Oddbean

As tide goes out on private credit, smaller firms look exposed ========== Funds with less than $1 billion of assets received the least amount of cash on record last year. Large firms got more than four fifths of the $200 billion raised by private credit globally in 2023. Limited partners are choosing well-known giants over smaller managers. A growing number of newcomers are being forced out of the private credit market. Fidelity International and Polen Capital Management had to rethink plans to expand into Europe. Smaller firms are in danger of being swallowed up by better-capitalized rivals. Smaller firms can outperform on returns by lending to smaller companies. Investors are less interested in putting their money with the smallest managers. Higher default rates in the portfolios of small managers are the result of triggers on covenants often lacking on larger loans. Larger managers may imperil their own futures by squeezing out the smallest managers. #PrivateCredit #SmallerFirms #LimitedPartners #MarketConcentration https://theedgemalaysia.com/node/718770