Capital providers are storming into 2024 with guns blazing, given most fell short of their deployment goals last year. That said, closing a capital raise deal this year will be akin to threading a needle in low light – everything will have to line up perfectly and there is no margin for error.
Five Things to Consider if Raising Capital in 2024:
1. Be Ready to Opportunistically Time Market Conditions
- Macro and geopolitical tensions keep investor sentiment highly fragile; favorable issuance windows may be short-lived
- Prospective borrowers / issuers may benefit from early legwork – thus reducing “time-to-market” when capital is needed
2. There’s Plenty of Dry Powder, but it’s Increasingly Selective
- Investors are ever more discerning when deploying capital; be prepared for deeper and more invasive diligence processes
- While pristine businesses are garnering competitive interest, complex stories are requiring more concessions from issuers
3. Go Broad – No Two Capital Providers are Alike
- Private credit and structured equity continue to attract new players – each with a unique approach toward capital deployment
- Creative solutions are key to getting deals done in the current environment; broad processes ensure no stone is left unturned
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4. Seek Opportunities to Preserve Cash
- Lenders are hyper-focused on deteriorating interest coverage ratios and will thoroughly scrutinize cash flow forecasts
- In a higher-for-longer rate environment (SOFR > 4%), non-cash interest optionality may be critical to balance sheet health
5. Expect More Calls from Asset-Based Lenders
- Capital continues to funnel into asset-based finance as allocators seek to diversify lending strategies and hedge inflation risks
- As traditional lenders / banks pull back, private credit is stepping in to aggressively take wallet share
Structuring highly competitive processes to navigate current market conditions and find the perfect capital source continues to be critical. Intrepid brings a full arsenal of resources to help clients achieve their capital raising goals.