Billionaire Bravo Girds for Wave of Software M&A: Milken Update

(Bloomberg) -- Private-equity billionaire Orlando Bravo said he expects a wave of consolidation in the software industry and that it’s one of the best places for investors to put their money to work.Most Read from BloombergGoogle’s Biggest Moonshot Is Its Search for a Carbon-Free FutureA $30 Billion Fortune Is Hiding in China’s Silicon ValleyThe Biggest Public Graveyard in the U.S. Is Becoming a ParkGoogle’s CEO: ‘We’re Losing Time’ in the Climate FightHate-Speech Case Forces Japan to Confront W Read More...

(Bloomberg) — Private-equity billionaire Orlando Bravo said he expects a wave of consolidation in the software industry and that it’s one of the best places for investors to put their money to work.

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“There is more deal opportunity than there is capital,” the Thoma Bravo co-founder said Tuesday during a Bloomberg Television interview at the Milken Institute Global Conference in Beverly Hills, California.

Bravo said the pandemic forced executives and other leaders to think differently about the digital world, noting that technologies already existed to help students and workers operate remotely. “What did the world do?” he said. “They embraced these technologies. We’re not going to go back.”

Distressed Investors Pouncing Late Is ‘Disaster’ (1:36 p.m. NY)

Lenders are no longer able to take over companies until they’re much closer to dying, according to Michael Patterson, a governing partner at HPS Investment Partners.

Investors previously might have been able to buy debt at 70 cents on the dollar and take over a struggling company by converting debt to equity. Now, money managers are more likely to buy debt at 20 cents on the dollar for a recovery at 40 cents, he said late Monday.

“You’ve got to wait for them to literally not be able to pay the electric bill,” Patterson said. “That’s a disaster.”

‘How to Hybrid’ Vexes BMO Asset Management CEO (1:17 p.m. NY)

Bank of Montreal asset management chief Kristi Mitchem said embracing hybrid work won’t be as easy as some business leaders assume.

After a period of entirely remote work during the pandemic, adjusting to a model where employees are in the office part time will involve trial and error, she said.

“The hard question is how to hybrid, so when you begin to think about some people being in and some people being out, it raises all of these questions,” said the chief executive officer of BMO Global Asset Management. “I don’t think we’ll get it right the first time. I think it’s going to be an experimentation process.”

Carlyle Executive Talks Up Private Credit Boom (12:45 p.m. NY)

Lower rates, a hunt for yield and more companies going private and staying that way for longer have all contributed to the huge growth in private credit markets, said Mark Jenkins, the global head of credit at Carlyle Group.

Private credit has increased from roughly $300 billion to more than $1 trillion over the past decade or so, partly fueled by banks retreating from lending, he said. While valuations have risen across the board in all asset classes, especially in equity markets, it’s not a particular worry for lenders.

“That’s a good thing for us from a credit perspective because it gives us a bigger margin of safety for the lending that we’re doing,” he said during a Bloomberg Television interview at the conference.

Oaktree’s Marks Says Son Lectured Him on Bitcoin (12:24 p.m. NY)

Oaktree Capital Management co-founder Howard Marks said his son Andrew, who lived with him during the pandemic lockdown, lectured him daily on dismissing Bitcoin without knowing enough.

“And he was right,” Marks said.

Marks famously criticized Bitcoin and other cryptocurrencies in a 2017 memo. “Nobody has been able to make sense to me of these currencies,” he wrote at the time. “They’re not real!!!!!”

In a memo earlier this year, though, the investor’s tone had shifted. The earlier skepticism “has been a source of much discussion for me and Andrew, who is quite positive on Bitcoin and several others and thankfully owns a meaningful amount for our family.”

Distressed Investor Marks Says ‘Nothing Is Distressed’ (11:47 a.m. NY)

There are fewer assets that satisfy the criteria for distressed investing, which include being under-appreciated, unknown or not understood, said Oaktree’s Marks.

“Strictly speaking, nothing is distressed,” he said, adding that excesses in valuations and availability of cash have made investing unusual for more than a year. “It’s tough at the time.”

He was asked how to determine value during a pandemic. “It’s hard to operate in a world where things are worth infinity,” Marks said of assessing companies when they’re growing faster than the discount rate. “It makes it hard on a value investor.”

Minerd Likens Crypto ‘Garbage’ to Dot-Com Bubble (11:07 a.m. NY)

The majority of cryptocurrencies are worthless and will fail, with just a handful of big winners remaining, Guggenheim Partners Chief Investment Officer Scott Minerd said.

Similar to the dot-com boom of the late 1990s, the world of digital currencies will produce some breakout successes like Amazon.com Inc., which went public in 1997, while most of the field will fade away, as Pets.com did, he said.

“Seventy percent of the coins are garbage and will go away,” Minerd said in a Bloomberg Television interview at the event.

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