Private Credit Strategy – the next big thing?

In the past few years, we have seen an exceptionally significant shift towards the emergence of Private Credit Strategy. According to SP Global, private credit grew tenfold between 2011 and 2021, with this trend set to continue. Preqin have predicted that the market with grow by another $2.3 trillion in the next five years. 

We have seen some of the major players such as Carlyle, Ares, Oaktree and Blackstone allocating significant portions of their AUM to the Private Credit market – with a lot of new boutique specialists following suit.

This has major impacts on the labour market – the demand for candidates with Private Credit experience already overshadows that available, with this only set to increase. 

Where are the investment management jobs?

There are three key private credit products that are already in high demand at present from these Managers building out their Private Credit offering. 

Direct Lending    

Direct lending is when you make loans direct to companies without going through an investment bank’s debt capital markets division, which may help the company issue a high yield bond. The loans often mature over five years, and the rates are given as a spread above reference rate. 

Mezzanine/ Junior Debt funds

Asset Based Finance 

Asset based finance is all about using assets and the stream of income those assets will generate in the future to create a security that can be sold. The assets might be anything from real estate to aircraft or railcars, says KKR. The advantage is that their value usually rises with inflation - which is desirable in the current environment. 

 BNP Paribas: another heavy hitter entering the Private Credit scene 

In December 2022,  BNP Paribas announced the creation of Private Assets, a new business unit within its Investment and Protection Services (‘IPS’) division (including asset management, wealth management, insurance and real estate)  to further goal aimed at becoming a leading European player in private asset management.

Albeit a space that already has a strong number of more boutique players, an entrance of this size signals the true growth potential of this market. Discussing the launch of the new service, Renaud Dumora, Deputy Chief Operating Officer of BNP Paribas and Head of Investment & Protection Services commented:  

What does this mean?

We are currently working with a number of leading Fund Managers across a variety of assets and strategies. From conversations, it is clear that private credit experience is an in-demand skill. Where these private credit functions are being built out, hiring managers are looking to hire professionals from a fund finance background i.e., Fund Controllers and Fund Accountants. And where functions are in their maturity, there is an increased need for fund operations professionals to develop the strategy for the business.

Unlike the wider financial services market, private credit is firmly bucking the trend of stabilising salaries. Remuneration packages in this area, including bonus, are on a sharp incline. This is primarily due to the chronic shortage of talent in the space. 

How Marks Sattin can help you find your next investment management hire 

Our Fund Finance Consultants have been in the middle of the Private Credit market far before it became popular! We have worked with boutique firms growing out Fund Finance and Ops professionals in this space. Similarly, we have been able to offer consultancy and market insights to the larger players allocating major investment into this strategy. We have positioned ourselves within the Private Credit talent pool, whilst also understanding some suitable transferable fits when supply is lacking. Our ingrained background in the Fund Finance space has enabled us to monitor this trend closely and prepare both our clients and candidates for these upcoming requirements. If you are a business looking for top-quality candidates you can submit a brief here. 

Alternatively, if you are a candidate looking for your next investment management and private credit role, you can find our latest roles here.