In an engaging fireside chat, Mattis Poetter, Partner & Co-CIO of Arcmont Asset Management, shares his insights on how to carve out a niche in private credit, the evolution of the industry, and his aspirations for the future.

Key Takeaways:

Niche Focus: Arcmont’s success is attributed to its focus on the upper middle market (€50-€100 million EBITDA), where it can provide large capital commitments and diversify its portfolio.

Default Rates: Investors are most concerned about default rates and losses, which is why Arcmont focuses on larger, more stable businesses with diversified revenue streams.

Stability: A stable team with long-term incentives is crucial for private credit managers, as it aligns with investors’ interests and motivates employees.

Relationships: Building strong relationships with CFOs and management teams is essential for anticipating problems and making informed investment decisions.

Technology: Technology has improved Arcmont’s underwriting process, but human discussion and Q&A remain valuable in investment decisions.

Integrated Asset Management: Partnering with larger asset managers like Nuveen has accelerated Arcmont’s growth and provided access to resources and expertise.

Sector and Country Specialization: While not essential, sector and country specialization can be beneficial in private credit, particularly in the middle market.

Consolidation: The private credit industry is expected to consolidate, with larger managers growing and smaller ones potentially being squeezed out.

Growth Prospects: Poetter is bullish on private credit growth, particularly in sponsor-less deals and special situations.

Key timestamps:

00:09: Introduction
01:37: Evolution of Private Credit
04:32: Differentiation in Private Credit
05:58: Niche Strategy
06:58: Focus on Upper Middle Market
08:44: Risk Management and Competition
09:23: Investor Concerns
10:26: Team Stability and Incentives
11:45: Skills and Responsibilities
13:07: Red Flags in Investments
14:20: Relationship with Management Teams
16:04: Impact of Technology
18:24: Future Role and Process
19:46: Streamlining Data and Technology
20:04: Niche vs Integrated Asset Management
21:19: Specialization in Private Credit
22:26: Future of Private Credit Providers
23:07: Consolidation in Private Credit
25:17: Fundraising from Family Offices
25:39: Outlook for Exits
25:59: Platform Deals vs Buy and Build