Where Energy Capital Stops, PE Starts

Good morning, ! It's Wednesday and we're covering how energy is shifting its sources and how private equity can create value backing the energy transition. Disney agrees to acquire the remaining stake in Hulu with a $438M deal, HSBC is expanding its private credit playbook with a $4B move. 

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DATA DIVE

$2.1T and Still Behind: The Energy Transition’s Double Bind

Global energy transition investment hit a record $2.1 trillion in 2024, but here’s the twist: that’s still just 37% of what’s needed to hit net zero by 2050. Most of the capital is crowding into “mature” plays—renewables, EVs, and grids—leaving emerging sectors like CCS, hydrogen, and clean shipping underfunded and underdeveloped. Private equity is being called to do what it does best: absorb risk, scale what works, and build operational muscle where institutional capital won’t tread (yet). Think of it as distressed investing—only with more solar panels. (Read or Listen to the Full Report)

TREND OF THE WEEK

Europe’s Valuation High Wire

In the latest Bain report, Western Europe has taken the lead with record-high buyout multiples, reaching 12.1x EBITDA, surpassing North America’s 11.9x. This marks a 5% increase over Europe’s 2023 figures and an 11% jump above its five-year average. North America’s multiples, while rebounding, remain just 3% above their five-year norm.

The divergence suggests European dealmakers are embracing higher valuations, possibly betting on future growth or strategic synergies. Meanwhile, their North American counterparts appear more cautious, perhaps reflecting differing economic outlooks or risk appetites. (More)

LIQUIDITY CORNER

The Halfway House of Liquidity

Private equity’s latest escape hatch? Hybrid liquidity solutions—where GPs raise cash without hitting the eject button. These deals blend partial asset sales and recaps, offering LPs their pound of flesh while GPs cling to upside.

The toolkit: mezzanine debt, preferred equity, convertible notes—once exotic, now practically mainstream. The hybrids straddle the line between debt and equity, giving portfolio companies growth ammo without forcing a full exit.

Why now? With IPOs in hibernation and M&A less reliable than a politician’s promise, firms need new ways to unlock value. As Morgan Stanley puts it, hybrids are no longer cute; they’re critical. (More)

DEAL OF THE WEEK

Disney Writes a $438M Check to End Hulu Saga

The nearly two-decade joint venture between Disney and NBCUniversal over Hulu is finally closing the curtain. Disney will pay an additional $438.7 million to NBCU, bringing its total tab to $8.6 billion + $438M to gain 100% control of the streaming platform. The valuation process was a drama in itself: Disney’s appraisers lowballed, NBCU’s went high, and a third appraiser split the difference—landing Hulu’s valuation at ~$29B. The deal, expected to close by July 24, ends an era of tangled ownership and paves the way for deeper integration of Hulu, Disney+, and the upcoming ESPN DTC offering. One less JV headache for Bob Iger, and perhaps one more revenue synergy opportunity for Disney’s streaming ambitions. (More)

PRIVATE CREDIT

HSBC’s $4B Bet: Banking Muscle Joins the Direct Lending Arms Race

HSBC is injecting $4 billion into its own private credit funds, an aggressive play to catch up in a market that’s grown too big for banks to ignore. The goal: build a $50 billion private credit platform within five years under its asset management arm, with initial focus on UK and Asian direct lending.

This isn’t just a side hustle. As traditional lending margins compress, banks like HSBC are chasing higher yields, and relevance, in the $2 trillion private credit market historically dominated by PE titans like Blackstone and Ares. Some peers are partnering (Citi with Apollo, UBS with General Atlantic), but HSBC is building in-house. CEO Georges Elhedery is betting that internal capital, plus group brand power, will attract external LPs.

Why it matters:
Private credit is becoming a scale game, and banks want in. For sponsors, this could mean more competition (and capital) in direct lending, but also more complexity as bank-backed platforms blur the line between traditional finance and private markets. For LPs, HSBC’s move signals that institutional money isn’t just chasing yield—it’s chasing control. (More)

MICROSURVEY

Margin Playbook 2025

Private equity firms are getting surgical about EBITDA margins. Our latest PE150 microsurvey shows where the knives are really out: Strategic Pricing & Margin Analytics (35.6%) and Supply Chain Optimization & Cost Control (28.8%) dominate the leaderboard.

PE Sponsors are hedging their bets — also leaning into SKU rationalization and footprint realignment (23.8% each). Meanwhile, M&A pros are singing from the same pricing + supply chain hymnal (77% combined), and bankers are betting big on pricing (41.7%).

Bottom line: In a market where topline is a coin toss and inflation is the house, margin work is your best game. And it just became core curriculum for PE. (More)

MACROVIEW

Metal Markets on the Tariff Treadmill

Aluminum markets are learning a timeless lesson: tariffs cause whiplash. The latest round of U.S. tariffs sent aluminum futures soaring—then tumbling—faster than a trader’s caffeine high. Markets quickly recalibrated, but the structural impact is clear: Oxford Economics forecasts elevated prices amid a 200k metric ton supply gap in 2025. Domestic production? Still hampered. Only four U.S. smelters remain, limiting flexibility.

Meanwhile, industrial production and employment in aluminum are stuck below historical norms—productivity gains have flatlined. Steel isn’t faring much better: a 25% tariff is pushing prices higher, with U.S. production expected to shrink this year before rebounding.

Bottom line: tariffs are driving volatility, higher costs, and persistent inefficiencies. U.S. producers might grab temporary wins, but consumers are left footing the bill. Policy clarity is desperately needed—because markets don’t handle “maybe” well. (More)

THIS WEEK IN HISTORY

The SEC Is Born: A Blueprint for Trust in Capital Markets

On June 6, 1934, President Franklin D. Roosevelt signed the Securities Exchange Act, creating the U.S. Securities and Exchange Commission (SEC) and changing capital markets forever.

The legislation followed years of post-crash reckoning. After the 1929 market collapse, the U.S. Senate launched the Pecora Commission, a relentless investigation led by Ferdinand Pecora that exposed rampant fraud and insider abuse on Wall Street. The outcome was a series of financial reforms, culminating in the Exchange Act.

Joseph P. Kennedy, a financier and, notably, father of a future president, became the first SEC chairman. Alongside Pecora and a team of reformers, Kennedy was tasked with restoring investor confidence. The new agency brought transparency and accountability to financial markets through required disclosures (think: 10-Ks and 10-Qs) and enforcement against market manipulation.

Why it still matters: The SEC remains a foundational institution for private equity and public markets alike. Its creation marked the beginning of modern financial regulation—a necessary guardrail as capital scales across global markets, and as PE-backed companies increasingly flirt with public listings, SPACs, and complex secondaries. (More)

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