Lecture Notes on Credit Business Overview

Introduction

• Speakers: Tony, Mike, and speaker (unspecified name)
• Duration together: 25 years
• Purpose: Quick overview of credit business, the largest segment.
• Key Speakers: Court Schnabel, Blair Jacobson, Joel Holsinger, Aaron Rosen, and Edwin Wong on their respective verticals.

Key Business Strategies

• Investment in People: The focus is on putting the right people in the right position, empowering them to succeed.
• Global Reach: Managing $300 billion with 500 people, with expansion focus on APAC credit.
• Core of Business: Origination and differentiated deal flow.

Direct Lending Group

• Focus Areas: Scale, origination, and incumbency.
• Scale: Large balance sheets ($190 billion) allow holding more than competitors.
• Origination: Largest team with global presence, leading to $40 billion + in gross originations annually.
• Incumbency: 50% of gross originations from existing business.

Scale and Growth

• Funds Growth: From 5 to 15 series of funds over a billion dollars in assets.
• Verticals: Growth in alternative credit, special opportunities, sports media, and entertainment.
• Focus: Adding resources, opening new offices, expanding the footprint.

European Credit Business

• Established: Team lifted from Barclays Bank in mid-2000s.
• Metrics: $70 billion in assets, 90 investment professionals.
• Expansion: Opened offices in multiple European countries.
• Market: Growing alternative fund-based lending.

Market Position

• Change: Bank market share reduced from 100% to below 50%.
• Deal Growth: Deals by fund-based lenders increased significantly.

Alternative Credit

• Focus: Credit-related investments in portfolios of loans, leases, and receivables.
• Team: Large, experienced team.
• Market: $28 trillion, fragmented post-GFC.
• Strategic Growth: Across liquid and illiquid markets.

Capital Strategy

• Core Strategy: Focused on open-ended vs. closed-ended opportunities.
• Quality AUM: Achieved through origination and relative value.

Opportunistic Credit

• Evolution: From special situations to all-weather strategy.
• Team: 30 investment professionals across major cities.
• Returns: 22% gross, 17% net, with low loss rate.

Market Environment

• Opportunities: In both dislocated and healthy markets.
• Challenges: Addressing over-levered, healthy companies.

APAC Credit

• Leader: Edwin Wong, post-SSG acquisition.
• Regional Importance: Asia contributes 60% of global growth.
• Platform: $12 billion managed, with extensive regional presence.

Future Outlook

• Growth: Continuing strategies, focusing on local currency opportunities.
• BDC Development: Anticipated expansion in the region.

Conclusion

• The session hints at expanding opportunities, global scale, and strategic investments across various credit segments. The panel reflects optimism for continued growth and success in the credit market.