Since joining Investec 15 years ago, Callum Bell has played a lead role in building out and transforming the firm’s direct lending strategy from a niche offering into a core part of its investment portfolio in private credit and alternative assets.

As head of direct lending, Bell leads the platform that covers deal sourcing, structuring and management of private debt solutions for lower to mid-market companies and their private equity sponsors across Europe. Before Investec, he was a director in the leveraged financed team at RBS. A native New Zealander, Bell has spent the past 22 years of his career based in London — one he planned to be only two years at the outset.

1. We are just over halfway through 2025, a year that has been a bumpy ride for public and private markets to say the least. How would you sum up what we saw in H1?

The overarching theme is the current oversupply of capital into private credit — a lot of quite large funds that have been raised. We had grand hopes for the M&A market at the start of the year, and [US president Donald] Trump’s liberation day and some general economic malaise have meant this is much more muted than we had hoped for. Having said that, deal flow has remained pretty constructive for high quality borrowers and activity levels are decent — just not booming.

2. Where do you see spreads heading in the near future and rest of the year as we enter the second half?

We’re finding top quality deals are transacting with keen pricing as the market converges in some ways. There used to be a nice pricing gap between the banks and funds market that could be exploited but, with the supply and demand imbalance, this has closed. Looking forward, the pricing compression has started to flatten out. It remains to be seen if managers who have converged to the BSL market are able to decouple when M&A returns. This is not a factor in the lower mid-market, which is not accessible to the capital markets due to liquidity needs.

3. How does consolidation in the market affect a lower mid-market participant like Investec?

One of the key themes of the last 12 months is the level of consolidation and partnership we have seen. We play in a space where partnership and trust are important when choosing a financing lender. If you have been through cycles with your financing provider and built relationships, this will always have a value when it comes to decision making. Pricing is of course important but only one of the factors.

4. What does your credit selection process look like, and what themes are you paying attention to?

Picking the right capital structure and crafting the appropriate risk-adjusted rewards remains key. Within the lower mid-market, it is not “max out the leverage and apply a market price”. We’ve never been so macro as we have been in the past couple of years, it is normally a very micro business when financing mid-sized corporations across Europe. In our ICs, we talk a lot more about macro factors and market dynamics than we used to, like cyber risk, global trade flows and AI exposure. I spend a lot more time with our internal economists and advisory and sector specialists understanding and assessing the current state of play and key outlook and policy trends. 

5. Investec’s leverage ratio for deals has maintained a historical low of 3.5x as the wider market has crept up to 5.4x. Why is this important for you?

Investors love that because they see consistency and certainty — this is a 'sleep at night' product by design. So we pursue a 'no surprises' approach to all stakeholders. There are higher octane equity products out there in the equity or mezzanine space. Our role for investors is to deliver consistent returns year in and year out to allow them to capitalise on the benefits of consistent compound growth. You double your money in a different but quite compelling way for those who like the magic of compound growth.

6. How are low spreads translating to the M&A market?

Particularly for the highest quality transactions, we would expect to see some record low spreads being agreed as people target putting capital to work over price perfection. The panacea for a change to that is increased M&A. The structural drivers are there to support this growth, but the timing is trickier to predict. 

7. What’s going to be the driver to unlock M&A activity in Europe?

It's all about certainty. There have been just a lot of headwinds over the last few years in the political and economic environment — high base rates being one such input. In the UK, for example, the negative national insurance changes from the Labour government are just working through a company’s earnings. We are seeing that transition in pockets, for example with base rates ticking down in the UK and EU, so increased certainty will only help to unlock embedded deal activity.

8. What are you excited about that’s on the horizon at Investec?

We are under-indexed to investor capital and over-indexed to sourcing opportunities — this makes for a great opportunity to capitalise on. We have got strong growth ambitions in private credit and we are looking to attract more funds from external investors to access our unique alternatives investment platform, this could be by direct investment in funds or partnerships.

9. Any summer plans coming up as we head into August?

It's been a cracker of a summer in London to date — the best since I have lived in the UK. Originally from New Zealand, I came to London 22 years ago for a two-year trip and here I am, a 'few' years later riding the wave of the private credit ascent. The good news is the outlook looks very strong into the future, assuming the itch to catch real waves in New Zealand does not convince me otherwise!

9Questions is our Q&A series featuring key decision-makers in the corporate credit markets — explore the full collection here.