The announcement that you and your team had joined AB Private Credit Investors from Barclays coincided with [US private equity conference] Intergrowth. Has that benefitted you guys in any way?
It’s been very exciting. The fact that we were able to pull this together, to coincide with ACG Intergrowth, we couldn’t have timed it in a better way. Getting the word out, getting the chance to meet with some of our prior contacts and develop new contacts, from that perspective it’s been very exciting.
What made the partnership with AllianceBernstein particularly appealing?
I have gotten to know the AllianceBernstein team for over a year so in some respects it feels like my colleagues and I have been part of the AB team for a long time, which creates a strong sense of comfort.
The sale of Barclays Private Credit Partners – the fund provided the team and me a really unique opportunity to identify our future strategic partner with which we could build a business. We took a very thoughtful approach to this and feel confident that Alliance Bernstein is absolutely the right fit.
First and foremost, there is a culture at AB of putting clients first. AllianceBernstein is extremely creative and client focused in the way they do business and we think that fits well with the way we ran Barclays Private Credit Partners.
Secondly, AllianceBernstein has a top-tier fixed income platform and we think there will be significant synergies with the private lending business. It very much views AB Private Credit Investors as an extension of its liquid fixed income platform. The private corporate credit business resides within AllianceBernstein’s alternatives group and is envisioned to be a strategic component of that business, which is very exciting.
Can you describe those synergies?
Our business is focused on new issue opportunities that are directly sourced and privately negotiated. That’s how we think about the business and AllianceBernstein isn’t in that business today. So while I think that there will be some synergies in terms of deal origination, this is not where I expect to see the most bang philsses the way we’ve always sourced business, which is direct relationships with core borrowers and sponsors.
AllianceBernstein clearly brings a world class client base which we believe will facilitate our ability to raise capital in the future. This client base is global in nature and spans institutional, retail and high net worth channels. The private lending business will benefit from AllianceBernstein’s extensive research capabilities and deep relationships with the investment banking community on Wall Street.
How would describe the opportunity set for your strategy right now?
Mid-market direct lending is a very attractive space. We think about it along two different dimensions. One is the fundamental long term enduring features of mid-market lending that made this an attractive business yesterday, make it an attractive business today and will make it an attractive business going forward.
There are additionally really strong secular trends that we think will present opportunities for alternative debt providers. The driver of these trends relates to the re-regulation of the banks and other traditional lenders. Traditional lenders have had to pull back from the mid-market, and we think that creates an opportunity.
What specifically about mid-market lending is appealing, then?
It is a very large and very fragmented market which gives sophisticated investment managers an ability to differentiate themselves to generate attractive risk-adjusted returns. This differentiation can take several forms but includes targeting unique deal flow sources, focus on a specific investment type of investment such as senior secured loans or mezzanine debt, or seek to develop expertise in all layers of the such as sponsor and non-sponsor channels, as well as developing industry specialisation. Mid-market lenders can also choose to capital structure.
Brent Humphries runs AllianceBernstein Private Credit Investors having moved across from Barclays Private Credit Partners with colleagues alongside Jay Ramakrishnan, Patrick Fear, Shishir Agrawal and Wesley Raper in April.