Overheard at SuperReturn Private Credit Europe

Learn what experts had to say about the industry during the recent conference in London

On the outlook for 2023

“This year is going to present some interesting dynamics for managers and borrowers to navigate. There are some encouraging signs: inflation may have peaked, energy prices are starting to come down, the UK recession may not be as deep as feared and Europe may avoid one. That said, we are still in the middle of the credit cycle, so it is critical to be vigilant about portfolio management and supporting existing borrowers while opportunistically deploying flexible capital.”

Blair Jacobson, Partner, Co-Head of European Credit, Ares Management

On tests to come

“We have been hit with a series of shocks and these are taking some time to filter through. Over the coming period, it will become increasingly apparent how managers picked the credits they backed over recent years. That will inevitably mean a higher return differential among funds compared to the benign environment of the past. This will remind everyone to emphasise selecting highly disciplined managers.”

Börge Grauel, Partner and Co-Head of Private Debt, YIELCO Investments

On current trends

“Yesterday’s capital structures that were put in place in a low-rate environment are a real asset for companies that they would like to leave in place. As a result, we are seeing some sell a minority stake to raise equity capital and avoid replacing their debt at double the cost.”

James Reynolds, Global Co-Head of Private Credit, Goldman Sachs

On why it’s different this time

“The difference between the great financial crisis and today is how much equity is in play in deals now. Sponsors are far less able to just walk away. I think the support will continue to be there in most cases.”

Tara Moore, Managing Director, Head of European Originations, Golub Capital

On the resilience of private credit

“We have been visited by the four horsemen of the apocalypse in recent times: Brexit, the pandemic, the war in Ukraine and inflation. Private credit has remained in good shape throughout and 2022 was a great year for our industry. We saw high quality businesses, lower leverage and meaningful covenants, and we took advantage of this.”

Neale Broadhead, Partner, CVC Private Credit

On fundraising

“We believe the secular trends behind private credit are still present and investors are still very committed to private markets. However, they may not be able to commit at the pace they were before. We expect fund sizes will be smaller and 2023 may be a more challenging year. That said, I expect 2024 will be more positive and in the meantime, funds will seek capital elsewhere, such as from wealthy investors.”

John Bohill, Partner, StepStone

On public vs private

“The factors that drive returns in public markets are not always based on credit fundamentals – that makes them very hard to predict. If you want returns that are as predictable as possible, you need to go to private markets, where returns are driven by fundamentals – there you can analyse what is happening and make sound judgements.”

Trevor Castledine, Manging Director, bfinance