Private credit has become one of the most discussed areas of private markets. For families new to the asset class, it helps to start with what it is and where its return comes from before looking at any specific opportunity.
What private credit is
Private credit is lending to companies or projects outside public bond markets, usually through funds managed by specialist lenders. Investors are compensated for illiquidity and for the credit risk of the borrowers.
Questions to ask first
- How and when can capital be returned, and what happens if many investors ask at once?
- How concentrated is the lending across borrowers, sectors and regions?
- What security sits behind the loans, and how has the manager handled defaults?
- How are fees structured, and how do they align the manager with investors?
TI
About the author
Trois Advisory
Written by the Trois advisory team, drawing on client work across mobility, real estate, private markets and strategy.
