Good morning, ! It's Wednesday and we're covering private equity’s residential real estate opportunity, continuation funds are outperforming traditional vehicles, and ESG is positioning itself as a top value creation lever.

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DATA DIVE

The $45 Trillion Question: Can PE Crack the Code on U.S. Housing?

U.S. residential real estate now commands a $45.4 trillion valuation, larger than the U.S. equities or Treasuries markets. Of that, $31 trillion is homeowner equity, a capital base surpassing the combined GDPs of China, Germany, and Japan. This is no longer just a consumer macro stat, it’s a balance sheet that institutional capital can’t ignore.

The bull run in home prices, fueled by migration, low-rate refinancing, and supply constraints, has locked homeowners into sub-4% mortgage rates, freezing mobility as new buyers face 7%+ borrowing costs. But asset values remain sticky, and the existing home market—85–90% of transactions, is showing signs of a rebound. Sales are projected to rise 12% by 2026, opening a window for platforms playing the iBuy, resale, and rental conversion trade.

Yet institutional ownership still holds just ~2% of single-family rentals. That leaves a runway, but also political heat. As affordability craters and Millennials age into buying years, PE-backed strategies must walk the line between scale and scrutiny. Build-to-rent stays hot, but faces zoning friction and cost inflation.

The bottom line: This isn’t just a real estate story. It’s a generational shift in where and how capital finds duration. For PE, U.S. housing isn’t just shelter, it’s strategy. (Read or Listen to the Full Report)

PRESENTED BY INSURANCE 150

Lost Bags, Found Margins

The baggage insurance market is moving from afterthought to front-runner. Globally projected to double from $17.3B to $32.7B by 2033, this segment is riding a tailwind of digitized distribution and surging travel volume. Platforms are embedding coverage directly into bookings, leaning on APIs and data to turn a passive upsell into sticky revenue. Top offenders like Delhi’s Gandhi International and U.S. carriers like Southwest are offering insurers both a headache and an underwriting roadmap. Bottom line? Lost luggage isn’t a risk. It’s a growth lever. (Read or Listen to the Full Article)

TREND OF THE WEEK

ESG Gets Off the Pitch Deck

ESG is back—but this time it’s playing the long game. While only 8% of European PE pros currently see ESG as a top value creation lever, that figure is expected to jump to 13% by 2029, per Statista. Meanwhile, ESG-designated funds now make up 21% of global private capital raised in 2024, with infra funds (44%) leading the way.

Zoom out: ESG’s shifting from a box-checking exercise to a baked-in operational layer. Still, the IRR gap remains: ESG funds return 13.5%, vs. 15% for non-ESG funds. But LPs aren’t chasing alpha alone—they want measurable impact, not marketing fluff.

Bottom line: ESG has moved from virtue signaling to balance sheet strategy. Now GPs just have to prove it can outperform doing good and doing well. (More)

PRESENTED BY PACASO

Top investors are buying this “unlisted” stock

When the team that co-founded Zillow and grew it into a $16B real estate leader starts a new company, investors notice. That’s why top firms like SoftBank invested in Pacaso.

Disrupting the real estate industry once again, Pacaso’s streamlined platform offers co-ownership of premier properties – revamping a $1.3T market.

By handing keys to 2,000+ happy homeowners, Pacaso has already made $110m+ in gross profits.

Now, after 41% gross profit growth last year, they recently reserved the Nasdaq ticker PCSO. But the real opportunity is now, at the unlisted stage.

Until May 29, you can join Pacaso as an investor for just $2.80/share.

Invest before the window closes.

_{This is a paid advertisement for Pacaso’s Regulation A offering. Please read the offering circular at invest.pacaso.com. Reserving a ticker symbol is not a guarantee that the company will go public. Listing on the NASDAQ is subject to approvals. Under Regulation A+, a company has the ability to change its share price by up to 20%, without requalifying the offering with the SEC.}

LIQUIDITY CORNER

Continuation Funds Are Beating the Curve

Private equity's liquidity puzzle has a new piece: the continuation fund. According to Morgan Stanley’s expanded dataset ($160B across 150 deals), CVs are outperforming traditional buyouts, both in aggregate and by vintage. 

The standout? Top quartile CVs at 1.8x MOIC, compared to buyouts at 1.6x. Investors seeking rapid appreciation should note: multi-asset CVs show tighter dispersion and stronger median returns. Meanwhile, the GP-led market is splitting into haves and have-nots—elite firms dictate timelines and terms, while the mid-market lags in execution and pricing power. The rules of the secondaries game are being rewritten. (More)

DEAL OF THE WEEK

Thoma Bravo Closes the Book on Nasdaq

Thoma Bravo has officially cashed out of Nasdaq, liquidating its entire stake in a multi-phase exit totaling $3.4B. The final tranche? 25.5 million shares offloaded to JPMorgan at $80.68 per share. This follows a $1.35B sale on May 7 and a $2.72B offering last July, all stemming from Nasdaq’s $10.5B acquisition of Adenza, a fintech platform previously owned by the firm. Classic playbook: turn a strategic M&A payout into phased, high-value exits. While Thoma Bravo walks with cash in hand, Borse Dubai remains Nasdaq’s largest shareholder—for now. (More)

PRIVATE CREDIT

Has Private Credit Lost Its Momentum?

For the first time since the post-COVID rate reset, the leveraged loan market is showing signs of cooling. Yields to maturity dropped to 8.6% in 2024, down from the 10.1% peak in 2023 and the 10.0% surge in 2022. That’s still elevated relative to pre-2022 levels—but momentum matters, and the momentum is fading.

After a historic run fueled by rising base rates, spread widening, and capital scarcity, private credit’s return profile may be normalizing faster than LP expectations. Back in 2021, yields sat at just 4.2%, sub-inflation in real terms. The jump to double digits was a gift. But with the Fed signaling a plateau and risk appetite returning to syndicated markets, sponsors may have more financing options in 2025 than they did last year.

If yields continue to slip while risk structures remain aggressive, private credit faces a double bind: spread compression without a corresponding reduction in risk. For allocators, the golden era of private credit might not be over, but the risk-reward calculus is shifting.

The bottom line: It's no longer about access to yield. It’s about defending it.(More)

MICROSURVEY

Private equity strategies continue to evolve, with firms prioritizing different levers to unlock value. We're interested in where you see the greatest potential today.

MACROVIEW

The 90-Day Bluff

After dragging each other through a multi-year economic cage match, the US and China have declared a 90-day tariff ceasefire. The reprieve dropped reciprocal duties from a suffocating 145% to just 10%, and markets cheered. But don’t mistake volatility suppression for peace. This is a classic Nash equilibrium—where neither side can improve without risking a worse outcome.

The underlying driver? Mutual economic disruption: Chinese factories were collapsing, while US bonds flirted with instability. The chart says it all: even at peak tension, bilateral trade remained robust. Expect M&A teams to use this temporary window to reassess China exposure, lean into nearshoring, and prepare for Round 27 of this infinite game. (More)

THIS WEEK IN HISTORY

May 17, 1792: The Buttonwood Agreement Is Signed

Under a buttonwood tree on Wall Street, 24 brokers and merchants signed a simple, two-sentence pact that would shape global finance for centuries: the Buttonwood Agreement. The terms? Trade securities only among themselves, and do so on a commission basis. With that, the New York Stock Exchange was born.

At the time, America’s capital markets were embryonic. Government debt was the only game in town. But as industrialization accelerated, that pact laid the institutional groundwork for the world’s deepest and most liquid equity market. From a handshake under a tree to a $40+ trillion behemoth, the NYSE has become the model for capital formation, price discovery, and shareholder capitalism.

For private equity, the NYSE's creation is more than historical trivia, it’s the origin of the modern exit. IPOs remain a core pathway to liquidity (when windows are open), and public valuations still set the reference point for private deal pricing.

The bottom line: Every sponsor looking for a public market exit is walking a path that started under that tree. (More)

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TWEET OF THE WEEK

"I find that the harder I work, the more luck I seem to have."

Thomas Jefferson