Private Debt Investor Podcast

Cashflow is king: Making the case for asset-based finance

This episode is sponsored by Rithm Capital

The asset-based finance market is heating up, with a raft of private credit investors increasingly taking note of the strategy – and for good reason. Capable of delivering strong returns even in challenging macroeconomic environments due to its cashflow-oriented nature, ABF represents a rather unique offering for lenders and LPs alike.

But contrary to what many might think, ABF is not a particularly new strategy. Michael Nierenberg is Chairman, Chief Executive Officer and President of Rithm Capital, a global asset manager focused on real estate, credit and financial services which makes direct investments and operates several wholly-owned operating businesses.

In this episode, he explains how the market has evolved over his more than 30 years in the industry. He also discusses which industries are particularly well-positioned to benefit from ABF strategies and why he believes ABF is an area in which investors are underinvested.

Goldman's Reynolds on scale and the $10bn deal

Growing scale is one of the big themes in private debt as a small group of mega-sized GPs expand their platforms rapidly – both building on existing strategies like direct lending and colonising new areas such as asset-based lending and specialty finance.

Among the largest of these managers is Goldman Sachs Asset Management, one of the early pioneers of the asset class. In this edition of The Private Debt Investor Podcast, we hear from James Reynolds, global co-head of GSAM’s private credit business, about how the addressable market is growing larger still – with $10 billion club deals now within the view of direct lenders.

Reynolds explains why the firm has launched a climate credit strategy, arguing there is a large supply/demand imbalance in that area. He also discusses the blurring of the public and private markets, how managers are reaching out to large new pools of investor capital, why there is room for optimism around the M&A market, and the importance of focusing on underwriting rather than being distracted by the headlines.

Rising stars of private debt share their top tips for success

Private debt's rapid growth is continuing to attract attention from junior professionals that are looking to make a career for themselves in this dynamic market. But how can they stand out from the crowd and prove their value in what is an increasingly competitive labour market?

In November, Private Debt Investor unveiled its annual list of Rising Stars of Private Debt, which highlights the young professionals that are blazing a trail in the asset class.

For this episode, we asked three of this year's cohort to reflect on their careers and share how they capitalised on opportunities that came their way over the course of their career, how they identified their areas of interest and what their advice would be for the next generation of private credit professionals.

Listen as Hannah Roberts, special projects editor at PDI, speaks with Adam Baghdadi, a managing director in the lending team at Arrow Global; Priscilla Schnepper, an investment manager in the private credit team at the European Investment Fund; and Catherine Verri, a partner in the investor relations team at Carlyle, to get their top tips on how to succeed in this industry.

See the full list of the Rising Stars of Private Debt here.

The ACC's Jiri Krol on why securitisation rules need changes

Last year, the European Commission launched a consultation seeking feedback on the functioning of the EU Securitisation Framework. Among those organisations submitting a response to this was the Alternative Credit Council, the body representing private credit asset managers led by global head Jiri Krol.

The Private Debt Investor Podcast caught up with Krol to find out what was at the heart of the ACC’s response. The organisation believes there was an “overreaction” after the global financial crisis, placing severe regulatory burdens on the securitisation market, including the likes of private credit firms as well as banks and insurers.

Krol believes a thriving securitisation market will provide welcome additional liquidity and a boost to the real economy, and he makes the case for deregulation in the face of unreasonably high demands in areas such as due diligence and transparency.

The discussion also includes reflections on the ACC's latest Financing the Economy report, including the revelation that private debt has now become a $3 trillion industry.

The ‘good boring’ approach to private credit

This episode is sponsored by Golub Capital

Private credit has enjoyed massive growth for more than a decade, but there are real questions about what happens when conditions are less favourable. How can lenders that launched during the good times continue to succeed when the market changes?

David Golub of Golub Capital knows from experience. Golub Capital was founded 30 years ago and has performed well in all kinds of market conditions. One of Golub Capital’s strengths involves a ’good boring’ approach, which aims to minimise the excitement of market swings and focus on delivering consistently for its stakeholders.

In this episode, David discusses Golub Capital's founding and its evolution through the financial crisis and the pandemic. We'll look at how cultivating close, long-term relationships with sponsors can improve every stage of the deal process, and why remaining focused on companies in resilient sectors where the firm has deep expertise has helped Golub Capital remain consistent, even in times of ‘bad interesting’.

A golden era for opportunistic lending

This episode is sponsored by Sculptor Capital Management

The last 24 months have been a period of uncertainty and volatility in credit markets, with rising inflation and higher interest rates putting borrower capital structures under pressure and making it difficult for lenders to price risk.

These headwinds have proven challenging for mainstream lenders. But for opportunistic credit investors, it has provided a window to unlock attractive risk-adjusted returns in situations that are obscured by complexity.

In this episode, we sit down with Jimmy Levin, the chief investment officer of Sculptor Capital, a global alternative investment manager with more than $20 billion of credit assets under management across corporate, asset based and real estate credit. He discusses the opportunistic credit investment opportunity set, reflects on how it’s reshaping old thinking about the credit default cycle, and explores other strategies – notably, asset based finance – that benefit opportunistic lenders who can operate free of constraints.

Private credit lenders seize the moment in Europe

This episode is sponsored by Arrow Global

Private debt has enjoyed sustained success in recent years, with private credit firms stepping in to fill the void left by the retreat of banks from their traditional lending role. The outlook for the asset class in Europe remains strong, as firms continue to find compelling opportunities, even in sectors that face market headwinds.

A persistent supply-demand imbalance in the housing market across most European countries means that residential real estate is a particularly attractive sector for lenders. Changing work patterns are also giving a long-term boost to parts of the hospitality real estate sector, with southern European markets able to take advantage of a boom in demand.

In this episode of the Private Debt Investor Podcast, Zach Lewy, founder and CEO of Arrow Global, discusses how asset-backed lending enables private credit firms to minimise risk while capitalising on emerging opportunities. Success, he notes, hinges on maintaining strategic discipline in a landscape ripe with potential.

Navigating the Asian private credit opportunity

This episode is sponsored by Bain Capital

Asia’s credit markets are the largest in the world, yet they remain heavily bank dominated. While large blue-chip businesses are well serviced, there is a material undersupply of custom, fit-for-purpose capital for SMEs, mid-market businesses, and financial sponsors. This is creating a significant opportunity for direct lenders.

Asia’s credit markets are also complex and nuanced, which places a premium on managers with the right networks, insights, and experience.

In this episode of the Private Debt Investor Podcast, Bain Capital’s Andrew Schantz, discusses how to navigate Asian private credit and what the future holds for an asset class having a “golden moment” across the globe.

One LP’s concerns over systemic risk

In this episode, Andy Thomson meets with Raymond Wright, a portfolio manager in private markets at the London Collective Investment Vehicles, which was established in 2015 as one of eight UK Local Government Pension Scheme asset-pooling companies.

Wright discusses the organisation’s private debt-focused funds of funds and how he has gone about building portfolios through client collaboration – which, by his own admission, is a process that has challenged some of his assumptions around portfolio construction.

He talks about why asset-based finance, secondaries and sustainability are all favoured areas currently, but also why he has concerns about an economic downturn and private debt’s possible systemic risk.

To hear more of our episodes, head to privatedebtinvestor.com/podcast or you can search and subscribe to the Private Debt Investor Podcast wherever you like to listen.

NAV finance steps into the mainstream

This episode is sponsored by 17Capital

NAV finance used to be a niche, little known corner of debt capital markets, but over the past 10 years it has evolved into a firmly established part of the private markets ecosystem.

As NAV finance has moved into the mainstream, private capital managers have taken up NAV facilities in ever greater numbers to address a wide range of financing requirements.

So, how are managers using NAV finance across their platforms, and how has the market navigated a cycle of rising inflation and interest rates? What do LPs think of NAV finance and what is the outlook for the industry in the next 12 to 24 months?

In this episode, we sit down with 17Capital partner Dane Graham to discuss what has driven the NAV finance industry’s rapid growth over the last 10 years, unpack how managers are using NAV facilities at the portfolio company and fund level, and look ahead to what comes next following a period of higher interest rates and tighter liquidity.

The sustainable boom in private credit

This episode is sponsored by the Credit Investments Group (CIG)

Private credit has expanded exponentially in recent years, with most citing the contraction in syndicated markets as the cause of that growth. But now those markets are opening back up, and questions linger about how that will affect private credit.

So what do continued inflation and elevated interest rates mean for today's managers? What does private credit look like now, and how will it adapt to a new macroeconomic landscape? Will private credit shrink in the wake of access to public credit, or will the two co-exist to provide a full suite of financing options to their clients?

In this episode, we'll look back at the causes of private credit's recent boom, how much of that boom might continue, and what the future of lending is likely to be in the coming years. We’re joined by Kevin Lawi, private credit portfolio manager and head of origination at the Credit Investments Group in UBS Asset Management (formerly known as Credit Suisse Asset Management), along with his colleague on the public side, David Mechlin, a US portfolio manager and member of the CIG Corporate Credit Committee.

Delivering flexible capital during difficult times

This episode is sponsored by Blackstone

Private credit has seen significant growth over the past year, with some of the largest asset managers increasing their allocations to the sector. It comes as volatile market conditions and geopolitical tensions have plagued most industries, revealing private debt as a more secure source of capital. So, how are firms looking to take advantage of this uptick in activity? And what areas will they be focusing on going forward?

In this episode, we're joined by Blackstone’s Michael Zawadzki and Brad Marshall to explore some of the trends shaping private credit and analyse what the manager’s investment strategy looks like. The podcast comes after Blackstone integrated its corporate credit, asset-based finance and insurance groups into a single new unit called Blackstone Credit & Insurance (BXCI) in September.

Why private debt fundraising saw a seven-year low

In this episode, Andy Thomson sits down with Darius Craton, a director at Raymond James/Cebile Capital, a private fund placement and secondary advisory specialist. Craton reflects on PDI's fundraising data for 2023, providing insight into why it was a difficult year for those raising fresh capital but also why 2024 is shaping up to be more fruitful.

See Private Debt Investor's full 2023 fundraising report here.

AIFMD II: Why it threatens funds' strategic freedom

In this episode, we catch up with Jiří Król, global head of the Alternative Credit Council within the Alternative Investment Management Association. The ACC is a body that represents the private credit industry to policymakers, legislators and regulatory authorities globally.

In the conversation, Król discusses implications arising from the second, revised version of the Alternative Investment Fund Managers Directive (AIFMD), which fund managers in Europe will need to incorporate into their activities over the next few years.

One of the issues noted by Król is the definition of loan origination funds, which he believes may deter opportunistic investment at times when it’s most needed by the real economy. The conversation also covers areas such as cross-border investing, leverage, liquidity and risk management.

To listen to our other episodes – including our Decade of Private Debt miniseries – subscribe to the Private Debt Investor Podcast for great insights into the private debt asset class. A recent interview with Król may also be found here.

LP Perspectives 2024: A ‘brightening of the mood’

In this episode, we catch up with Reji Vettasseri, lead portfolio manager for private markets investments at Decalia, a Geneva-headquartered wealth management specialist.

Vettasseri reflects on some of the key takeaways from PDI’s LP Perspectives 2024 study in conversation with PDI senior editor Andy Thomson and explains why he thinks appetite to invest in private debt funds is growing after a challenging fundraising year in 2023. He also shares his views on why confidence in private debt performance is so strong, and questions whether investors are necessarily justified in continuing to allocate large amounts of capital to the same strategies they’ve backed up to now.

Click here for the full LP Perspectives 2024 report.

Apollo’s Akila Grewal on the firm's strategic evolution

In the final episode of our Decade of Private Debt podcast miniseries, the partner in client and product solutions at Apollo discusses the progression of her firm’s private debt business, as well as her personal growth within the industry.

Be sure to also check out our Decade of Private Debt special report at Private Debt Investor.

ELFA's Sabrina Fox on the tussles that have shaped deal agreements

In the fifth episode of our Decade of Private Debt miniseries, the European Leveraged Finance Association CEO reflects on the highs and lows of borrower/lender deal negotiations in the industry.

Be sure to also check out our Decade of Private Debt special report at Private Debt Investor.

Pemberton's Symon Drake-Brockman on the building of a pan-European GP

In the fourth episode of our Decade of Private Debt podcast miniseries, Pemberton co-founder and managing partner Symon Drake-Brockman discusses how the industry has evolved and recounts the process of shaping Pemberton into the powerhouse it is today.

Be sure to also check out our Decade of Private Debt special report at Private Debt Investor.

Kartesia’s Julien Rigon on how LP pressure has shaped ESG

In the third episode of our Decade of Private Debt podcast miniseries, Kartesia's head of France Julien Rigon reflects on the past 10 years from an ESG perspective and looks at how the industry might evolve considering today’s sustainability agenda.

Be sure to also check out our Decade of Private Debt special report at Private Debt Investor.

LCM’s Paul Burdell on finding gaps in the private credit market

In the second episode of our Decade of Private Debt podcast miniseries, LCM CEO Paul Burdell discusses the evolution of private debt and banking oversight over the past 10 years, the impact of regulations, as well as LCM’s unique position in the industry.

Be sure to also check out our Decade of Private Debt special report at Private Debt Investor.

Ares’ CEO Mike Arougheti on the huge potential for private debt’s future growth

In the first episode of our Decade of Private Debt podcast miniseries, Arougheti looks back at a decade of strategic growth in private credit, emphasising the importance of enduring relationships and the misunderstood, yet resilient nature of the market.

Be sure to also check out our Decade of Private Debt special report at Private Debt Investor.

Private Debt Investor Podcast trailer

Introducing the Private Debt Investor Podcast, where we'll be exploring the emerging trends and most important themes with the biggest names in the private credit asset class. To learn more and see all your subscription options, go to https://privatedebtinvestor.com/podcast