funds, including at Oak Hill, Fortress, and Angelo Gordon. Oaktree is seeking a record $15 billion distressed fund, my colleagues broke. That’s almost as much as the total sum Howard Marks’s firm has already dedicated to that strategy.
• Some hedge fund superstars have lost a lot of money. But for the star managers, wallets are opening up.

It has been a very long week. There’s much more to come for the next one. Tips and ideas always welcome at [email protected].

Sonali