Credit secondaries
Is a gross 14-15% and net 12% IRR decent for a credit secondaries fund if it uses no leverage? Thx
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Based on the WSO Dataset, a gross IRR of 14-15% and a net IRR of 12% for a credit secondaries fund that uses no leverage can be considered decent. Typically, the use of leverage can amplify returns, so achieving these levels without leverage indicates a solid performance. It's important to compare these figures with the specific benchmarks and expectations for the credit secondaries market, which often looks for higher returns when leverage is employed. However, a fund operating without leverage and still delivering a 12% net IRR is managing risk well while providing a reasonable return.
Sources: Private Credit Secondaries Case Study Insight, What kind of returns are LPs targeting in opportunistic funds these days?, Do you think it's justifiable to ask for 25% of the GP for being the fund raiser for the projects?, Secondary PE Modeling, Sensitivities......
Were they buying high quality direct lending funds or were they buying steeply discounted opportunistic funds?
Direct lending LP secondaries or doing low LTV NAV loans
I don't have actual experience in the space, but seems pretty decent. Assuming they have a senior position where they aren't the first impaired in the fund meaning between equity cushion at the borrowco and "equity cushion" at the fund they should be in a pretty safe position meaning that yield sounds attractive. But not sure if that's the structure
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