In a recent ION Influencers Fireside Chat, Stuart Mathieson, Head of Europe and APAC Private Credit and Capital Solutions at Barings, shared his insights on the evolution of private capital, the current state of the market, and future trends. Here are the key topics discussed:

1. Stuart Mathieson’s Background and Role at Barings: Stuart Mathieson has been with Barings for over 22 years, starting as a public markets loan analyst and evolving through various roles, including leading the restructuring efforts during the Global Financial Crisis (GFC) and setting up the Special Situations Group.

2. Evolution of Barings’ Platform: The platform has grown significantly since its early days as Duke Street Capital Debt Management, one of the first institutional loan investors in Europe. The acquisition by Babson Capital and subsequent rebranding to Barings marked a pivotal evolution.

3. Market Cycles and Growth: Mathieson discussed the various market cycles he has witnessed, including the GFC and more recent periods of volatility like COVID-19. He emphasized the importance of having a diversified and stable capital base to navigate these cycles.

4. Private Credit Business at Barings: Barings’ private credit platform has over $50 billion in commitments, with a significant presence in Europe, North America, and developed APAC. The platform’s scale provides stability and diversity, allowing for consistent market presence and strong partnerships.

5. Investor Sentiment and Allocation Trends: Investors have increasingly allocated to private credit, seeking returns that exceed public market equivalents. Transparency and strong risk-adjusted returns are crucial, with Barings being one of the first firms to externally price all assets quarterly.

6. Middle Market Dynamics: Mathieson highlighted the healthy competition in the core middle market and the importance of maintaining strong relationships with sponsors and management teams. He noted that the lack of new platform activity in 2024 might change with increased M&A activity in 2025.

7. Regional Differences: Europe vs. APAC: While the US market has largely disintermediated banks, Europe and APAC are still on that journey. Mathieson sees significant growth potential in APAC, particularly with the recent launch of a dedicated senior lending strategy in the region.

8. Future of Private Credit: Mathieson anticipates further consolidation in the private credit space, with fewer but larger players. He also discussed the potential for partnerships between private credit providers and banks, and the growing importance of secondary markets.

9. Team Dynamics and Skills for the Future: The future will see larger teams with broader skill sets, leveraging technology for efficiency but still relying on experienced analysts for in-depth business understanding. Diversity of skills will be key to managing complex situations effectively.

Key timestamps:

00:09 Introduction to the Fireside Chat
00:41 Understanding Barings and Its Role
01:45 Evolution of the Private Capital Platform
03:52 Market Dynamics: Large Players vs. Mid-Market
07:03 Investor Perspectives on Private Credit
08:25 Focus on Middle Market Financing
10:11 Competition in the Middle Market
12:09 Future of M&A Activity
14:20 Maintaining Relationships with Portfolio Companies
16:35 Private Credit Dynamics in Asia Pacific
18:15 Potential Consolidation in Private Markets
19:00 Specialization vs. Broad Coverage
19:36 The Role of Country Specialists
20:36 Trends in Partnerships with Banks
21:16 Future of Private Credit Transactions