Pantheon targets insurance clients for growth in credit secondaries
PANTHEON’S private credit duo expects insurance companies to fuel further growth for the business, after closing a $5.2bn (£3.9bn) senior debt strategy earlier this year with a sizeable chunk of capital from this client segment.
“We are spending a lot of time addressing investor demand from the insurance side, and that's an area where
Pantheon launched its first credit secondaries fund, focused on Europe, in 2018, at a time when there weren’t many of such strategies around.
Since then, Jain says it’s been a “steady and disciplined focus” on growth, with the group now managing $12bn across the division and a range of vehicles, including evergreen ones. Although private
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The Alternative Credit Awards are our flagship event and it’s been incredibly heartening to witness so much growing engagement from the industry.
From the breadth and quality of this year’s entries to the staggering demand for tables, we feel confident that the ceremony on 19 November 2025 will be our best yet.
In uncertain times, it’s important to take a moment to herald how far the industry has come and the essential role it will play in the future – supporting digital transformation, energy transformation and providing vital support to businesses worldwide.
Attendance for this year’s Alternative Credit Awards, held at the Royal Lancaster London, has already surpassed last year’s total numbers and we are on track to reach the room’s maximum capacity.
If you’re keen to celebrate the industry’s achievements, we strongly encourage you to book your table now to confirm your place.
SUZIE NEUWIRTH EDITOR-IN-CHIEF
cont. from page 1
the last couple of years. Jain says the group’s second or third deal was in fact what they called at the time a “GP liquidity solution”.
Since then, they’ve completed around 40 such deals, representing over $4.5bn of invested capital, but Jain argues that the market for them will just continue to get bigger.
“GPs are becoming more proactive about managing their fund durations,” said Toni Vainio (pictured right on front page), head of European private credit at the firm. “There's also a lot of capital in separately managed accounts (SMAs) or balance sheets affiliated with fund managers.
“GP stakes firms and managers with affiliate balance sheet capital that have supported earlier, older vintage funds, are increasingly looking to rebalance that capital to new activities. You've also got funds of one or SMA investors who want to accelerate liquidity or change the profile of what they own. It’s also a phenomenon that GPs have found secondary players like us be a very good conduit to achieve strategic objectives around distributing capital quicker.”
Jain highlighted opportunities particularly
in asset-based lending, venture debt and royalties, which would be invested in through the group’s special opportunities credit secondaries fund.
“We continue to see great tailwinds and growth in the senior secured lending market in the US and Europe,” he added. “In fact, Europe's pretty interesting right now, for both US and European clients as a place to allocate capital, we're certainly seeing growth in that strategy. Then on our opportunistic credit side of our business, we feel there is a real gap in the market, where not a lot of people have the right skill sets, cost of capital or capabilities to find opportunities there.”
Vainio added that they are seeing discounts of between par to 15 per
cent in senior secured funds and 10 per cent to 30 per cent on the more opportunistic side, where there are fewer secondary buyers.
Private credit secondaries are one of the key growth areas in private markets, with transaction volumes predicted to soar to $40bn by 2027, according to Jefferies. As a result, more and more managers are looking to take advantage of the opportunity.
Although Jain and Vainio welcome the competition, they are quick to highlight that it is not as easy as it seems to establish a presence in the market.
“We don't think it's an easy market to just drop a billion dollars in and try to compete,” Jain said. “And that's where all the aspects of sourcing
and underwriting and relationship building really make a difference. But I don't think we've seen any meaningful pressure, in terms of new entrants, either just announcing or really being credible in this market.
Vainio added: “As the transaction sizes have started growing quite meaningfully, even new entrants that raise smaller pools of capital may not necessarily be able to participate at scale in some of these larger transactions… Where we've seen more competition is for smaller LP stake sales, which can be highly intermediated. The market pricing has become more aggressive in some of those situations, though we feel the market is increasingly deep and broad.”
Private credit’s consolidation season
LAST month saw two significant deals struck amid an uptick in M&A activity – first, Orix USA acquired a majority stake in Hilco Global. Then, days later, BlackRock announced it was acquiring ElmTree Funds.
For those in the private credit industry, this has been seen as a natural progression, with asset managers increasingly keen to access segments of the market in a cost-effective way.
“Similar to other industries that have experienced boom cycles, we can expect to see significant consolidation among asset managers to achieve scale and market penetration rapidly,” said Morris DeFeo, chair of the corporate department at New York law firm Herrick. “We also will likely see an increase in consortiums, joint ventures and other strategic alliances, as well as the emergence of new technologies — all of which are common characteristics of a rapidly-growing and evolving industry.”
DeFoe sees M&A as a natural result from the mismatch between the number of private credit firms and the sheer amount of investors seeking exposure, which he expects will lead to
“significant competition” for deal flow and funding.
This ability to originate a healthy flow of deals was one of the main reasons Orix USA bought a stake in Hilco. The former’s group head of private debt and real estate Jeff Abrams highlights the latter’s unique access to private credit origination as a liquidator and asset appraisal service provider.
“We think the market opportunity for this type of asset-based lending is largely untapped, and Hilco underwrites loans using knowledge of asset values compiled over decades of liquidation and appraisal experience,” added Abrams.
Asset managers are eager to sign off on such deals as this is much less expensive than organically creating their own private debt brands
from scratch, which can also be time-consuming.
“One acquisition can deliver years of growth instantly, providing immediate access to track record, origination networks and investor relationships,” said Benjamin Lamping, founder and chief executive at Reframe Capital. “Recent moves by BlackRock, Nuveen, PGIM, Clearlake and Generali each highlight how M&A can enable rapid market entry and sector expansion, especially in competitive areas like infra debt or sponsor lending.”
This trend of M&A is attracting further attention for established private credit firms, with both scale and origination functions. Many expect this trend to continue and Reframe’s Lamping can see this leading
to the biggest names continuing to grow in size.
“This is reshaping the industry into a barbell structure, where large platforms thrive and smaller players struggle to scale or access major mandates,” he said. “As LP capital increasingly flows to multi-strategy firms, smaller GPs risk being sidelined, despite well-documented evidence that they can often more efficiently access segments, such as the lower mid-market, more efficiently and, deliver outsized riskadjusted returns.”
DeFoe sees M&A as inevitable for any growth strategy in the space, but warned of prioritising speed instead of organic growth: “There is no ‘best way’ – however, an ill-conceived or poorly executed M&A strategy can be disastrous.”
Alternative Credit Awards on track to sell out
THE ALTERNATIVE Credit Awards have seen unprecedented demand this year, with confirmed numbers exceeding last year’s total attendance in just two weeks after the shortlist was unveiled.
The Alternative Credit Awards, hosted by Alternative Credit Investor, take place on 19 November 2025 at the Royal Lancaster London.
The only dedicated awards event in the UK for the industry celebrates the most influential fund managers, specialist lenders and service
providers in the space.
Shortlisted asset managers include Ares Management, Blackstone, Carlyle Credit, Arrow Global and Pemberton.
Shortlisted specialist lenders include Kuflink, Folk2Folk and easyMoney, while service providers with a chance of winning an accolade include
Allvue Systems, Aztec Group and Broadridge Financial Solutions.
“The Alternative Credit Investor team has been absolutely thrilled with the industry demand to attend this year’s awards,” said Alternative Credit Investor’s founder and editor-in-chief Suzie Neuwirth.
“Given the current levels of interest, we fully expect the room to be at maximum capacity, which will be over twice the size of last year’s event.
“We’d strongly encourage any firms wishing to attend to confirm their table as soon as possible, as we expect to be sold out closer to the time.”
For table enquiries, please email sales and marketing manager Tehmeena Khan at tehmeena@ alternativecreditinvestor. com.
NAV finance market “never been healthier”
DEMAND for net asset value (NAV) finance has “never been healthier”, according to 17Capital partner David Wilson, with the market predicted to grow to $145bn (£107.5bn) by 2030.
NAV facilities make up a key part of the growing fund finance market. According to Goodwin, fund finance surpassed $1.2tn in 2024 and is on track to reach $2.5tn by 2030.
Numerous factors are driving this, with demand for NAV facilities now playing a greater role.
“Our prediction is that, by 2030, deployment of
NAV facilities will have grown to around $145bn from around $20bn in 2020, as the asset class matures,” said Wilson.
This optimism comes against a backdrop of greater market uncertainty and higher volatility. Managers are being forced to look elsewhere to generate value in portfolios, which is boosting demand for NAV facilities, according to Arcmont Asset Management’s head of NAV financing Peter Hutton.
“We believe the current macro uncertainty (e.g. Trump Tariffs) is
a significant tailwind for adoption of NAV financing,” said Hutton. “[This type of facility] – as a relatively simple and cost-effective way to significantly enhance capital availability for bolt-on M&A – is a natural way for sponsors to enhance fund returns.”
Specifically in Europe, Protiviti managing director Luca Medizza expects the fund finance market to remain active throughout 2025. He expects continued growth across three segments: refinancing of subscription lines for funds nearing extension
periods; NAV and hybrid facilities used for distribution planning or interim liquidity; and solutions supporting continuation vehicles or illiquid strategies.
“Deal activity is expected to remain strong, supported by continued interest in alternative financing structures such as NAV and hybrid facilities,” added Medizza. “European private capital deal activity is showing recovery after the turbulence of recent years, with signs of uptick in mid-market private equity and a broader appetite for new transactions.”
Convergence of public and private credit creates challenges
THE CONVERGENCE of public and private credit is set to create challenges for the industry, as lines increasingly blur between the different asset classes.
There are a few different dynamics at play. One part of the convergence is resulting in syndicated loans and direct lending at the upper end of the market starting to look very similar in terms of how they are structured and the terms – something analysts at Moody’s previously warned about.
The other side is the inclusion of both public and private credit in portfolios aimed at retail or private wealth investors.
"People are moving to expand their patches and you’re getting a mix of different products,” said Patrick Marshall, head of private credit at Federated Hermes.
“You’re getting more syndicated loans being put in funds, the terms of larger cap direct lenders are becoming increasingly standardised and more bond-like, so in effect, you’re moving towards a wider fixed income market, of which private debt is now a key component.”
He added that
some managers are in effect becoming fixed income managers.
Case in point, PGIM recently announced that it would be combining its public and private credit arms into a $1tn (£0.74tn) unit.
Marshall said that where publicly traded loans and private credit are becoming more similar is at the larger end of the mid-market. But as investors look to different structures, such as semiliquid funds, managers will need to put instruments in those strategies to allow them to have some form of liquidity and therefore there may be pressure on the lower mid-market as well.
“However, the lower mid-market does remain a primarily banking
market, and I think that investors who are investing in the lower mid-market know that if you want an illiquidity premium, you do have to have an element of illiquidity,” he added. “Having said that, we are still seeing pressure arising.”
He also noted that if the convergence continues, there will be a greater regulatory spotlight on private credit. But he believes that it is not likely that there will ever be a situation where lower midmarket loans are traded, because they are too small.
“If [semi-liquid funds] can't deploy fast enough, they'll put more liquid assets in there, and that's where you're going to get that convergence,” he added. “As these products become more popular, it won't just be lower midmarket loans, there'll be other types of fixed income products that go into the fund. Then the issue is, what is the investor really getting?"
Meanwhile, the convergence of the two markets is creating a talent gap that is putting pressure on recruitment.
Skye Lucas, director –investment management at Selby Jennings, told
Alternative Credit Investor that the intersection of the two sectors is paving the way for new career trajectories as firms look to hire talent that “combines the speed and liquidity mindset of public markets with the structuring skills of private lending.”
She said that there is growing demand for candidates who can navigate both liquid credit markets and private lending as managers build out hybrid strategies, but these are in short supply.
“Firms want talent with a mix of skills: public market savvy, private credit underwriting proficiency, and a deep understanding of how syndicated deals and custom transactions come together,” she added.
“These firms are focused on multi-asset professionals who are capable of analysing, underwriting, and investing across the full capital structure and liquidity spectrum. They are looking for fluency in credit underwriting across structures, complex deal experience, advanced financial modelling, relative value and market awareness, and a deep understanding of the full capital structure.”
The missing piece in direct lending’s operating stack
Global direct lending AUM has surged past $1.5tn (£1.1tn) as firms rapidly scale to meet the demand for private capital. Supporting this rapid expansion is a corresponding push towards technology modernisation. But amidst conversations and investments in deal sourcing platforms, portfolio monitoring systems, and AI-powered capabilities, there's a glaring omission in the conversation – leverage management. Debt capital commitments can often exceed half the size of a fund’s AUM. Kanav Kalia, managing director at Oxane Partners, talks about the overlooked leverage management piece of direct lending’s operating stack.
DIRECT LENDING IS witnessing remarkable growth. Over the past decade, assets under management have grown nearly tenfold, and now exceed $1.5tn. Today, direct lending firms are scaling rapidly – raising larger funds, forging new partnerships, and attracting an increasingly diverse investor base. While this growth was initially spurred by bank retrenchment from direct lending after the global financial crisis, more than a decade on, the story has significantly evolved.
Sizing up the leverage piece
The banks may have had to step back, but they have by no means stayed on the sidelines. Banks and private credit firms have become increasingly linked, with the former’s leverage playing a critical role in the growth of the latter.
Direct lending AUM currently stands at over $1.5tn. A typical direct lending firm will deploy portfolio-level leverage, often with
loan-to-value ratios around 60 per cent. So, the leverage a firm has to manage is a sizeable operational challenge alongside the assets under management. While firms pour resources into sophisticated deal origination and portfolio monitoring systems, they're often managing this equally significant leverage exposure through manual processes, spreadsheets, and ad hoc workflows that have not evolved to be integrated into the overall core operational and technology infrastructure.
The operational reality
We work with both sides of the industry – the banks and the private credit firms – and we are seeing firsthand the complexities within these arrangements. Lenders typically have exhaustive risk compliance requirements in terms of the underlying collateral that funds can borrow against and to what extent – eligibility criteria, concentration limits, different advance rates for different types of
underlying collateral, etc. Banks may have stepped away from direct lending after the crisis and have moved up the capital structure by lending to private credit firms, but they are still keen to have the full picture of their risk exposure. They seek underlying loan-level and obligor-level transparency across every facility to fully understand their risk exposure. This level of oversight introduces a significant operational burden, especially for firms managing multiple lines of credit with bespoke terms. Supporting these expectations requires systems that span the full spectrum of teams, from origination and portfolio management to treasury, risk, operations, and investor relations.
Integrating leverage management into the op-stack
It’s crucial to ensure that as your business grows, your infrastructure keeps pace. This sentiment is true in all businesses but is especially valid in this market. Many firms
sometimes make the mistake of assuming that operational infrastructure is a consideration that merits thought once they have reached a certain scale, or they focus on limited aspects like managing deal flow and portfolio risk that feel most pressing. Building scalable infrastructure early on is a strategic investment that benefits every function within the firm. For example, monitoring and managing risk is an exhaustive process – tracking obligor reporting, financial spreading, covenant, calculation, and servicing of these loans for even relatively modest books of business. This data is equally critical for risk management, investor reporting, and sharing with leverage
providers. Firms need to think holistically about how they manage data and operations to remove redundancies, eliminate duplicated effort, and ensure seamless information flow with a single source of truth. Every team and workflow is interlinked.
Speaking from our own experience of managing over $800bn and having worked with over 100 clients, we’ve seen that the most successful firms take a unified approach. When every deal is onboarded into a single system, every team has a single source of truth, the firm gains a holistic view of exposure, concentrations, and performance in one place.
Fortunately, a lot of private credit firms and banks are becoming increasingly mindful of
where they are on their technology journey, but many are still unaware of how rapidly they can be caught out unprepared. The momentum we are seeing in the industry is fantastic, and exciting to see, but every organisation has to be prepared, or they risk losing out to their competition. As firms scale portfolios, they simultaneously scale leverage on their investments, and having a solution that works across all teams and workflows, will give them an operational edge.
Lessons from the coalface
In writing this piece, I wanted to share some insights from over a decade in the market, working with banks and private credit firms. As the space expands, so too does regulatory scrutiny. Regulators are paying closer attention to the growing bank leverage extended to non-bank financial institutions (NBFIs), and how those exposures are managed. With concerns around systemic risk, liquidity, and transparency, firms should prepare for rising expectations around data quality, risk oversight, and reporting.
The time to get ready is now, before the pressure arrives. I have worked with firms that started with small books and have grown several times over in a few years. When the opportunity comes, it can arrive suddenly, making it crucial to be ready before this moment and not to scramble to accommodate scale after the fact. Those who invest early in scalable, integrated systems are the ones best positioned to seize the next phase of growth, with confidence, clarity, and control. Sponsored content created in partnership with Oxane Partners.
The race is on
Direct lending has exploded in recent years, boosting competition and putting pressure on pricing. Who will thrive and who will fall by the wayside in this increasingly competitive market? Jon Yarker reports.
THE GROWTH
OF private credit has been largely driven by direct lending’s ability to replace bank debt, having grown substantially over the past 15 years. Direct lending made up just nine per cent of the private credit sector in 2010, according to Pitchbook data, but this has since swelled to 36 per cent – the largest subset of private credit, and more than asset-based and distressed debt combined. The overall private credit industry is anticipated to hit $2.3tn (£1.7tn) in size by 2028, from $1.8tn at the end of last year, and direct lending is widely expected to help lead this charge.
Direct lending is seen as the ‘bread and butter’ of the private credit industry, in the same way that leveraged buyouts are often synonymous with private equity. Several industry experts told Alternative Credit Investor they were highly positive about the outlook for direct lending, which has benefitted from a gap in the market and supportive conditions.
“Sponsors have become more comfortable with the durability of private capital since the GFC, particularly as the banks have been in and out of the market frequently with hung deals, bank failures and regulation,” says Meghan
Neenan, North American head of NBFI at Fitch Ratings. “Sponsors appreciate the certainty they can get with private credit providers, the privacy, the flexibility in terms and structuring, and the fact that, if they do have issues, they can re-negotiate with a much smaller group of lenders.
“A considerable amount of capital continues to be raised in direct lending, particularly within the perpetual, private business development company structures.”
The wider macroeconomic climate has been supportive of this. Market uncertainty has created increased volatility in public markets, with more investors shifting away from public fixed income and towards private credit. Private credit’s lack of vulnerability to macroeconomic swings has helped the asset class to grow according to Mark Wilton, head of European investments at Corinthia Global Management.
“This inherent stability has allowed the asset class to perform well and grow during challenging times, such as the Covid-19 pandemic, the Russia/Ukraine conflict, and the aftermath of the financial crisis,” adds Wilton. “Uncertainty in broader markets can, in fact, present opportunities for private credit.”
Declining spreads
Despite the continued optimism around direct lending, spreads have been steadily declining since 2023 according to KBRA data. There are mixed opinions as to whether spreads will continue to tighten this year.
“Generally we have seen spreads compress in public markets and, as that market tightens, so does the private credit market,” reflects Stuart Mathieson, head of European private credit and capital solutions at Barings.
“Typically around 200-250bps of spread premium has been maintained but absolute spreads themselves have come down.
“ It is not sufficient for new entrants to simply participate; those without a compelling plan will struggle to gain traction”
Another factor is that the number of new platform opportunities, driven by primary LBO activity, have been quite low. This has driven more competition on some transactions.” Could these fall further? Fitch Ratings’s Neenan sees spreads as “close to bottom,” and points out how 2024’s backdrop of intensifying competition and sparse M&A deal flow led to spreads tightening. Though the conditions remain the same she argues there “is only so far” that spreads can go.
In agreement is Will Sheridan, partner in the finance group at Travers Smith, who says that direct lending firms are having to respond to market conditions.
“The trend of sponsors repricing large cap deals in 2024 has since filtered down to the middle market, and we are seeing credit funds reduce margin significantly in order to stay in deals,” says Sheridan. “Given the liquidity available in private credit and the pressure to deploy, it is hard to see
the recent downward pressure on pricing fading away anytime soon.”
Scale is key
Intensifying competition has placed a premium on tried-and-tested managers, and Kort Schnabel –partner and co-head of US direct lending at Ares – points to this favouring the bigger firms.
“Often the larger and longer tenured private credit managers have global origination platforms, better due diligence capabilities and
in-house portfolio management teams,” says Schnabel. “Couple this with the significant market opportunity and the trend of LPs consolidating their GP relationships, it’s only natural that you see the larger funds with strong track records still growing.”
Scale is key, according to Barings’ Mathieson who points to the sheer challenges of trying to become organically established as a direct lending firm.
“To be successful in private credit, you need a big team of people, scale and incumbency, and scale isn’t just about inhouse resources but means having a large and diverse capital base,” says Mathieson. “I don’t tend to view newcomers [in the space] as our primary competition in the sense that at an entry-level point you need to be able to write sizeable business.”
Mathieson knows first-hand about the intensifying competition in the space as Barings lost 22 members of its private credit team in 2024 to new direct lending specialist Corinthia. The Barings team has since become “fully
resourced” but the episode shined a spotlight on the fierce battle for talent in the direct lending space, and raised the question of how new entrants can gain a foothold in a crowded market.
“It is not sufficient for new entrants to simply participate; those without a compelling plan will struggle to gain traction,” says Corinthia’s Wilton. “Demonstrable access to hard-to-reach markets and a well-articulated reason for existence are essential for standing out and commanding market share.”
Meanwhile, Adelbert Garcia, managing director of the investment team at NorthWall Capital, says newcomers need to target underserved areas. Here, he points to the background of narrowing spreads as a natural backdrop for newcomers to use specialist and novel approaches to prove their worth.
“We see a compelling opportunity to service quality borrowers overlooked due to their size,” says Garcia. “In these underserviced lower middle market borrower segments, more disciplined
underwriting and robust documentation can underpin attractive risk-adjusted returns.
“Experienced managers can achieve compelling risk-adjusted returns by capturing complexity premiums and focussing on broader private credit strategies beyond vanilla direct lending.”
Staying power
Industry stakeholders are broadly positive about direct lending's prospects but some are looking beyond the eye-catching figures to what needs to happen next.
Bevis Metcalfe, partner of private credit and restructuring at law firm Cadwalader, says direct lending is “unquestionably” here to stay but that it is now time for managers to prove their worth as more flock to the space.
“That all boils down to the credit basics and staying disciplined
“ A considerable amount of capital continues to be raised in direct lending”
– in terms of structuring, documentation and underwriting,” adds Metcalfe. “That discipline was probably less evident in a more benign economic environment that prevailed pre-2022, but in today’s markets it’s what will drive successful deployment.”
Private credit may be less susceptible to macroeconomic shocks than public markets, but there is a consensus that many direct lending providers have not been thoroughly tested yet. Several metrics, such as the Proskauer Private Credit Default Index, indicate a muted default
landscape but should this return, Corinthia’s Wilton expects a skewed response among direct lenders.
“The lower mid-market and micro-business segments are particularly vulnerable to defaults,” says Wilton. “However, highquality managers with strong market access and prudent selection processes, especially in the mid-market, where portfolios are often unique and less prone to overlap, are well-positioned to maintain solid performance and demonstrate the value of their differentiated approach.”
Additionally, James Charalambides, head of European private credit at Adams Street Partners, points to a wide delta in fixed income after the financial crisis, which puts fresh scrutiny on direct lenders’ models.
“This ultimately comes down to the manager’s ability to be selective – what you will see is
the managers that are the most selective will continue to perform like they have, and others will see materially worse performance,” says Charalambides. “To be selective as a manager, you need a few things to be true: firstly, your opportunity set needs to be much larger than the pools of capital you have to invest; secondly, you need to have a right to win the deals you chose; and thirdly, you need to have a credit intensive investment culture.”
Direct lending has rapidly grown to be a significant driver of private credit, with competition continually intensifying for market share. After a stellar few years, the question is how the industry will perform amid an impending rise in default rates and ever-squeezed margins. Rockier conditions could unveil just how selective managers have been – or have not been – in the race for business.
Alternative Credit
The Alternative Credit Awards will take place on 19 November 2025, at the Royal Lancaster London.
The event – hosted by Alternative Credit Investor – is the only dedicated alternative credit awards ceremony in the UK and has quickly become a must-attend industry event.
The evening will comprise a champagne reception, gala dinner and awards ceremony, commemorating the shining stars of the alternative credit industry.
Fund managers, specialist lenders and service providers will be presented with accolades on the night.
Credit Awards 2025
Categories include Fund Manager of the Year, Senior Lender of the Year and Fund Administrator of the Year.
Go to our website at alternativecreditawards.com for more information about the awards.
Tables are limited so get in touch as soon as possible to secure your place.
For table enquiries, please email sales and marketing manager Tehmeena Khan at tehmeena@alternativecreditinvestor.com.
For sponsorship enquiries, please email commercial director Luke Raphael at luke@alternativecreditinvestor.com.
“Too good an opportunity to miss”
Corinthia Global Management hit the headlines last year amid a legal tussle with Barings, but the start-up has shrugged off the scandal to make its mark on the world of direct lending. Mark Wilton, head of European investments, tells Alternative Credit Investor how the firm stands out in a competitive market.
CORINTHIA GLOBAL
Management launched last year as a new entrant to the direct lending space, but it is at no risk of being ignored in a crowded market.
22 Barings private credit employees departed together as a team to join the new firm, triggering legal action by Barings against Corinthia and certain former staff members. In its lawsuit, it described the mass exodus as “one of the largest corporate raids at an asset manager in years.”
Mark Wilton (pictured), head of European investments at Corinthia, would not be drawn into discussing the legal action, but conceded that the increased visibility for the new firm had its benefits.
“I think the story around our launch was, frankly, helpful in terms of publicity,” he told Alternative Credit Investor
“A lot of start-ups are probably starved of oxygen, whereas we had a lot.”
Wilton, a chartered accountant by background, spent 18 years in a senior management role leading Barings’ European private credit business before moving to Corinthia.
He says that joining Corinthia “was too good an opportunity to miss” and highlighted the attractions of working at a start-up.
“Rather than focus on push factors, it’s actually the pull to set up a new business, to be a dedicated specialist in direct lending, and to be part of
an employee-owned firm, where those alignment of interest and incentivisation is really, really clear and is something you can present to investors very well,” he said.
“That was the attraction really, of starting off on a new, exciting path.”
Corinthia, which has financial backing from Nomura, positions itself as a core mid-market direct lending specialist, focusing on corporates with EBITDAs ranging from €10m (£8.7m) to €50m.
It enters the direct lending market at a challenging time, with downward pressure on pricing amid fierce competition for deals.
Industry data indicates that investors and corporates are flocking
to the largest managers with the longest track records, so how does a new entrant grab market share?
Wilton explains that it is the track record of Corinthia’s combined team that helps to set it apart from other new firms. He highlights that the North American colleagues have worked together for over 20 years, while the core European team has worked together for more than 10.
“One of the unique features we have is that whilst we are a start-up and going through all of these growth phases, actually, as a team, we’ve worked together for a long time,” he said.
“The fact that the team is a known entity, and has an auditable track
record as a team, is a strong factor.
“Most start-ups will be a collection of people who individually could be really good, but they haven’t got a shared history. They’re trying to form their new message, whereas from day one, we’ve had a clear identity. From an investor proposition and a private equity proposition, we’ve been a known and trusted partner for many, many years. That’s a clear point of difference.”
Wilton argues that being independent has its advantages over being part of a larger firm.
“Within a lot of large global businesses, there are individual teams and divisions that will have a limiting remit, which could be either in terms of the types of clients or the types of vehicles,” he said. “I think we’ve learned some new skills and opened up some new avenues as an independent.”
He also asserts that it is “absolutely possible” to compete with the biggest players as their growing scale leaves gaps in the market for fund managers willing to originate smaller transactions.
“When they raise larger and larger funds – which we celebrate as it shows that investor appetite for private credit is going from strength to strength – it leaves gaps,” Wilton explained. “If you raise €20bn or €30bn then you actually leave behind a lot of room because you have to deploy that into larger and larger transactions.
“Private credit is now a permanent feature competing against broadly syndicated loans on large-cap transactions and I don’t think that’s going to change. But what it means is that more managers are drifting up and up in size. Being a dedicated specialist in the core mid-market, which is our mission, means that the larger those big firms get,
the more it creates opportunities for firms like ourselves.”
Corinthia’s focus is on sponsorbacked lending, drawing on the team’s well-established relationships with private equity firms.
It has now funded four deals and signed another four, while it is in advanced stages for another four or five. Wilton said they hope to have at least 12 completed transactions by the summer.
“I’ve been really pleased with how the private equity industry has embraced the new firm,” he added. “We’re getting opportunities to compete on mainstream processes and quiet off-market processes, and that’s very valuable.”
Uncertainty ahead
The current macroeconomic environment – particularly relating to US government policy – has been closely watched by market commentators, amid fears that the US will go into a slump that stifles M&A.
Wilton suggests that a broader economic cycle “will sort out the better managers from ones who aren’t,” although he agrees that a slowdown “would be the main concern”.
However, he also highlights that private credit has typically done well in periods of volatility, stepping in when banks retreat.
“One of the advantages of debt, compared with, say, private equity, is that there’s always some activity in the market,” Wilton added.
“Even when there’s no M&A, you can essentially manufacture deal flow because there’s refinancing, there’s dividend recaps.
“Ultimately, to expand the market, you need M&A, but there’s enough activity that ticks on to allow private credit to operate.”
However, Wilton expects to see a rise in default rates across the industry, predicting that “there’s probably some credits out there that have been held together for long enough and the time will run out”.
When it comes to rates of return, he expects to see differentiation between fund strategies.
“Over the last 18 months, there has been a reset of rates in a slower M&A environment, which followed a period of super profits being earned by direct lenders,” he said. “When rates started to rise after the Russia-Ukraine war started, margins and fees both expanded. So what we’re seeing now is a reset to more normal levels.
“Where the market goes next will depend on the volatility that we see through public markets. If public markets start to widen because they were at record lows, you'll probably see private credit edge up as that illiquidity premium maintains.”
For Corinthia, the plan is to stick to their core mid-market offering for now, as they expand their business.
“We're clearly very ambitious – there's probably not many startups that within a year would have eight offices across six countries and 50 staff,” said Wilton.
“I think we’ve done some things well. There’s other things I’m sure we would do differently because you learn new skills and it’s been nothing other than incredibly hard. I’m sure it will continue to be really hard. But some of that is the fun we’ve signed up for.
“Firstly, we need to do the core really, really well. And from that, you attract a loyal following in both the investor and the private equity community as you build the platform. There’s no limit on our ambition and growth, but it’s step by step.”
Why property-backed fixed income is a stabiliser in a soaring market
INVESTORS RECENTLY
watched the FTSE 100 reach new heights as it broke through the 9,000 mark for the first time. For context, it took eight years to climb from 7,000 to 8,000, but only two years to rise from 8,000 to 9,000 highlighting just how quickly market momentum can shift. It’s a reminder of the remarkable pace of change in today’s investment landscape.
But these heady figures only tell one side of the story. Soaring equities can also come with risks. Such records may be welcome news for those already invested but are share prices being driven more by sentiment than fundamentals? Additionally, such highs can be short-lived: on the same day it broke through 9,000, the FTSE 100 retreated. Major indices are easily influenced, and investor concerns can cause rapid selloffs and increased volatility.
The case for diversification
Being exposed to a major equity index at a time of record highs can be rewarding. But concentration in any single asset class, equities included, can increase exposure to downside risk. This is a timely reminder of the value of diversification, particularly in the event of a market correction.
Blending asset classes is a key diversification strategy, as they often behave differently in response to market conditions. Property-backed fixed income is often used to introduce balance to equity-heavy portfolios. It
offers steady returns that are uncorrelated with the stock market.
“There’s something reassuring about having a diversified investment portfolio that includes something backed by property and delivering a fixed monthly income,” says Roy Warren, managing director of Folk2Folk. “It’s a different rhythm to the stock market, but one that’s resonating right now.”
Fixed income may not soar like equities, but it also tends to be less volatile. Its appeal lies in its predictability; generating steady, recurring income that helps investors lock in returns and manage overall portfolio risk. Of course, property markets can fluctuate too, and secured lending carries its own risks. But the combination of a tangible asset and fixed payment structure typically offers more stability than equities.
The
Folk2Folk approach
No investment is without risk and fixed income investors can still
experience losses. At Folk2Folk loans are secured against property, typically at a maximum 60 per cent LTV, providing a layer of protection. If a borrower cannot repay, there’s a tangible asset to support recovery, though full repayment isn’t guaranteed, particularly if property values fall.
While this doesn’t eliminate risk entirely, it adds a layer of protection not found in many other investment types.
“We continue to see strong demand from investors seeking steady income while their capital is secured against tangible assets,” adds Warren. “There’s a definite shift toward recurring income, and that’s exactly what we provide.”
With potential Bank of England rate cuts ahead it’s a relevant time to consider portfolio resilience. Against this backdrop, propertybacked loans with attractive income yields could become even more compelling.
Sponsored content created in partnership with Folk2Folk.
