Newsletter Edition 68
May 8, 2025
Lone Star to Return $3.5B to Investors Amid Exit Momentum
Lone Star Funds is preparing to return approximately $3.5 billion to its limited partners in the coming weeks, according to a Bloomberg report citing sources familiar with the matter. The move comes amid growing pressure on private equity firms to deliver liquidity and improve DPI (distributions to paid-in capital) performance.
The Dallas-based buyout firm recently generated about $1.8 billion in proceeds from the $4.35 billion sale of specialty chemicals company AOC to Japan’s Nippon Paint Holdings, achieving a return of more than 3x on invested capital.
Additional distributions will be fueled by Lone Star’s stake in Portuguese lender Novo Banco, which is expected to issue $1.1 billion in dividends in the near term. The value of this asset could increase further, with an IPO in preparation. Novo Banco CEO Mark Bourke recently confirmed that the bank's listing prospectus is “well advanced,” with a potential flotation as early as June.
Further cash returns are anticipated from portfolio companies including Titan Acquisition Holdings—a ship repair and fabrication business acquired from Carlyle Group and Stellex Capital in 2023—and GTT Communications, which has rebounded following a Chapter 11 restructuring.
The $3.5 billion payout comes at a time when limited partners are closely tracking DPI metrics, particularly as traditional exits remain constrained in a sluggish dealmaking environment. According to sources, Lone Star’s Fund XI, launched in 2019, has posted a 0.9x DPI, while its 2017 predecessor has achieved a 1.35x DPI. By comparison, a recent Goldman Sachs report showed that post-2019 PE vintages industrywide have returned just 0.1x, with 2015–2018 vintages averaging 0.6x by year four.
Founded in 1995, Lone Star manages more than $85 billion across private equity and credit strategies, with a focus on value-oriented investments in dislocated markets. The firm declined to comment on the reported performance metrics.
Granite Asia Closes $250M First Close for Debut Private Credit Fund
Granite Asia, the newly rebranded Asian arm of GGV Capital, has secured more than $250 million in anchor capital for the first close of its debut private credit fund, the Libra Hybrid Capital Fund, according to a report by Reuters.
Backed by leading Asian sovereign wealth funds, the first close also includes capital commitments from Granite Asia’s general partners and a network of long-standing founders and entrepreneurs. The firm is targeting a final close of $500 million.
The milestone comes ahead of the fund’s formal launch and reflects two accelerating trends in the region: growing institutional appetite for Asia-focused mid-market lending strategies and a broader pivot by global investors toward Asian growth markets amid continued macroeconomic volatility.
Libra Hybrid Capital marks Granite Asia’s entry into private credit and positions the firm among a rising class of alternative asset managers scaling private debt strategies in Asia-Pacific—a region that still represents a modest share of the $1.6 trillion global private credit market. Other firms, including Gaw Capital Partners and Kotak Alternate Asset Managers, are also raising $2 billion credit funds aimed at tapping similar demand.
The new fund will be co-led by Ming Eng, former Managing Partner at Orion Capital Asia, and Roger Zhang, previously Managing Director at Blackstone. It will focus on providing secured loans across the Asia-Pacific region, with an emphasis on delivering risk-adjusted returns and downside protection for investors.
Brookfield to Deploy $119B Dry Powder to Seize Market Dislocation Opportunities
Brookfield Asset Management is gearing up to deploy a portion of its $119 billion in dry powder to capitalise on global market dislocations, targeting high-quality real assets and credit opportunities amid tightening liquidity and rising credit stress, according to a report by Bloomberg.
In a letter accompanying its Q1 2025 earnings, CEO Bruce Flatt and President Connor Teskey highlighted the firm’s readiness to act on opportunities created by current volatility. “Brookfield is well-positioned and fully intends to capitalise opportunistically on market dislocations,” they wrote, citing mounting credit market strain and limited access to public capital as key drivers of private market demand.
The firm, which manages over $1 trillion in assets, raised $25 billion during the quarter, including $14 billion for its credit strategies. Brookfield’s flagship real estate fund brought in $5.9 billion in Q1, pushing total commitments to roughly $16 billion. Teskey noted that the current interest rate climate is creating opportunities to acquire distressed properties, particularly in constrained supply markets.
Private equity is also a key focus, with Brookfield planning to launch its next flagship buyout fund later this year. The firm deployed $16 billion in capital and recorded $10 billion in exits during the quarter.
Brookfield’s credit arm, led through Oaktree Capital Management, closed a $16 billion opportunistic credit fund in Q1. Teskey said structured credit investments—especially in infrastructure and PE—are seeing growing demand as traditional financing channels falter.
Fee-bearing capital rose 20% year-on-year to $549 billion, while distributable earnings grew 20% to $654 million, in line with analyst expectations. Net income rose 32% year-on-year to $581 million.
Since spinning out from Brookfield Corporation, the firm has deployed $1.4 billion across three new partnerships and increased its ownership in Oaktree to 74%. It recently agreed to take a majority stake in Angel Oak Companies, an $18 billion mortgage credit platform, and entered a new private debt partnership with Castlelake.
Brookfield sees a “compelling opportunity” to grow ownership in affiliated managers, potentially generating $250 million in additional fee-related earnings over the next five years. The firm also repurchased over 2 million shares in the quarter as part of its capital return strategy.