Private equity firms tap into debt market

Private equity firms are expanding into the lucrative credit space, according to an industry expert.

The $1.5trn (£1.2trn) private credit market has been booming of late, as higher interest rates have led to increasing returns.

“Private equity is in a challenging environment, with exit multiples under pressure,” said Keith Miller, global head of product, private debt, at Apex Group.

“Credit is being seen as a great alternative when you look at it on a risk return basis.

“We’re seeing a lot more interest in credit. Traditional private equity houses are looking at credit structures and credit funds.”

Read more: 58pc of private capital firms ramp up hiring

However, Miller noted that fundraising has been challenging this year and it is difficult for new entrants to gain a foothold in the market.

“There’s competition for fundraising,” he told Alternative Credit Investor.

“New entrants are competing against larger managers with a very established investment track record.

“The private equity firms who are looking at credit strategies have a good internal track record.

“For new managers it’s more challenging.”

Private equity firms are not the only ones tapping into the private credit boom.

Investment giants including Schroders, M&G and Fidelity have expanded their private debt offerings in recent months, with a number of new product launches.

Read more: M&G launches £500m private credit fund