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PGIM’s Engin Okaya on private credit opportunities and the use of AI in investments
Dec 18, 2024
Engin Okaya, an executive managing director at PGIM Private Capital, shares her expertise on private credit trends and strategies. She discusses the value of a structured framework for evaluating lending while emphasizing middle-market companies for stable investment. Engin highlights the growing collaboration between private credit firms and banks, enhancing deal opportunities. She also delves into the transformative role of artificial intelligence in investment decisions, viewing it as a tool to support human judgment rather than replace it.
16:35
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Quick takeaways
- Engin Okaya emphasizes the importance of a structured risk-return framework in evaluating lending opportunities, particularly for middle-market companies.
- The integration of AI in investment decision-making enhances data analysis while still requiring human judgment for critical decisions.
Deep dives
Investment Decision Criteria in Private Credit
Deciding which companies to lend to in the private credit space involves a structured approach using a four-quadrant model. Key factors considered include customer and supplier concentration, capital intensity, business valuation, and leverage profile. High customer concentration may pose risks, while capital-intensive businesses may struggle with cash flow due to significant capital expenditures. By assessing the interplay of these factors, lenders can make informed decisions, even choosing to lend to companies with inherent risks by adjusting their valuation or leverage accordingly.
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