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Private credit managers expect more demand from investors following the pandemic, with many under-allocated to the asset class, panelists said at the virtual Permanent & Private Capital Summit this week.

David Miller, head of private credit and equity at Morgan Stanley Investment Management Inc., said private equity activity is "largely back to business," driving sponsor-backed direct lending activity. So long as middle-market private equity continues to raise capital across the next few years, there will be demand for more private credit.

"This notion that there is too much private credit out there — I would say no, there's probably not enough. Although people might debate that, I certainly think that will continue," Miller added.

Both Miller and Kipp deVeer, head of credit at Ares Management Corp., said they are speaking with investors who are either not exposed or underexposed to private credit.

The months following the outbreak of COVID-19 colored by subsequent lockdowns have been "another proven ground for private credit all round," deVeer said.

Before the pandemic, investors said they wanted to see "another cycle to make sure that the losses that a lot of folks expect investing in lower-middle-market companies don't come through in an unexpected way, and most of the managers in the space have done a good job mitigating that through COVID."

Ares has "seen a whole host of different types of investors from different geographies [that] want to be in the asset class because it's demonstrated good risk/reward, particularly with rates as low as they are," deVeer added.

Miller echoed deVeer's comments, adding that "this is a great asset class during this period of uncertainty around inflation rates rising, and I think it's very resilient and people have seen that. So there's a lot of interest, and we expect more capital to be raised."

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CHART OF THE WEEK: PE builds up construction and engineering M&A

➤ Private equity buyouts are fueling a revival in construction and engineering M&A, with announced private equity transaction value across the industry reaching $4.48 billion in the year to May 22, according to S&P Global Market Intelligence data.

➤ A total of 53 whole company and minority stake acquisitions by private equity firms have been announced in the sector in 2021 with the bulk of deals in North America and Europe, recording 25 and 24 transactions, respectively.

➤ Venture capital firms have invested a total of $330.6 million globally across 32 rounds of funding since Jan. 1.

FUNDRAISING AND DEALS

* KKR & Co. Inc. and Clayton Dubilier & Rice LLC are purchasing enterprise cloud software company Cloudera Inc. at $16.00 per share in cash, valuing the company at approximately $5.3 billion.

* EQT AB (publ) submitted a €1.8 billion preliminary bid to buy Telxius Telecom SA's submarine cable unit from Spanish telecommunications operator Telefónica SA, Reuters reported, citing Spanish news website El Confidencial.

* The Carlyle Group Inc. tapped Solebury Capital to assist with the potential IPO of specialty chemical producer Nouryon Cooperatief UA, people familiar with the matter told Bloomberg News.

Separately, the private equity firm and the minority shareholders of Integrated Dental Holdings Ltd. are selling the U.K. dental service group to a joint venture between Integrated Dental's management and Palamon Capital Partners LP.

* A subsidiary of Ares Management Corp. completed its purchase of Landmark Partners LLC.

ELSEWHERE IN THE INDUSTRY

* TA Associates Management LP amassed $12.5 billion for its 14th flagship fund and raised $1.5 billion for TA Select Opportunities Fund II.

* Funds managed by Digital Colony Management LLC's affiliates finalized the acquisition of Boingo Wireless Inc. for close to $854 million, including $199 million of assumed net debt obligations. The firm's affiliates also wrapped up the purchase of digital infrastructure company Landmark Dividend LLC.

* Trilantic Capital Management LP will add the on-demand manufacturing business of 3D Systems Corp. to its portfolio.

* Tiancheng International Investment Ltd., a unit of private equity firm Creat Group Co. Ltd., is exploring strategic options for its stake in German blood-plasma supplier Biotest AG.

FOCUS ON: SYSTEMS SOFTWARE

* KKR agreed to buy a minority interest in French business management software solutions company Cegid Group at an enterprise value of €5.5 billion.

* Carlyle is selling advanced analytics company Novetta Solutions LLC to Accenture Federal Services LLC.

* A Symphony Technology Group LLC-led investor group is purchasing FireEye Inc.'s products business in a $1.2 billion deal.