There’s an assumption that private debt investors are keen to diversify away from the core direct lending exposures that have been the foundation of most portfolios in the asset class. It seems a reasonable one given the wide range of strategies available – including distressed debt and special situations, asset-backed finance and what seems like an ever-lengthening list of speciality finance options.
Why appetite for diversification may not be satisfied
With a wide range of strategic options, it may seem counterintuitive that last year saw LPs doubling down on well-established direct lending exposures. For many of them, committing capital to new areas is not as straightforward as it may seem.
