In a recent fireside chat, Amit Bahri, Co-Head of European Direct Lending at Goldman Sachs Asset Management, shared his insights on the evolving landscape of private credit. With a career that began in 2006 in Goldman Sachs’ leverage finance department, Bahri transitioned to private credit in 2008, marking the start of his extensive experience in the sector. Over the years, he has witnessed the growth and transformation of private credit, particularly in how it has become a significant part of the capital structure for businesses.

Bahri highlighted the strategic focus of Goldman Sachs Asset Management on senior debt and subordinated capital, primarily in sectors like business services, software, and healthcare. These sectors are chosen for their resilience and growth potential, aligning with the firm’s goal of capital conservation and risk mitigation. The discussion also touched upon the importance of being selective in credit investing, emphasizing the need to avoid losses and ensure capital preservation.

The conversation delved into the changing dynamics of sponsor M&A activities and the impact of macroeconomic factors on private credit. Bahri noted a pickup in sponsor M&A activities in recent quarters, driven by improved macro confidence and a shift in market conditions. He also discussed the role of subordinated capital and the increasing involvement of CFOs in decision-making processes, reflecting a broader trend towards more sophisticated capital structure management.

Looking ahead, Bahri anticipates continued growth and evolution in the private credit market. He expects an increase in the issuance of subordinated capital and a greater emphasis on comprehensive, sector-specific expertise. The discussion concluded with Bahri’s personal and professional aspirations, highlighting his commitment to prudent risk management and the strategic growth of Goldman Sachs Asset Management’s private credit business.

This fireside chat offered valuable insights into the current state and future prospects of private credit, showcasing Amit Bahri’s deep expertise and strategic vision in the field.

Key timestamps:

00:11: Introduction to ION Influencers’ Fireside Chats
00:44: Background and Transition to Private Credit
01:50: Transition from M&A to Private Credit
04:03: Focus and Strategy in Private Credit
05:18: Metrics and Evaluation in Credit Investing
06:46: Signals for Selecting Credit Investments
08:52: Pattern Recognition in Credit Investing
09:19: Market Trends and Sponsor Behavior
11:43: Market Outlook and Confidence
12:38: Economic Indicators and Rate Expectations
14:21: Impact of Interest Rates on Private Credit
15:42: Resilience of Large-Scale Businesses in Current Environment
16:14: Nominal Earnings Growth and Pricing Power
16:49: New Issuances vs. Legacy Businesses
17:20: Impact of Interest Rates on New Finance
17:56: Fundraising Market Activity and M&A Volume
18:36: Manager Consolidation and LPs’ Expectations
19:01: LPs’ Expectations and Performance
19:38: Preference for Private Capital and Syndicated Markets
21:33: Niche and Uniqueness in Capital Structures
21:54: Capital Conservation Focus and Engagement of CFOs
23:53: Talent in the Industry
25:05: Consolidation in the Market
25:26: Relevance of Scale in Private Credit
26:02: Impact of International Diversification
27:05: Democratization of Private Credit
28:04: Trends in Private Credit Strategies
29:04: Aspirations for Goldman Sachs Asset Management
29:55: Psychological Impact of Risk Assessment