Understanding Private Sector Investment Opportunities

‘Peak’ Private Credit? A prominent bank CEO in the news has stated Private Credit has peaked. With the highest level of conviction, I can assure you that is simply not the case. First, some imply that Direct Lending (DL) defines Private Credit (PC), however, it is just one of the three main pillars that represent private credit. DL is currently the largest segment of PC, it is still growing, and I expect it to grow proportional to PE, a business that will undoubtably be bigger 5-10 years from now than it is today. As corporate earnings grow, the corporate sector at-large will support more debt that allows a company to add operating leverage, a reasonable assumption since corporate earnings grow with GDP and earnings are only temporarily interrupted by an occasional recession that comes along ~1x every 10 years or so. Second, Assrt-Based Lending (ABL) is only getting started. Although Marathon has been in the ABL business for 20 years, having invested $30B+, investor interest in ABL is just ramping up now. A leading consulting firms released its survey of institutional clients with ABL representing the #1 allocation request for the coming year. The TAM for ABL is enormous with some estimates providing a range of $30 to $40 trillion. In the next 5-10 years, I believe the ABL business overall will grow by 30% annually as AUM for ABL becomes as large as DL. The ABL outlook should enable PC to grow 2x on its own. Diversification and low correlation to DL, makes ABL a terrific compliment for PC investors (institutional, insurance, wealth management). The third PC leg to the stool is Opportunistic Credit, which includes capital solutions and special situations. Capital solutions provide tailored financing to meet a company’s strategic needs, ranging from growth capital and debt refinancing to solve for liquidity or restructuring through credit or hybrid structures, structured as debt, often with equity upside. The return objective for Opportunistic Credit should allow managers to generate higher IRRs than observed in DL & ABL. As DL has slowed over the past year, capital solutions have picked up rather significantly. PC also includes infrastructure debt, data centers, and more. Specialty finance such as litigation finance and NAV lending are not sectors that Marathon favors, however, they do represent a growth for PC. So, while, certain skeptics may question the growth of PC, you should have no doubt the direction of travel—the size and scope are huge and getting bigger. As the global economy grows $3 trillion per year (global GDP now exceeds $100 trillion), the amount of credit needed grows proportionally. Private Credit peaking? Not even close; that’s like saying the internet peaked in 2001 à before smartphones, cloud computing, streaming, social media, and more recently AI has helped to re-define the global economy. The Private Credit markets are ~$4T today and I believe it will grow to $10T over the next 7 years.

Private debt is exploding, but there's a $1.7 trillion problem nobody's talking about. Here's what's actually happening: Interest rates jumped 200-300 basis points since 2022, and suddenly everyone wants a piece of private credit. The yields look incredible. But here's the catch that's creating chaos in 2025: buyout funds are sitting on mountains of dry powder with nowhere to deploy it. Too much money, not enough quality deals. The competition is absolutely brutal. Private credit AUM hit $1.7 trillion in just five years. That's not growth, that's a feeding frenzy. Plot twist: While everyone's fighting over the same deals, smart money is looking elsewhere. Merchant Cash Advances are quietly eating market share by going where private credit won't touch. Small businesses with messy cash flows? MCAs are there. Companies that need money tomorrow, not in three months? MCAs again. Revenue-based financing that actually moves with business performance instead of rigid payment schedules? You get it. The real story isn't that private debt is killing banks. Banks are still crushing it with revolving credit lines. Private debt handles the big, complex, longer-term stuff. But MCAs? They're speed-running the entire process. Days instead of months. Flexibility instead of covenants. Access instead of exclusion. Asset-Based Finance is already a $6 trillion market heading toward $9 trillion, but the most interesting opportunities aren't in the obvious places. They're in the gaps. The businesses too small for private credit but too dynamic for traditional banking. The companies that need capital that adapts to their reality, not the other way around. Here's what most investors miss: MCAs aren't just filling gaps, they're creating new market dynamics. Counter-cyclical opportunities when banks get nervous. Direct exposure to small business growth with built-in downside protection through revenue-based structures. Different risk, different returns, different game entirely. Banks fund private credit funds. Private credit competes with MCAs for certain deals. MCAs serve customers everyone else ignores. It's not competition, it's evolution. The credit market in 2025 isn't about choosing sides. It's about understanding that the whole ecosystem just got more complex, more interconnected, and way more interesting. The players who figure out how all these pieces fit together? They're going to make serious money. Source in comments 👇

💸 UHNW Single Family Office (SFO) based in the US is building an endowment-style portfolio, looking for sub $150M venture funds, and invests across Private Equity, Real Estate and Credit.   The insights below come from a conversation with an investor at an Ultra-High-Net-Worth (UHNW) SFO based in the US.   🧠 Investment Philosophy • In for the long haul: Underwrite for the next 10-20 years. Invest early and scale as firms grow. • Endowment model: Building a self-sustaining model over the next 7-10 years. Expect to offset liability of capital calls and replace dividends through their private markets portfolio.   📊 Portfolio Construction  • 60% public equities & cash • 40% alternative portfolio   → 40% venture capital   → 30% private equity   → 20% real estate   → 10% private credit   🚀 Venture Portfolio • 10-15 emerging funds, primarily seed / pre-seed, sub $150M (avg. check size $1M-$5M) • Secondary LP positions in various funds to shorten timeline to liquidity • Ownership focused, with 5-10% on the look through   🔮 Looking Forward • Sub $150M funds with proven track record (DPI) • Prefer frontier / deep tech (vs. generalist / SaaS). Highly technical GPs who are looking for urgent problems, e.g., climate, healthcare, TechBio, defense, manufacturing, logistics, etc.  • US-based funds (no emerging markets)   ✍🏼 Lessons Learned • No free passes: Re-ups are reviewed & diligenced with the same rigor as any new investment. • Relationships compound faster: Prefer to invest earlier, in smaller funds (vs. larger / established funds) since it’s easier to develop deeper relationships with those GPs and win access to future funds & opportunities • Follow process with room for flexibility: Do the work required to source & diligence investments, but don't be too much in a box to where it inhibits your ability to execute on deals with high conviction.   🌱Funds Fundraising To be connected with this family office, please submit your fund info here: hyphah.com/fund-intake. 🎷LPs Connect with global family offices, endowments, and other institutional LPs: hyphah.com/events. 🙏 Special thanks to the investor of this SFO for sharing their insights (shared with their permission, on the condition of anonymity). #familyoffice #venturecapital #emergingmanagers #OpenLP #LPInsights #US #hyphah

📈 Strategic Insights for 2024: Navigating the New Normal in Private Markets and Beyond 📊 As growth leaders, understanding the broader business landscape is crucial, especially considering the evolving challenges and opportunities in private markets. A recent article from McKinsey sheds light on "Ten Considerations for Private Markets in 2024," offering valuable insights not just for private equity markets but for middle-market companies across various ownership structures. Key Considerations for 2024: 1️⃣ Normalizing Dealmaking: Expect a balanced growth in dealmaking, influenced by LP-driven pressures and higher interest rates. 2️⃣ Challenging Fundraising Environment: The 'numerator effect' continues, with fresh LP commitments constrained by valuation growth and slow PE exit velocity. 3️⃣ Concentration Among Larger Names: Larger funds may continue to attract LPs in a tight fundraising environment, limiting new-fund formation. 4️⃣ Emphasis on Value Creation: Transformative change becomes crucial for value boost, with low rates and expanding multiples no longer tailwinds. 5️⃣ Evolving Talent Challenges: The industry faces diversity, equity, and inclusion progress, alongside retention challenges in downturns. 6️⃣ Creative Sourcing: Opportunities may arise from family-owned businesses and corporate carveouts, favoring those with deep networks. 7️⃣ Infrastructure Investing Acceleration: Expanding definitions and uncorrelated returns drive increased LP exposure to infrastructure. 8️⃣ Private Credit Growth: Higher rates enhance the attractiveness of private credit, with banks limiting lending. 9️⃣ Real Estate Deal Volume Recovery: Predictability in living, working, and shopping trends may stabilize rents and encourage deal activity. 🔟 Secondaries Market Expansion: Near-record secondary fundraising could influence private markets, offering liquidity solutions for GPs and LPs. Your (and your customers') CEO, CFO, and Board are discussing these items and making decisions on them. These considerations underscore the importance of adaptability and strategic foresight for sustaining growth and achieving business objectives in the changing landscape of 2024. Remember, balance is a Verb: The concept of balance in business is dynamic, requiring continuous adjustment and alignment with evolving market conditions. This perspective is crucial for effectively managing the multitude of factors influencing company and customer decisions. 👇 For a deeper dive into these insights, see the full article linked in the first comment below. Call to Action: What market and economic trends do you believe companies need to be aware of in 2024 that may be currently under the radar? #BusinessStrategy #MarketTrends #PrivateMarkets #VentureCapital #talentmaximization #executivesearch

The world faces a monumental challenge: trillions of dollars of investment are required annually in emerging markets and developing economies (EMDEs) to help alleviate poverty, boost prosperity, and address the impacts of climate change.  Meeting this challenge demands a dramatic scale-up of private capital mobilization alongside the efforts of the World Bank Group and other development partners. The World Bank Group has delivered $100 billion of private capital mobilization into EMDEs in the last three fiscal years, with IFC accounting for ¾ of this total. But more needs to be done. The global community is looking to MDBs, DFIs, and the private sector to find innovative solutions. For those keen on understanding the dynamics of private sector investment and its impact on global development, read attachment below.     Here are some of what is being implemented by IFC and wider WBG: - WBG launch of a new unified guarantee platform that will deliver simplicity, improved access, and faster payment execution - IFC developing a tool to facilitate and scale an originate-to-distribute program to crowd private sector capital into emerging market assets - Looking into additional solutions, building off IFC's existing onshore and - offshore products, including local currency bond issuances and products such as guarantees and risk-sharing facilities in local currencies - IFC continues to mobilize equity by being an anchor investor in equity issuances, bringing in other investors, and providing overall leadership by negotiating terms and incorporating ESG requirements into transactions - WBG continuously receive feedback from private sector partners who require greater regulatory certainty to deploy capital at scale. This is where the power of the joint World Bank Group approach can make a big difference. We have to act – bigger, bolder, and faster. 📰💼 #WorldBankGroup #PrivateSectorInvestment #GlobalDevelopment 

Private credit is a large and growing element of insurers' investment portfolios. The sector is looking to catch the next wave of growth — in asset-based lending. In part, that is to sustain its extraordinary growth trajectory and to satisfy the sea change in allocations to credit. But firms are also tapping into it because leveraged lending has become more crowded. How large is the addressable market? Our new estimates suggest specialty finance is a $5.5 trillion asset opportunity in the United States alone, where private credit today has less than a 5% share. The need to secure access to these new asset classes is prompting private credit players to change tack, looking to partner up with banks rather than be their adversaries. We explore what Private Credit 2.0 might look like — for banks and investors. Read more here: https://lnkd.in/d_zRDx4B #privatecredit #assetmanagement #strategy #innovation #reinventinginsurance Huw van Steenis Dylan Walsh Julian Gorski

What exactly is asset-based private credit—and why is it gaining traction now? In a time of rising rates and tighter credit conditions, Castlelake explores how this strategy works and why it's drawing increased interest from institutional investors. From the fundamentals in A Primer on Asset-Based Private Credit to a deeper look at the current market environment in The Perfect Storm, these insights reveal why Castlelake sees a durable, expanding opportunity in this corner of private credit. A Primer on Asset-Based Private Credit: https://hubs.la/Q03xlnLh0 The Perfect Storm: https://hubs.la/Q03xlqJc0 #InsuranceAUM #AssetBasedLending #PrivateCredit #InstitutionalInvesting #Castlelake #AlternativeInvestments #FixedIncome