200+ $30Bn+ A leading global software employees Funds under Management and services investor solutions that work for everyone. We put a lot of gaps in the market that funds are filling, but equally emphasis on transparency and doing the right thing. banks will continue to pick their spots. But there’s also a great alignment between Ardian’s strategy and ours in terms of the types of situation MB: There will continue to be situations where bank we focus on – subscription business software, for financing makes sense for every sponsor, especially example – and the way both our activities have in the large-cap market. But we believe bank scaled over the past few years. Ardian’s growth competition in the European mid-market will continue in AUM is important because those who have the to reduce. Europe is fundamentally over-banked scale to provide all the finance we require stand out and returns on equity are too low – if anything when the alternative is stitching a deal together with that’s being accentuated by the current situation, 15 counterparties. while the private debt market has performed well overall. That said, within the fund market, we believe MB: Private debt fund financing comes at a premium the big, well-established players will get bigger and to bank lending, so Hg won’t take that route unless the smaller names with shorter track records will find it makes sense for their returns. Ultimately, we it harder to raise follow-on funds. have to support and accelerate their equity thesis, whether that’s acquisition-led growth or investment JC: We’re excited about the future for private debt in organic growth, and in many cases private debt fund finance. The growth drivers are strong and there fund financing can do that because it brings greater is no material or discernible sign of them changing. flexibility. That’s where you see one of the benefits Institutional investors will continue to seek out the of a bilateral relationship – it’s a much less complex return profile they can get in private markets, given situation. the comparatively different risk adjusted returns available in some pockets of public markets, and JC: The reality is that we work with banks and the long-term growth of private equity assets will private debt providers. People talk about fund naturally create more opportunities for private debt finance disintermediating banks, but I don’t see providers. We see private debt fund finance going it as disintermediation as much as differentiation. in one direction and, as it does so, we expect to see Not every situation is suited for bank funding. With more sub-strategies, more specialization and more some of our businesses it’s a question of their size, choice for sponsors. or we choose to capitalize a little deeper than a bank is willing to go, or we want certain flexibility or features, or we have short deadlines. There are 2020 ACTIVITY REPORT 103