Marathon Asset Management, a $23 billion asset manager, is expanding its private credit team in a strategic move to position itself for upcoming market turmoil.
The New York-based firm is looking to capitalize on the $2 trillion opportunity in private credit by offering direct lending to firms backed by private equity.
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The Private Credit Team
Marathon’s expansion into private credit involves hiring five new executives to join the firm’s private credit team.
The team will be responsible for originating, structuring, and managing private credit investments for the firm’s clients. Marathon’s move into private credit is part of a broader strategy to diversify its investment offerings and generate higher returns for its investors.
Strategic Expansion
Marathon’s move into private credit comes at a time when many investors are seeking alternative sources of yield in the low-interest-rate environment. The firm is betting that private credit will provide a lucrative opportunity for its investors, particularly in the mid-market space.
Marathon is looking to expand its direct lending business to include mid-market companies, including those with stressed balance sheets.
The firm is also exploring private asset-based lending as part of its strategic expansion into the private credit market.
Overall, Marathon’s move into private credit is a confident and knowledgeable step towards diversifying its investment offerings and generating higher returns for its investors.
With the addition of five new executives to its private credit team, the firm is well-positioned to take advantage of the $2 trillion opportunity in private credit.
The Private Lending Landscape
Private lending has emerged as a popular investment opportunity in recent years, with a potential lending opportunity of $2 trillion. This market has attracted a diverse range of lenders, including banks, private equity firms, and asset managers, all seeking to capitalize on the lucrative fees and high returns on offer.
Market Opportunities
The private lending landscape is ripe with opportunities, particularly as traditional banks have become more cautious in their lending practices.
This has created a funding gap that private lenders are well-positioned to fill, offering borrowers access to capital that may not be available through more traditional channels.
Moreover, the soaring demand from investors for higher-yielding assets has resulted in a significant increase in dry powder, providing private lenders with ample capital to deploy. This has also led to a proliferation of private credit funds, with Blackstone Inc’s Head of Alternative Credit recently stating that they are “drowning in capital.
Competition and Challenges
Despite the significant market opportunities, private lenders face stiff competition from both traditional banks and other alternative lenders. This has resulted in a compression of lending spreads, making it more difficult for lenders to generate attractive returns.
Moreover, private lenders also face a number of challenges, including increased regulatory scrutiny and the potential for increased default rates in the event of a market downturn. As a result, lenders must be diligent in their underwriting practices and maintain a disciplined approach to risk management.
In conclusion, the private lending landscape offers significant opportunities for lenders seeking to capitalize on the lucrative fees and high returns on offer. However, lenders must also be aware of the challenges and risks associated with this market, and maintain a disciplined approach to underwriting and risk management.
Video by Nino Souza
