The Evolution and Adaptation in Private Credit

Welcome back to the Alt Goes Mainstream podcast.

Today’s episode is with someone who is running the long race — in investing and in running.

We sit down with prolific long distance runner, Blue Owl Capital’s Ivan Zinn, who has been a pioneer in alternative credit and asset-based finance.

Ivan has had a long career in private credit. He started at DLJ before joining Leonard Green & Partners and Highbridge Capital. He then joined HBK before founding pioneering private credit firm Atalaya Capital Management, where he was also the CIO. Ivan and team grew Atalaya to over $10B in AUM from 2006 to 2024 before being acquired by Blue Owl Capital for $450M (and $800M with earnouts).

As part of the transaction, Ivan became Managing Director at Blue Owl and is the Head of Alternative Credit, where the firm is now expanding its footprint due to Atalaya’s expertise. Ivan is as prolific outside of the office as he is in it — he is a long distance runner, running 100 mile races, and was a NCAA All-American tennis player, which comes as no surprise given the discipline, focus and expertise required to excel at the activities he’s done throughout his career in work and sport. He’s also a Board member of the USTA Foundation.
Ivan and I had a fascinating conversation about the evolution of private credit and the growth of asset-based finance. We discussed:

• How and why ABF has grown within the private credit ecosystem.
• ABF’s market structure and a “trip down main street.”
• The potential size of the ABF market.
• Why moving assets off bank balance sheets can help the financial system.
• Why private credit is a data rich asset.
• Where ABF fits in a portfolio.
• Why consumer credit is potentially misunderstood within private credit.

Thanks Ivan for coming on the show to share your wisdom and expertise on private credit and ABF. Good luck to anyone keeping up with you on a long run though!

You can also see a recent Q&A with Ivan about private credit and ABF on AGM here.

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A word from AGM podcast sponsor, Ultimus Fund Solutions

This episode of Alt Goes Mainstream is brought to you by Ultimus Fund Solutions, a leading full-service fund administrator for asset managers in private and public markets. As private markets continue to move into the mainstream, the industry requires infrastructure solutions that help funds and investors keep pace. In an increasingly sophisticated financial marketplace, investment managers must navigate a growing array of challenges: elaborate fund structures, specialized strategies, evolving compliance requirements, a growing need for sophisticated reporting, and intensifying demands for transparency.

To assist with these challenging opportunities, more and more fund sponsors and asset managers are turning to Ultimus, a leading service provider that blends high tech and high touch in unique and customized fund administration and middle office solutions for a diverse and growing universe of over 450 clients and 1,800 funds, representing $500 billion assets under administration, all handled by a team of over 1,000 professionals. Ultimus offers a wide range of capabilities across registered funds, private funds and public plans, as well as outsourced middle office services. Delivering operational excellence, Ultimus helps firms manage the ever-changing regulatory environment while meeting the needs of their institutional and retail investors. Ultimus provides comprehensive operational support and fund governance services to help managers successfully launch retail alternative products.

Visit www.ultimusfundsolutions.com to learn more about Ultimus’ technology enhanced services and solutions or contact Ultimus Executive Vice President of Business Development Gary Harris on email at gharris@ultimusfundsolutions.com.

We thank Ultimus for their support of alts going mainstream.

Show Notes
00:00 Introduction and Message from our Sponsor, Ultimus

01:57 Introducing Ivan Zinn

03:49 Parallels Between Running and Business

05:32 Early Days of Private Credit

06:52 Post-GFC Changes in Private Credit

07:31 Evolution of Atalaya's Business Model

08:21 Growth of Asset-Based Finance

09:38 FinTech's Role in Private Credit

11:09 Importance of Stable Capital Sources

21:09 Concentration Risks in Private Credit

22:27 Defining Asset-Based Finance (ABF)

22:53 Different Flavors of ABF

27:43 Investor Exposure and Risk in Private Credit

29:46 Direct Lending vs. Public Credit

36:02 Consumer Credit and Perceived Risks

37:36 Debunking the Cyclical Perception of Credit Risk

38:22 The Utility of Credit Cards During Financial Crises

38:44 The Resilience of ABS and Diversified Portfolios

39:07 The Role of Data Science in Credit Analysis

39:32 Surviving the GFC: A Benchmark for Credit Pools

39:53 Diversification in ABF and Private Credit

40:48 Selective Approach to Consumer Credit

41:36 The Importance of Manager Selection in Credit Investing

42:11 Private Market Transactions and Large Announcements

42:40 The Journey from Atalaya to Blue Owl

43:25 Challenges in Institutional Fundraising and Capital Formation

44:20 The Need for Diverse Capital Sources

45:43 Integration and Cultural Fit with Blue Owl

46:16 The Role of Data Science and Innovation in Credit

50:22 The Wealth Channel and Private Credit

50:50 Private Credit as a Fixed Income Replacement

52:34 Transparency and Market Structure in Private Credit

55:55 Educating Investors on Private Credit

57:48 The Evolution and Adoption of ABF

01:00:15 The Growth of Private Credit Market

01:01:28 Challenges and Opportunities in Private Credit

01:03:45 The Importance of Scale in Credit Investing

01:04:28 Vertical Integration in Financing

01:05:26 Relentless Forward Progress in Credit Investing

01:06:31 Memorable Investments and Risk-Reward Balance

Editing and post-production work for this episode was provided by The Podcast Consultant.