The Rise of Private Credit - Fact vs. Fiction: A deal makers perspective
Through my firm Kaeros Capital Advisors we've originated, structured and funded dozens of deals over the years with some of Canada's and the U.S.'s largest private debt (credit) funds. If you're reading the news, you'll likely notice a barrage of articles, exposes and OpEd pieces lauding private credit for taking over Tier 1 and Schedule 1 bank business. While the stats point to the affirmative, my question is is deal execution of the same quality and is the customer benefiting from this change? From my vantage point, I saw a great uptick in deals funded with private credit post-Covid as traditional bank debt froze. But that's not the whole story. While traditional banks can be risk adverse at times, can be constrained by capital ratios and beholden to changing lending policies (E.g. appetite towards particular sectors), private credit funds have challenges of their own. To name but a few, competitive pricing (especially in a decreasing interest rate environment), increasing competition, slow deal execution, capital constraints, poorly integrated CRM systems and continued reliance on manual due diligence, are things we notice in today's market.
What are your thoughts? What are you seeing out there?
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