In a recent fireside chat, Chris Acito, CEO of Gapstow Capital Partners, shared his insights on the outlook for US alternative credit, drawing from his extensive experience in investment management. The discussion, hosted by Giovanni Amodeo, covered a range of topics, including the evolution of alternative credit, the growth and challenges of asset management firms, and the future of private credit.

Key Highlights from the Fireside Chat:

Background and Formation of Gapstow Capital Partners:
Chris Acito has a 30-year background in investment management, with significant work in Europe and the Middle East. He founded Gapsto Capital Partners in 2009, focusing on alternative credit, a sector he identified as underrepresented and poised for growth.

Growth and Strategy of Asset Management Firms:
Acito discussed the journey of asset management firms from managing a few billion dollars to scaling up to $100 billion, emphasizing the importance of diversifying product sets and client bases. He highlighted the challenges of scaling original platforms and integrating new capabilities.

Consolidation and Talent in the Alternative Credit Industry:
The conversation touched on the trend of consolidation in the alternative credit industry and the challenges of acquiring and integrating talent. Acito predicted a new wave of talent coming from the commercial, not investment side of banks, driven by regulatory constraints on traditional banking.

Democratization of Private Credit:
Acito spoke about the increasing accessibility of private credit to individual investors, noting the growth of interval funds and other vehicles designed for high-net-worth and retail investors. He emphasized the potential for significant asset inflows as private credit becomes recognized as a distinct asset class in model portfolios.

Transparency and Market Dynamics:
The discussion also covered the differences in transparency between private equity and private credit markets, with Acito suggesting that while private credit may not be as “sexy” as private equity, it is gaining attention for its innovative structures and significant role in the financial ecosystem.

Advice for Professionals:
Reflecting on his career, Acito shared a piece of advice he found useful: “Be a hero, don’t be a hero and a half.” He interpreted this to mean that striving to do very good and bold things is rewarding in itself, without the need to overextend.
The fireside chat with Chris Acito provided valuable insights into the alternative credit market, highlighting its growth potential, the importance of strategic diversification for asset management firms, and the evolving landscape of private credit investment. As the industry continues to mature, the role of talent, consolidation, and innovation will be key factors shaping its future.

Key timestamps:

00:08: Introduction to ION Influencers’ Fireside Chats

00:34: Background and Firm Overview
01:39: Challenges in Credit Investing
03:14: Business Growth and Strategy
04:47: Scaling and Expansion
06:51: Client Needs and Business Organization
08:23: Talent Acquisition and Management
11:35: Focus and Client Expectations
13:51: Talent Source and Market Dynamics
15:48: Consolidation and Acquisition Activity
18:22: Advantages of Hiring from Banks
20:28: Specialized vs. Multi-Strategy Approach
21:06: Recognition of Different Opportunity Sets
22:06: Predictions on Market Consolidation
22:48: Factors Driving Growth in Alternative Credit
23:48: Slow Adoption of Credit by Endowments
24:31: Interest from Insurance Companies and Individual Investors
25:09: Growth Potential and Pie Size in Credit Market
25:58: Potential for Further Growth in Credit Market
26:33: Expected Changes in Pie Allocation
27:09: Democratization of Private Assets
28:31: Private Credit Catching Up to Private Equity
29:38: Quantitative and Qualitative Milestones for Private Credit
32:14: Transparency in Private Credit Transactions
34:02: Reflecting on Career Advice