“Too good an opportunity to miss”: Exclusive interview with Corinthia’s Mark Wilton

Corinthia Global Management hit the headlines last year amid a legal tussle with Barings, but the start-up has shrugged off the scandal to make its mark on the world of direct lending. Mark Wilton, head of European investments, tells Alternative Credit Investor how the firm stands out in a competitive market.

Corinthia Global Management launched last year as a new entrant to the direct lending space, but it is at no risk of being ignored in a crowded market.

22 Barings private credit employees departed together as a team to join the new firm, triggering legal action by Barings against Corinthia and certain former staff members. In its lawsuit, it described the mass exodus as “one of the largest corporate raids at an asset manager in years.”

Mark Wilton (pictured), head of European investments at Corinthia, would not be drawn into discussing the legal action, but conceded that the increased visibility for the new firm had its benefits.

“I think the story around our launch was, frankly, helpful in terms of publicity,” he told Alternative Credit Investor.

“A lot of start-ups are probably starved of oxygen, whereas we had a lot.”

Wilton, a chartered accountant by background, spent 18 years in a senior management role leading Barings’ European private credit business before moving to Corinthia.

He says that joining Corinthia “was too good an opportunity to miss” and highlighted the attractions of working at a start-up.

“Rather than focus on push factors, it’s actually the pull to set up a new business, to be a dedicated specialist in direct lending, and to be part of an employee-owned firm, where those alignment of interest and incentivisation is really, really clear and is something you can present to investors very well,” he said. “That was the attraction really, of starting off on a new, exciting path.”

Corinthia, which has financial backing from Nomura, positions itself as a core mid-market direct lending specialist, focusing on corporates with EBITDAs ranging from €10m (£8.7m) to €50m.

It enters the direct lending market at a challenging time, with downward pressure on pricing amid fierce competition for deals.

Industry data indicates that investors and corporates are flocking to the largest managers with the longest track records, so how does a new entrant grab market share?

Wilton explains that it is the track record of Corinthia’s combined team that helps to set it apart from other new firms. He highlights that the North American colleagues have worked together for over 20 years, while the core European team has worked together for more than 10.

“One of the unique features we have is that whilst we are a start-up and going through all of these growth phases, actually, as a team, we’ve worked together for a long time,” he said.

“The fact that the team is a known entity, and has an auditable track record as a team, is a strong factor.

“Most start-ups will be a collection of people who individually could be really good, but they haven’t got a shared history. They’re trying to form their new message, whereas from day one, we’ve had a clear identity. From an investor proposition and a private equity proposition, we’ve been a known and trusted partner for many, many years. That’s a clear point of difference.”

Wilton argues that being independent has its advantages over being part of a larger firm.

“Within a lot of large global businesses, there are individual teams and divisions that will have a limiting remit, which could be either in terms of the types of clients or the types of vehicles,” he said. “I think we’ve learned some new skills and opened up some new avenues as an independent.”

Read more: Corinthia leads refinancing of health services provider Hygie31

He also asserts that it is “absolutely possible” to compete with the biggest players as their growing scale leaves gaps in the market for fund managers willing to originate smaller transactions.

“When they raise larger and larger funds – which we celebrate as it shows that investor appetite for private credit is going from strength to strength – it leaves gaps,” Wilton explained. “If you raise €20bn or €30bn then you actually leave behind a lot of room because you have to deploy that into larger and larger transactions.

“Private credit is now a permanent feature competing against broadly syndicated loans on large-cap transactions and I don’t think that’s going to change. But what it means is that more managers are drifting up and up in size. Being a dedicated specialist in the core mid-market, which is our mission, means that the larger those big firms get, the more it creates opportunities for firms like ourselves.”

Corinthia’s focus is on sponsor-backed lending, drawing on the team’s well-established relationships with private equity firms.

It has now funded four deals and signed another four, while it is in advanced stages for another four or five. Wilton said they hope to have at least 12 completed transactions by the summer.

“I’ve been really pleased with how the private equity industry has embraced the new firm,” he added. “We’re getting opportunities to compete on mainstream processes and quiet off-market processes, and that’s very valuable.”

Uncertainty ahead

The current macroeconomic environment – particularly relating to US government policy – has been closely watched by market commentators, amid fears that the US will go into a slump that stifles M&A.

Wilton suggests that a broader economic cycle “will sort out the better managers from ones who aren’t,” although he agrees that a slowdown “would be the main concern”.

However, he also highlights that private credit has typically done well in periods of volatility, stepping in when banks retreat.

“One of the advantages of debt, compared with, say, private equity, is that there’s always some activity in the market,” Wilton added.

“Even when there’s no M&A, you can essentially manufacture deal flow because there’s refinancing, there’s dividend recaps.

“Ultimately, to expand the market, you need M&A, but there’s enough activity that ticks on to allow private credit to operate.”

However, Wilton expects to see a rise in default rates across the industry, predicting that “there’s probably some credits out there that have been held together for long enough and the time will run out”.

When it comes to rates of return, he expects to see differentiation between fund strategies.

“Over the last 18 months, there has been a reset of rates in a slower M&A environment, which followed a period of super profits being earned by direct lenders,” he said. “When rates started to rise after the Russia-Ukraine war started, margins and fees both expanded. So what we’re seeing now is a reset to more normal levels.

“Where the market goes next will depend on the volatility that we see through public markets. If public markets start to widen because they were at record lows, you’ll probably see private credit edge up as that illiquidity premium maintains.”

For Corinthia, the plan is to stick to their core mid-market offering for now, as they expand their business.

“We’re clearly very ambitious – there’s probably not many start-ups that within a year would have eight offices across six countries and 50 staff,” said Wilton.

“I think we’ve done some things well. There’s other things I’m sure we would do differently because you learn new skills and it’s been nothing other than incredibly hard. I’m sure it will continue to be really hard. But some of that is the fun we’ve signed up for.

“Firstly, we need to do the core really, really well. And from that, you attract a loyal following in both the investor and the private equity community as you build the platform. There’s no limit on our ambition and growth, but it’s step by step.”