In this insightful fireside chat, Leo Fletcher-Smith, Managing Director and Head of European Private Credit Strategy at Aksia, delves into the evolution of the private credit market, sharing his expertise and perspectives on various critical topics.

Key Topics Discussed:

Background and Role at Aksia: Leo Fletcher-Smith’s journey from Deloitte to Aksia. Overview of Aksia’s role as an investment adviser and consultant, focusing on private credit.

Evolution of Private Credit: The broad scope of private credit, including direct lending, real estate, real assets, and specialty finance. Growth of Aksia’s private credit assets to approximately $110 billion.

Market Cycles and Shocks: Analysis of market cycles, with a focus on the Global Financial Crisis (GFC) as the only true cycle observed. Impact of short-lived shocks like the European sovereign debt crisis, energy market crisis, and COVID-19 pandemic.

Impact of Recent Market Shocks: Effects of the COVID-19 pandemic and recent interest rate rises on private credit portfolios. Structural stability of private credit vehicles during these shocks.

Investor Behavior and Risk Aversion: Shift towards brand-name General Partners (GPs) and well-trafficked credit strategies during periods of volatility. Observations on allocation behavior and risk aversion among Limited Partners (LPs).

Deal Origination and Expertise: Aksia’s approach to creating unique value through data analytics and market insights. Importance of scale and expertise in advising sophisticated institutional clients.

Market Coverage and New Entrants: Definition and segmentation of the private credit market into six main verticals. Opportunities and challenges for new entrants in a concentrated market.

Geographic and Vertical Expansion: Trends in US-based firms entering the European market. Convergence of markets and the role of consolidation in private credit.

Performance and Underperformance in Private Credit: Differences in portfolio health and performance across managers. Importance of fundamental measures like revenue, EBITDA, and leverage in assessing portfolio health.

Future of Private Credit Secondaries: Growth potential of private credit secondaries driven by market dynamics and capital velocity.

Democratization of Private Assets: Emerging trends in retail and high-net-worth capital entering private credit. Potential risks of asset-liability mismatches in poorly structured vehicles.

Bullish Strategies in Private Credit: Opportunities in stressed real estate credit and European leveraged finance. Defensive strategies and their resilience in varying macro conditions.

Role of Data and Analytics: Continued importance of data-driven insights and analytics in private credit. Aksia’s unique value proposition through scale, co-investments, and customized solutions.

Conclusion: Leo Fletcher-Smith’s insights provide a comprehensive overview of the private credit market’s evolution, highlighting the importance of data, expertise, and strategic growth. As the market continues to evolve, Aksia’s approach to leveraging scale and analytics positions it as a key player in navigating the complexities of private credit.

Key Timestamps:

00:09 Introduction to ION Influencers Fire Chats
01:40 Leo’s Professional Journey
03:15 Observing Market Cycles in Private Credit
05:02 Impact of Economic Shocks on Private Credit
07:28 Structural Stability of Private Credit
08:35 Investor Behavior During Market Volatility
09:54 Creating a Unique Niche in Private Credit
15:07 Defining Coverage in Private Credit
18:09 Opportunities for New Entrants in Private Credit
19:28 Geographic Dynamics in Private Credit
21:23 Performance Indicators in Private Credit Funds
23:36 Assessing Market Health
24:31 Future Trends in Private Credit
25:55 Democratization of Private Assets
26:50 Investment Strategies in Private Credit
27:55 The Role of Professionals in Evolving Markets
30:04 Conclusion and Closing Remarks