This was not just marketing speak. The huge range of niche strategies in private credit, from asset-backed lending to receivables, to venture debt, to infrastructure, require a certain agility from the fund manager in order to take advantage. At the same time, opportunities come from the ability to speak at scale to larger deals, which requires firepower that does not apply to all managers.

“If you just look at why private credit has grown, it's not lending to more mid-market, single-country, sponsored-backed businesses,” said the participant. “What's helped the growth of private credit the last few years is doing larger tickets with larger businesses.”

This flight to established, large fund managers has been reflected in recent fundraising volumes, which have converged around established names with strong track records. 

But doing larger tickets with larger volumes of capital also requires sophisticated portfolio construction to maintain diversity for investors. This comes from years of investment in vehicles and wrappers.

A second delegate elaborated. “Scale is a huge issue but then with that comes diversity. These days, one deal is funded by 30-40 different vehicles within one fund manager to give investors diversity. We therefore need to be nimble about the vehicles and wrappers we raise.”

“A manager raising only one fund and without access to diverse vehicles is going to struggle,” they concluded.

Creating and maintaining numerous different vehicles within one asset manager — be they wrappers, or separately managed accounts to support co-investments from LPs — is cost-intensive from a regulatory and legal perspective. “You must have invested heavily in infrastructure to allow this,” said the second source.

This agility, ironically, comes from years of investment in the back office. This internal plumbing cannot so easily be replicated in newer fund managers, and it can’t be outsourced, the delegates insisted. 

LPs broadly agreed. “We need diversification, not just in geography but in number of borrowers, new opportunities such as investing in capital call facilities, asset-backed lending, fund-based leverage, special situations,” they said. 

“For us, the track record is key. An infrastructure to manage ABL, the hardware and software to manage ABL, that’s important.”

Deal pipeline…

It’s not exploded in Q4 as hoped, but there are still a handful of deals coming to market in the UK and Europe.

European Digital Group, an investment platform, is up for sale by sponsor Montefiore Investment. Lazard is advising on the sell side, and EBITDA is marketed at €50m. 

Excellence Imagerie, a medical imaging company, is up for sale with Rothschild on the sellside, according to two sources familiar with the matter. Excellence Imagerie has €20m EBITDA, the sources said.

“It’s a good business in a great sector, with exposure to a desirable geography,” one of the sources said, “I think whoever gets in on the debt will be getting a steal,” they added. As the sale process progressed the sources said the preferred bidder may have been found but the debt is not yet over the line.

IRIS Software is circled by a handful of private equity firms as it mulls its sale. These include EQT, KKR, Nordic Capital, Thoma Bravo, and Vista Equity Partners. Of note, none of these are sponsors necessarily associated with a strong desire for the capital markets, which leaves the way open to direct lenders.

The carve-out of consumer insights company WGSN from Ascential is back on after a summer lull, according to two sources. Initial deal pricing had placed WGSN at a £45-50m EBITDA valuation with a 6x leverage, but talks had supposedly hit a standstill over valuation issues. JP Morgan is advising on the deal.

Harvest, a French wealth manager, is readying for sale at €25m EBITDA via Rothschild Five Arrows, as reported by 9fin.

Sogelink, a tech asset through Raymond James, is marketed at €50m EBITDA, as reported by 9fin.

Eurazeo has put its portfolio company, the Dutch Ophthalmic Research Center (DORC) up for sale through Rothschild at €50m EBITDA, according to 9fin sources.

Nordic Capital-owned Swedish fire and gas safety business Consilium is up for sale, marketed off €50m EBITDA, according to 9fin sources.

Pure Cremation, a no-frills UK cremation chain, may still have up to £80m debt put into the business after sponsor Epiris made the acquisition as an all-equity buyout, as reported by 9fin.

Options Technology rumbles on, marketed off close to €70m EBITDA. As reported by 9fin, private equity sponsors are readying debt packages of around $200m as they compete to bid for the UK IT services provider. The Abry Partners’-owned business has attracted interest from Cinven and Permira.

…and closed

US asset manager Adams Street Partners is leading the financing for Oakley Capital's purchase of Flemming Dental, Excent, and Artinorway Group, a carve-out from European Dental Group, according to a source close to the matter. The deal is the first European private credit investment for Adams Street. 

And…despite news of banks entering or re-entering the private credit market, doing it through co-investments seems to be the route of choice, as reported by 9fin in Banks piggy back off private credit funds to source deals.