The State of Sponsor Finance with Tom Amster

This week’s episode of Industry Insights brings together three critical themes shaping today’s private equity landscape: the resurgence of sponsor financing activity, the competitive dynamics between private credit and syndicated loan markets, and the strategic evolution of exit alternatives in an increasingly differentiated fundraising environment.

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Market Recovery and Financing Competition

The financing perspective reveals a market that is “absolutely back.” After two years of uneven activity interrupted by tariff-driven volatility, sponsors are returning to market with expanded financing options and unprecedented flexibility.

Tom Amster, Global Head of Financial Sponsor Coverage at Macquarie Capital, joins hosts Julie Miecamp and Michael Haley to frame the current environment as an “incredible moment for private equity from a financing standpoint.” The competition between broadly syndicated loan markets and private credit has created record low pricing, with private credit offering SOFR+450 for best-in-class credits while syndicated markets respond with equally aggressive terms.

Key developments include:

• Record repricings and dividend recaps earlier in the year
• Broad-based recovery across technology, aerospace and defense, healthcare, and infrastructure sectors
• Growing importance of data centers and AI-driven infrastructure investments
• Sovereign wealth funds increasingly co-investing alongside traditional sponsors

IPO Window and Exit Strategy Evolution

The sponsor-backed IPO market has reopened with durable fundamentals. The conversation shifts to public market exits, where leverage expectations and valuation arbitrage are driving selective but meaningful activity.

Recent transactions demonstrate market appetite across diverse sectors:

• Alliance Laundry (MSD Partners) currently in market
• Blackstone’s Allegiance in September
• Platinum Equity’s McGraw Hill Education over the summer
• Altamont’s Accelerant Holdings in insurance brokerage

Two primary drivers fuel IPO activity:

1. Valuation arbitrage where public market pricing exceeds private market alternatives
2. Scale constraints for portfolio companies with $1-1.5 billion EBITDA that lack viable strategic or sponsor buyers

The market’s tolerance for leverage varies by sector, typically requiring three times leverage or less, with proceeds often directed toward debt reduction rather than sponsor distributions.

The Decade of Differentiation and Liquidity Innovation

The discussion expands to fundraising trends and what Amster characterizes as “the decade of differentiation.” Unlike the 2012-2022 period when near-zero interest rates and readily available leverage created broadly favorable conditions, the current environment rewards performance-driven differentiation.

Winners in the fundraising environment include:

• Veritas raising $14.4 billion, 35% above target
• Bain closing their largest fund at $14 billion
• Stone Point exceeding hard cap by $2.5 billion at $11.5 billion
• CVC’s record $29 billion fund and CDPQ’s $26 billion raise

Continuation vehicles have emerged as a durable liquidity solution, addressing the fundamental challenge of selling best-performing companies while retaining underperformers. These GP-led single asset continuation vehicles represent permanent additions to the exit toolkit alongside IPOs, recapitalizations, and traditional M&A.

Closing Insights

The episode concludes with rapid-fire market indicators: CVs as the most watched trend, effective advisor management as an underutilized tool, and communication as the essential leadership habit during market volatility.

Tom’s perspective emphasizes that while interest rate cuts provide supportive conditions, investment success fundamentally depends on deal selection, portfolio management, and strategic exit execution rather than financing costs alone.

Listen & Subscribe

Listen now on Apple Podcasts, Spotify, Amazon Music, or wherever you get your podcasts.

Produced and edited by two-time Emmy Award-winning producer Tanya Hubbard.