In a recent ION Influencers Fireside Chat, Rakesh Jain, Partner and Global Head of Private Credit at Pantheon, discussed the trends, opportunities, and mechanics of the rapidly evolving private credit secondaries market.

With nearly three decades of experience in private credit, Jain brought a wealth of knowledge to the table, offering a masterclass on why secondaries are becoming an indispensable tool for modern investors seeking alpha, liquidity, and diversification.

Here are the key topics discussed during the insightful session.

1. The Bull Case for Credit Secondaries: Why Now?

Jain kicked off the discussion by outlining the compelling value proposition of credit secondaries. Unlike primary fund investments, which often operate as “blind pools,” secondaries allow investors to buy into fully funded, high-quality performing portfolios managed by top-tier firms.

Key Benefits Highlighted:

• Attractive Entry Pricing: Investors can acquire assets at a discount, creating a buffer for enhanced returns.

• Immediate Visibility & Diversification: Day-one transparency into a diversified pool of assets across industries, vintages, and general partners (GPs).

• Shorter Duration: These portfolios typically offer a quicker return of capital compared to traditional private credit funds.

• Risk Mitigation: Jain noted that the risk dispersion of these portfolios acts as an excellent hedge against traditional private credit allocations.

2. Learning from Private Equity: Similar Motivations, Different Execution

While private equity secondaries are a mature, 35-year-old industry, credit secondaries are charting their own course. Jain explained that while the motivations of sellers are similar—a desire for liquidity, rebalancing, or moving away from specific managers—the execution in credit is distinct.

In credit secondaries, buyers can dictate structure and terms, negotiate fees and dry powder, and, crucially, pick and choose specific assets to build a portfolio—a flexibility not typically available in PE secondaries.

3. Market Dynamics: A “Sweet Spot” for Both Buyers and Sellers

Is it a buyer’s or a seller’s market? According to Jain, it’s an attractive environment for both.

• For Sellers: The market is deeper than ever, with ample solutions for those seeking liquidity from US and European senior secured credit to opportunistic exposures.

• For Buyers: There is a significant supply-demand gap. Jain revealed that Pantheon generated nearly $50 billion in deal flow last year, meaning buyers with capital and expertise can be highly selective.

4. The Power of Scale vs. Niche Specialization

Jain argued that scale is a massive advantage in credit secondaries. The ability to write large equity checks (e.g., $500 million to $1 billion) allows firms to solve major liquidity needs for counterparties, leading to better pricing, terms, and information.

However, he emphasized that true success comes from combining scale with the ability to be “niche.” Leveraging data, incumbency, and relationships allows large players to also capitalize on smaller, sub-scale opportunities that might be overlooked.

5. Data, Talent, and the Evolution of the Ecosystem

• Data Transparency: Jain noted that data is becoming more transparent, especially in direct lending, though opportunistic strategies remain challenging. He highlighted the use of AI and data scrapers to distill information and make informed decisions, particularly when negotiating for better transparency in separate managed accounts (SMAs) or continuation funds.

• Talent Acquisition: Jain looks for “athletes” who are great direct investors, intellectually curious, and understand the full lifecycle of credit—from underwriting to portfolio management. He sees a growing trend of professionals moving from direct lending to secondaries as the market matures.

• The Role of Advisors: Intermediaries will continue to play a vital role in price discovery. However, Jain noted that diversified origination—going direct to LPs and GPs—remains key.

6. The Future: Consolidation and the Wealth Channel

Looking ahead, Jain predicts continued manager consolidation, which ironically generates more deal flow for secondaries as LPs seek liquidity post-merger.

He is also bullish on the private wealth channel. Pantheon has long believed in providing accredited investors access to these markets through evergreen structures, provided they are properly educated on the liquidity and duration profiles.

Final Thought:
When asked what he would do more of in the next five to ten years, Jain’s answer focused on culture: “Bringing up the team.” In a data-driven industry, he emphasized that nurturing talent and fostering a culture of ownership and accountability is the ultimate competitive advantage.

Key timestamps:
00:06 Introduction to the Discussion
00:37 Background of Rakesh Jain
01:54 Overview of Pantheon
02:43 Importance of Credit Secondaries
05:01 Learning from Private Equity Secondaries
07:39 Market Dynamics: Buyer vs Seller
09:01 Investor Access to Strategies
14:38 Characteristics of Team Members
17:06 Growth of Wealth Channel in Secondaries
19:07 Role of Advisers in Credit Secondaries
20:54 Future of Credit Management Firms
22:39 Future Goals and Team Development