Do you offer your LPs co-investment opportunities in private credit loans obtained by your portfolio companies?
TotǸl
AsiǸ-PǸcific
EMEA
North AmȃricǸ
49%
51%
50%
50%
49%
51%
49%
51%
No
Yȃs
products, and comfortable using them, GPs will continue to do so, even as liquidity pressures ease. “The private credit toolkit has broadened, and private credit is going to remain dominant. There are so many private credit solutions out there, and not only that, but GPs have been able to hybridize the various solutions and package them into bespoke facilities that address specific requirements,” Bolsinger says. “GPs are very sophisticated when it comes to optimizing capital structures. We are long past a GP raising a syndicated loan for an acquisition and that being the full extent of the financing.”
products in private credit, compared to 56% of North American respondents in last year’s survey.
The use of first lien/senior debt with recurring revenue loans has also seen a year-on-year jump across all regions surveyed. This product looks set to continue its upward trajectory, with 69% of respondents expecting to use it more over the next 12 months. Additionally, 62% and 67% of respondents expect to increase their use of ABS/structured products and junior debt capital products, respectively, with 77% of EMEA respondents expecting to increase their use of the latter. Just over half of respondents (51%) across all regions surveyed will also offer their LPs co-investment opportunities in private credit loans obtained by portfolio companies. The wide range of different private debt products that GPs are using highlights how the private credit playbook has expanded beyond the industry’s core direct lending foundations and branched out into new areas. The Alternative Credit Council notes that asset-backed lending (ABL), real estate and infrastructure debt now represent 40% of total private credit AUM. Increasing uptake of the various private credit offerings also shows how private credit players have reacted to GP requirements and tailored their products sets accordingly. Inflationary and interest rate pressures have helped to spur the growth of emerging private credit strategies. With constrained liquidity from more familiar sources of debt, GPs have had to take a broader view and explore all their financing options. Once familiar with different private credit
GPs are very sophisticated when it comes to optimizing capital structures. We are long past a GP raising a syndicated loan for an acquisition and that being the full extent of the financing. Markus Bolsinger Dechert LLP
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