Marathon Asset Management is expanding its private credit team as the $23 billion asset manager looks to position itself for upcoming market turmoil.
Private Credit News UK
The firm is planning to offer direct lending to firms backed by private equity, joining the rush into private credit ahead of the ‘refinancing wall’.
Marathon’s direct lending strategy is powered by 180 professionals across its global credit platform, a franchise that Marathon has built since its founding 25 years ago.
Photo by Miguel A Amutio
Target Market
Marathon’s direct lending strategy targets middle market borrowers with earnings before interest, taxes, depreciation and amortisation (EBITDA) ranging from $25 million to $150 million.
The firm is focused on providing loans to private equity-backed companies seeking sponsor coverage.
Marathon’s direct lending team is experienced in originating, structuring, and underwriting loans across a broad range of industries, including healthcare, industrials, consumer, and technology.
Investment Criteria
Marathon’s direct lending team is focused on investing in companies with strong cash flow generation, recurring revenue streams, and a competitive market position. The firm’s investment criteria include:
- Strong management teams with a track record of success
- Proven business models with a competitive advantage
- Predictable and stable cash flows
- Diversified revenue streams
- Attractive risk-adjusted returns
Marathon’s direct lending team is committed to working closely with its borrowers to understand their business needs and provide flexible financing solutions that meet their unique requirements. The firm’s direct lending platform offers loans ranging from $25 million to $150 million, with terms ranging from 3 to 7 years.
Overall, Marathon’s direct lending strategy is designed to provide middle market borrowers with access to flexible, customized financing solutions that meet their unique needs.
The firm’s experienced team of lenders is focused on building long-term relationships with its borrowers and providing them with the support and resources they need to grow and succeed.
Market Response and Future Outlook
Investor Perspective
Marathon Asset Management’s expansion of its private credit team has caught the attention of investors.
The move comes as the $23 billion asset manager looks to position itself for upcoming market turmoil. Investors are keen to see how Marathon’s corporate credit business will perform in the current low yield environment.
Marathon’s direct lending business provides loans ranging from $25 million to $150 million, primarily for private equity-backed companies.
The firm’s Managing Director in New York City has stated that the current refinancing wall presents a significant opportunity for the firm.
Borrowers are looking to refinance their debt ahead of rising interest rates, and Marathon is well-placed to offer alternative financing solutions.
Industry Impact
Marathon’s expansion is a sign that private credit is becoming an increasingly attractive asset class for investors.
As yields on traditional fixed income investments remain in the low teens, investors are seeking higher returns in alternative assets. Private credit offers attractive yields and lower volatility than traditional fixed income investments, making it an appealing option for investors.
The expansion of Marathon’s direct lending business also has broader implications for the industry.
As private equity firms continue to raise larger funds, they will require more financing solutions.
Private credit firms like Marathon are well-positioned to fill this gap in the market. The industry is likely to see continued growth in the coming years as private credit becomes a more established asset class.
Overall, Marathon’s expansion into private lending is a positive development for the industry. As investors seek higher returns in alternative assets, private credit is becoming an increasingly attractive option.
With the current refinancing wall presenting a significant opportunity, Marathon is well-placed to take advantage of the growing demand for alternative financing solutions.
Marathon’s Other Business Ventures
Commercial Real Estate
Marathon Asset Management has a wide-ranging portfolio of commercial real estate investments. The firm has invested in a variety of properties, including multifamily properties, office buildings, and retail spaces.
Marathon’s investments in commercial real estate are typically made through its Asset-Based Lending Fund, which provides financing to real estate developers and owners.
One of Marathon’s most significant commercial real estate investments is its $33 billion portfolio of commercial mortgages. These mortgages are primarily secured by office buildings, hotels, and retail spaces located in major metropolitan areas across the United States.
In recent years, Marathon has increased its exposure to commercial real estate, with a focus on asset classes that are less sensitive to interest rate changes. The firm has also expanded its investment in multifamily properties, which have proven to be a stable and reliable source of income.
Alternative Credit
Marathon Asset Management has been actively investing in alternative credit for many years.
The firm has a long history of investing in distressed debt, special situations, and other credit opportunities that are not available to traditional investors.
In recent years, Marathon has focused on the dislocation in the credit markets caused by the COVID-19 pandemic. The firm has been actively investing in distressed debt and other credit opportunities that have arisen as a result of the pandemic.
Marathon’s alternative credit investments are primarily made through its Asset-Based Lending Fund, which provides financing to companies across a variety of industries.
The fund has a flexible mandate and can invest in a variety of debt instruments, including senior secured loans, mezzanine debt, and distressed debt.
Marathon’s alternative credit investments have been highly successful, generating strong returns for the firm’s investors. The firm’s expertise in this area has been recognised by a number of industry publications, including Bloomberg L.P.
Conclusion
Marathon Asset Management’s expansion into private lending is a strategic move that positions the firm to take advantage of the growing private credit opportunity. With the company’s focus on direct lending to firms backed by private equity, Marathon is joining the rush into private credit ahead of the “refinancing wall” that is expected to hit in the coming years.
The $2 trillion opportunity in private credit is driven by a number of factors, including low interest rates, regulatory changes, and the increasing need for alternative sources of financing. As such, the move by Marathon to expand its private credit team is a smart one that will help the firm capture a share of this growing market.
Investors looking for exposure to private lending may want to consider Marathon Asset Management as a potential investment opportunity. With the firm’s proven track record in the asset management space and its focus on direct lending, Marathon is well-positioned to generate strong returns for its investors.
Overall, Marathon’s expansion into private lending is a positive development for the company and its investors.
With the private credit market expected to continue growing in the coming years, Marathon’s move into this space is a smart one that should help the firm capture a share of this lucrative market.
