How do Private Credit / Direct Lenders differentiate themselves to borrwers?
How can private credit lenders can differentiate themselves?
Or is it always a race to the bottom on pricing and terms since capital is commoditized?
Having a neat package, being organized, and having thoughtful diligence questions. You don't want to deal with someone who (i) has a ton of non-relevant questions, (ii) questions that are easily available in the data room or the CIM but they then get asked again to the sponsor anyway, and (iii) who ideally has prior experience with the type of deal you are looking at, which just helps eliminate points i and ii above.
I’d add to this
(1) the relationship with the sponsor who ultimately decides who the lenders are: have they worked with that lender before? How much trouble/noise have they created in prior underperformance instances (eg when another PortCo from same PE breached cov with that lender, did lender threaten to take over / ask for tons of equity, etc?)
(2) the sponsor’s approach to debt. Some sponsor maximise every bps while other prefer to work with only some lender (eg make sure lender has $ to upsize etc)
speed/simplicity/easy to work with/amount of debt/looseness of terms/pricing/unfunded commitments (DDTL size)
Cultural fit. But mostly terms. The product is capital, not necessarily a growth partner where minority / majority investors can differentiate themselves based on resources and thesis to win the deal.
bump
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