Private credit is a rapidly growing industry that has seen exponential growth in assets under management (AUM) over the past few years.
According to data from Preqin, AUM in private credit went from $500bn in 2015 to $1.5tn in 2022, and this growth is expected to continue. As AUM increases, so does the need for professionals to manage those assets. Private credit funds have been adding headcount, big time, with recruiters covering the space saying they are awash with work and are only likely to become busier.
Private credit funds are not just looking for people who can give introductions, but who really understand how the credit product works and how it’s structured.
As a result, there has been a lot of hiring activity around fundraising and marketing. Business development and marketing professionals are moving into private credit from capital introduction in banks, or – if they can prove an understanding of the space – from private equity or real estate funds.
By comparison, origination and structuring professionals in private credit are more likely to come from banks. Diligence and underwriting talent comes from banks or insurance firms.
The big players in private credit include Oaktree, Ares Management, Sixth Street, Blue Owl, HPS, Stonebridge Financial Corp, and Monroe Capital. These firms have been hiring heavily from banks, as well as from other private credit funds. Big asset management players like Apollo, KKR, and Blackstone are also adding to the heat as they build private credit teams.
Once private credit funds have raised money and made investments, their other big need is for structuring and syndication professionals to package up the loans and sell them on again. Private credit CLOs have become increasingly popular, with HPS and Blue Owl issuing collateralised debt obligations in recent weeks. As the default rate increases, more deals are being syndicated.
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Despite concerns about rising interest rates and defaults, private credit recruiters remain optimistic about the industry’s future. Even if defaults rise, recruiters predict that the private credit sector will expand and need more people as banks try to shift debts off their books. The regional banking crisis means that none of these regional banks want anything on their balance sheets now, so direct lending from private credit funds will only increase.
Recruiters covering the private credit space say that the sector is likely to remain hot as a pistol for at least the next 14 months, with private credit hiring continuing to be a major focus for many firms.
Frequently Asked Questions
Key Skills Required for a Career in Private Credit
Private credit professionals require a range of skills to succeed in their roles. These include strong analytical and financial modelling skills, as well as excellent communication and negotiation abilities. Attention to detail, the ability to work under pressure, and a good understanding of the market and industry trends are also essential.
Main Differences Between Private Credit and Private Equity
Private credit and private equity are two distinct investment strategies. Private credit involves providing debt financing to companies, while private equity involves investing in companies by purchasing equity. Private credit typically offers lower returns but also lower risks compared to private equity.
Getting Into Private Credit Without Prior Experience
Getting into private credit without prior experience can be challenging, but it is possible. Pursuing relevant education such as a degree in finance or economics can be helpful. Networking and building relationships with professionals in the industry can also be beneficial. Starting in a related field such as investment banking or corporate finance can provide valuable experience and skills.
Common Types of Private Credit Funds
There are several common types of private credit funds, including direct lending funds, distressed debt funds, mezzanine debt funds, and special situations funds. Direct lending funds provide loans directly to companies, while distressed debt funds invest in the debt of companies in financial distress. Mezzanine debt funds provide financing that sits between equity and senior debt, while special situations funds invest in unique opportunities that do not fit into traditional categories.
Major Challenges Faced by Private Credit Professionals
Private credit professionals face several challenges, including managing risk, finding attractive investment opportunities, and navigating complex legal and regulatory frameworks. Building and maintaining relationships with borrowers and investors can also be challenging, as can staying up to date with market trends and changes.
Typical Career Progression Paths in Private Credit
Career progression paths in private credit can vary depending on the firm and individual. Common paths include starting as an analyst or associate and progressing to more senior roles such as vice president or director. Some professionals may also choose to move into related fields such as private equity or investment banking. Building a strong track record and reputation is essential for career advancement in private credit.
