Private credit has swiftly transformed from a niche alternative strategy into one of the most dynamic and sought-after asset classes in global finance. This shift is fundamentally reshaping the debt landscape by allowing sophisticated investors direct access to exclusive financing opportunities, alongside the potential for consistent, uncorrelated returns.
What is Private Credit?
Private credit refers to loans directly negotiated and structured between companies and specialised, non-bank financial entities, such as private credit funds, insurers, and specialty asset managers.
Unlike traditional bank loans or publicly traded bonds, these transactions offer bespoke financing solutions tailored to the borrower’s needs and an investor’s specific risk-return profile. The result provides unmatched flexibility, speed, and efficiency.
Why Companies Choose Private Credit:
Companies are increasingly turning to private credit for several reasons:
- Tailored Financial Solutions:Custom-designed deal structures such as delayed-draw facilities, customised amortisation schedules, and specialised covenants, ensure alignment with each borrower’s unique business strategies and operational objectives.
- Efficient Capital Flow: Terms and pricing are agreed upfront, significantly reducing execution risks compared to traditional syndicated or publicly issued debt.
- Strategic Partnerships: Companies benefit from engaged, supportive lenders that not only provide capital but also strategic insights and additional funding for further growth and expansion.
- Enhanced Confidentiality: Private Credit limits sensitive information disclosure to select private lenders, safeguarding proprietary business strategies and operational details from competitors and the broader market.
Why Investors Are Turning to Private Credit:
Private Credit offers investors compelling advantages:
- Enhanced Yield: Historically, delivering superior returns relative to publicly traded debt, Private Credit combines attractive yields with lower volatility, driven by stable cashflows and strategic deal-structuring.
- Robust Downside Protection: Rigorous due diligence, specialised covenants, and ongoing direct oversight significantly mitigate borrower distress risks, protecting investor capital and minimising potential losses.
- Reduced Volatility and Increased Diversification: Contractual cashflows, shorter durations, robust structuring, and limited secondary-market activity all result in lower volatility for the asset class. The result is an asset class exhibiting low correlations to most traditional assets and therefore good portfolio diversification.
Accessing Exclusive Investment Opportunities:
Historically, access to high-quality private market investments has been limited primarily to large institutions like pension funds and insurers. Today, accessibility to this market is broadening rapidly, with institutions developing innovative structures that maintain institutional-grade oversight and protections while offering access points to new participants.
Sharenet, in partnership with Skybound Capital, opens the door to exclusive and innovative investment opportunities for clients. Leveraging Skybound Capital’s expertise and established track-record in private credit, ShareNet is uniquely positioned to guide investors through this sophisticated yet rewarding market landscape.
