How the Private Market Has Responded During Times of Capital Market Volatility

12.06.17
 

Prudential Capital's Brian Thomas, Dianna Carr and Michael Campion describe how the private placement market responds to businesses during times of capital market volatility.

 

The private placement market is often seen as more stable than the public debt markets, and is “open for business” at times when the broader public debt and financial markets are “closed,” particularly during periods of crisis.

The capital companies can access from the private placement market is on a negotiated basis, sourced outside of traditional public issuances or bank market funding. The private placement market is largely comprised of insurance companies, pension plans and other institutional investors.

Private placement providers differ from banks in that the capital they have to deploy is traditionally more stable than the capital the bank market relies upon; reason being that insurance companies and pension plans are not materially exposed to the same short-term liquidity risk. This was most acutely demonstrated during the 2008-2009 financial crisis, as many private placement lenders continued to provide capital, while many banks limited their lending availability to preserve corporate liquidity, and the public markets also seized up.

In general, the private placement market consistently demonstrates its ability to remain open during a crisis (see example) and finds a way to fund the capital needs of companies during periods when the public debt markets and/or the bank market may not be accessible. Private placements also offer longer maturities (typically 3-12+ years). Thus, the private placement market is typically characterized as being patient and long-term focused, it does not react rashly to short-term, temporary dislocations in market appetite.

 

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Anna Sabiston
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Brian Thomas

Brian Thomas is the Managing Director of Prudential Capital Group's Energy Finance Group: Oil & Gas and oversees the private placement activity in Prudential Capital's oil, gas and related energy investment activities worldwide. He joined Prudential in 1995.

Thomas received a BBA and an MBA from the University of Texas at Austin.

 

 

Anna Sabiston
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Dianna Carr

Dianna Carr is a Senior Vice President in Corporate Finance for Prudential Capital Group, located in Chicago. She leads a team responsible for marketing, originating and managing private placement and mezzanine investments in Michigan and Wisconsin. She joined Prudential in 2000.

Dianna received a BA from Michigan State University and an MBA from Northwestern University's Kellogg School of Management.

 

 

Anna Sabiston
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Michael Campion

Mike Campion is a Senior Vice President in Institutional Asset Management for Prudential Capital Group, located in Newark. He is assistant portfolio manager for Prudential Capital Group’s affiliated and non-affiliated accounts, including primary responsibility for the Gibraltar and POJ sub-advisory portfolios. Mike is also responsible for overseeing new deal allocations, performance related analysis and various analytical portfolio management functions. Mike joined Prudential in 1997. Prior to transferring to Prudential Capital in 2003, he worked in PGIM Investment Operations supporting Prudential Capital.

Mike received a BS from Lehigh University and an MBA from Rutgers University.