Search firm points to M&A-led ‘credit bonanza’

Jensen Partners reports that a wave of acquisitions is under way in the private credit industry, and that it is driving up the value of talent. 

There is a “credit bonanza” under way, according to an executive search firm, and executives with the right credentials for credit fund management will be the ones striking gold.  

Search firm Jensen Partners in its early July newsletter “Credit Bonanza as M&A Deals Heat Up” worked from the observation that many smaller credit firms have instituted a hiring freeze. The search firm believes that these freezes have been made in anticipation of deals with larger firms.  

Those firms want in on the credit space, and the easiest way for them to gain entry is not to build from scratch, but to partner or merge with a firm that already has built a position.  

The acquisition in May of Deerpath by PGIM, of the Prudential family, served as an example of this trend. 

Jensen Partners’ founder Sasha Jensen said in an interview Thursday that there will be many more such deals in the weeks and months ahead. “There have been three new M&A deals in this field just since we hit ‘send’ on this report. Deals that were imminent have since arrived, and more deals will certainly be announced over the remainder of 2023, which will certainly be a record-breaking year.”  

The reason new and often large entrants are so eager of course is that the banks continue their retreat from their traditional lending roles. The collapse of Silicon Valley Bank and other banks since then has accentuated this retreat. The retreat, in turn, has created a credit bonanza, a gold rush for those willing to do what banks can’t or won’t. “At conferences, Jensen said, “all the LPs are talking about is private credit. They are looking for double digit or at least high single digit stable returns.”   

This situation, in turn, has created a bonanza for the relevant talent. And executives for other asset management operations don’t turn into suitable executives for private debt funds with a wave of a wand. “The demand for someone who can understand and explain credit capital factors is very specific,” Jensen added.  

Accordingly, then, candidates who are suitable for such positions can command mark-ups for compensation at a premium to similar roles in other sectors. 

In 2022 alone, Jensen Partners noted in its newsletter, it tracked 518 marketing hires in the credit space, in contrast to just 227 such hires in 2021.