The bank is reportedly allocating cash from its balance sheet to purchase debt originated by the bank and participate in new financings arranged by direct lending funds as reported by multiple private equity news uk sites
The move is part of the bank’s plan to gain a foothold in the booming private debt industry, where private credit has emerged as a popular avenue for financing large-scale buyouts.
Recognizing this trend, Barclays has been planning its entry into the private credit market since last year. The bank aims to compete with private credit funds and expand its footprint in the $1.5 trillion private debt market.
Barclays is not alone in its pursuit of the private credit space. Other banks, including JPMorgan Chase, Bank of Montreal, Capital One Financial, and Goldman Sachs Group, have also set their sights on this market.
JPMorgan Chase has allocated $10 billion to revamp its direct lending approach, while Bank of Montreal has partnered with Oak Hill Advisors, and Capital One Financial has made unitranche loans through a joint venture with HPS Investment Partners. Goldman Sachs Group, a long-standing player in this field, holds loans through its asset management arm.
Private credit has left traditional banks at a disadvantage as private equity firms turn to asset managers for funding. Many companies, especially those controlled by private equity, have sought financing from private lenders during uncertain times in the public markets.
Private Credit News UK
Barclays plans to compete in the private credit market under the leadership of Emily Knickel, the head of principal investing based in New York. The bank’s move into the private credit market is a strategic one, as it seeks to gain a foothold in the industry and directly compete with private credit funds.
In another recent move, Barclays is one of the backers of the newly launched FinTech Growth Fund, a new investment fund in the United Kingdom, together with Mastercard and the London Stock Exchange Group.
The private credit market is a multi-billion dollar industry that has grown in popularity since the financial crisis. Direct lenders, such as Ares Management Corp and Blackstone Inc, have gained market share in recent years and charge lower deal fees and management fees than traditional lenders.
Institutional investors have also been attracted to the asset class due to its potential for higher returns. According to data from Preqin, the global private credit strategy is a $1.2 trillion asset class.
Barclays’ move into the private credit market is a significant one, as the bank seeks to expand its business and compete with other financial institutions in the industry.
The bank’s corporate and investment bank and asset management division will likely be key players in its lending strategy.
Private Credit News UK – Barclays sets funds for strategic entry into private credit market
