10 Dec 2023
Investcorp, a leading global alternative investment firm, held a breakfast event, led by Investcorp Credit Management (“ICM”) Managing Partner and CEO Jeremy Ghose, and featuring Dr. Mohamed A. El-Erian, Investcorp International Advisory Board Member (IIAB) and renowned expert on global macroeconomics and finance. The ICM Seminar, held at the Investcorp London office, brought together over 40 attendees, providing unique insights for investors seeking to navigate an increasingly complex economic environment.
Jeremy Ghose said: “We are thrilled with the outstanding success of the ICM Seminar with Dr. Mohamed A. El-Erian, and it was a great honor for us to have him join us today. We would also like to express our gratitude to all the participants who contributed to making this event a dynamic and insightful conversation. At Investcorp, we are committed to providing our clients and partners with the best possible tools and resources to help them understand our fast-changing environment.”
Dr. El-Erian’s fireside chat covered a variety of topics, including global macro and the new world paradigm, interest rates, geopolitics, the US presidential election, private equity, and private debt. In his remarks, Dr. El-Erian provided his perspective on the impact that a new era of higher interest rates and more patchy liquidity will have on pension funds, the private equity market as well as on government debt and the upcoming corporate debt maturity wall which will need to be refinanced. In addition to his analysis of how the growth patterns of the past decade have influenced election outcomes across the globe, he highlighted that there are reasons to be more optimistic about future medium-term growth given the developments in GenAI, life sciences and the energy transition.
Of particular interest were Dr. El-Erian’s insights on Japan, which is currently facing approximately 3% inflation for the first time in its history. In sharing how Japan needs to exit its Yield Curve Control (YCC) regime, Dr. El-Erian highlighted that “what happens in Japan may not stay in Japan” alluding to the impact on global markets if Japan’s YCC exit were to prove disorderly.
Dr. El-Erian’s remarks were complemented by comments from Jeremy Ghose and Dom Wood from Spartan Partners discussing the challenges that increased volatility presents to investors, as well as preferred credit strategies for these conditions. Mr. Ghose provided his unique perspective on what investors can expect from the market in 2024-2025, stressing how only experienced managers will be able to navigate the anticipated rise in default rates in the months to come and how ICM differentiates itself from other managers by proactively managing key KPIs that have a track record of delivering strong risk-adjusted returns.
Commenting on the refinancing wall, Jeremy noted that: “the better companies are refinancing early” while the ones that are not in a position to do so will be the ones facing issues in the next 18-24 months. Moreover, he forecast that private equity activity will pick up in the year ahead, with new deals anticipated to see a staggering 50-50 debt-to-equity ratio.