Recently, there has been a growth in the private credit sector with institutional investors investing seriously in private credit and private equity. Private credit and private equity are similar in many respects, but one major difference exist between investing in private credit and private equity. Private credit funds offer investors more predictability in terms of return rate and payout schedule. As to investing in the private credit sector, it could be a complicated proposition as there is a diverse spectrum of product types from which to choose as well as considerations such as the internal rate of return of a particular private credit fund, the quantum of risk involved with a given private credit fund, and the length of time of the lock-up (or lack thereof). Moreover, some private credit products afford investors a means of gaining a steady income while serving to preserve the investor’s capital for more ideal investment opportunities, while others provide investors who are seeking an IRR of 15% or more a means of achieving such. Private credit products include senior loan funds, mezzanine loans funds, distressed credit funds, capital appreciation funds, specialty finance, and business development companies. Another variable that an investor must take into account is the cycle of the economy and its impact on the different private credit approaches. For example, funds that focus on distressed debt find that during an economic downturn opportunities abound, while the performance of mezzanine and senior debt funds may suffer due to defaults on debt. However, initiating investment in mezzanine and senior debt funds at the beginning of a positive economic cycle, will be economically beneficial.
Due to the complicated nature of investing in the various private credit products and funds, it would be extremely helpful to have an experience investor provide guidance to anyone desiring to invest in the private credit sector. Gareth Henry is such an investor as he has nearly 20 years of experience in the alternative asset investment industry. Gareth Henry has been in charge of investor relations the Fortress Investment Group and Angelo Gordon. Gareth Henry was also employed as Director of Strategic Solutions at Schroders, as an investment manager for SEI Investments, and as an analyst for Watson Wyatt. Gareth Henry holds actuarial mathematics degree from the University of Edinburgh in Scotland.
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