Citigroup considers new direct lending strategy
Citigroup is in talks to roll out a new direct lending strategy in the early part of next year.
According to a Bloomberg report, the investment bank is keen to gain entry to the growing private credit market, which is believed to be worth approximately $1.75trn (£1.4trn).
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An executive from Apollo Global Management recently suggested that the true size of the private credit market could be as high as $40trn.
Citi intends for the direct lending initiative to complement the bank’s existing broadly syndicated leveraged finance business. This may involve teaming up with outside partners to source capital for loans, which the bank itself would originate.
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The aim of the new strategy is to be able to offer a potential borrower a high-yield bond, leveraged loan, or private credit option, which the company, or their private equity owner, could then choose depending on their needs, Bloomberg reported.
A person close to the bank said that Citi wants to be ready for a fresh wave of buyout deals as private equity firms eventually have to sell existing portfolio companies to pay back investors.
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