Deal Volume The Resilient Rise of Private Credit: Opportunities and Challenges
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Sep 25, 2024 Vivek Mathew, President of Antares Capital Advisors and a leader in private credit management, discusses the shifting landscape of private credit finance. He addresses the increasing demand for flexible capital and the critical challenges ahead, including market saturation and economic pressures. Vivek debunks myths about the so-called ‘golden age’ of private credit and emphasizes the importance of workout capabilities amidst rising defaults. He also analyzes evolving underwriting practices and the implications of geopolitical events on M&A activity.
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Private Credit's Allure
- Private credit's appeal lies in liquidity premiums, access to quality companies, and information advantages.
- Current market conditions, with manageable rates and potential soft landing, create a favorable environment.
LP Landscape Shifts
- Global investors are increasingly allocating to private credit, driven by diverse factors like low-interest-rate environments and diversification needs.
- Education about private credit as an asset class has increased interest from regions like Korea and the Middle East.
Growing TAM
- The private credit market's total addressable market (TAM) is expanding faster than capital inflows.
- Private equity's substantial dry powder, coupled with a low private equity penetration rate in middle-market companies, suggests ample lending opportunities.