Gareth Henry, a managing director of Fortress Investment Group, was recently featured on the Daily Forex Report website in the article “An Overview of Private Credit with Gareth Henry” written by Clara Davis. The article reveals how the head of global investor relations sees the potential of private credit deals.
There are a variety of ways to manage investments in private credit, depending on the type of fund. Many managers of impaired funds will take a more active approach to make value. However, fund managers who are more focused on mezzanine and senior debt will use a more passive strategy to create returns after the loan has been extended to the companies. Many managers who use NPL funds will focus on using their employees or freelancers to contact those who have defaulted on their loan. This will allow them to create a new repayment strategy that will allow them to start making payments on their loans again.
However, most private credit funds will liquidate their assets to provide them to the investors. Most of these funds are invested in funds that have predictable returns within a certain amount of time. The difference between private credit and other alternative investment plans is that the private equity investments have less reliability or predictability in terms of when they will pay. Gareth Henry’s philosophy when it comes to alternative investments is to keep receiving feedback. Gareth Henry solicits feedback from peers, clients, and even team members because it is the key to creating a deeper understanding of progress as well as the dynamics of the trade. To know more about him click here.
There are some risks involved with private credit that Gareth Henry feels can be managed, but should be taken into account when making investments. The first risk is leverage. A variety of different managers may use leverage to increase their potential returns but this can also create a boost in risk. There is also a style drift risk that happens when private income funds expand from the market of midsized businesses into the NPLs. Management capacity is another risk people should be aware of. It happens when private credit managers seek to expand rapidly.