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In a recent ION Influencers fireside chat, Siddharth Chakravarty, Director of Investments at Coaction Specialty, talked about the seismic shifts reshaping the asset management and private credit landscape. Chakravarty, overseeing a multibillion-dollar portfolio, provided a candid, insider’s view on data convergence, manager selection, and the new power dynamics between borrowers, banks, and private lenders.

Key Topics Discussed & Strategic Insights

1. The Data Convergence Challenge: Public vs. Private Markets

Chakravarty highlighted the ongoing effort to bridge the data gap between public and private markets, a central theme for modern allocators.

• Four Key Data Sources: He relies on 1) Evolving data platforms, 2) Enhanced manager disclosures, 3) Public proxies like Business Development Companies (BDCs) for private credit, and 4) A proprietary internal framework.

• The Unifying Lens: His team analyzes both markets through a unified risk-return model, focusing on metrics like OAS, duration, and risk-adjusted returns to solve for the illiquidity premium. The goal isn’t perfect parity, but creating a comparable analytical foundation.

2. Manager Selection: The Trifecta of Access, Selection & Structuring

For Coaction, these three elements are inseparable. Due diligence is exhaustive, with no shortcuts.

• Assessing Manager Transparency: With exposure to 16+ managers, Chakravarty benchmarks their data generosity. The key is respecting proprietary deal sourcing while pushing for the transparency needed for robust risk assessment.

• The “Cycle-Tested” Team: Beyond pedigree, he seeks teams with proven, cycle-tested experience, strong internal governance, and significant skin-in-the-game.

3. The Great Spread Compression & the Search for Yield

Spreads have compressed (e.g., ~575 bps in H1 2025 vs. 625 bps a year prior), driven by a supply-demand imbalance and massive dry powder.

• Finding Opportunity: Yield can be found by moving down the risk spectrum (lower middle market for +25-50 bps), exploring lagging regions (EU market), or specializing in alternative private credit segments like asset-backed finance (ABF) and infrastructure.

• The Borrower’s Market: Chakravarty delivered a stark assessment: “The borrowers are in the driving seat.” They now dictate terms and choose between bank and private capital, as seen in recent mega-deals like EA.

4. Specialization vs. Over-Diversification in Private Credit

The private credit universe is expanding into niches (ABF, infra, secondaries). Chakravarty’s approach:

• Avoiding “Mile Wide, Inch Deep”: He warns against over-diversifying across too many tiny sub-sectors with separate managers.

• Expressing Conviction: Instead, he identifies 4-5 complementary specialty sectors (e.g., hard collateral ABF like aircraft/equipment) and seeks a single manager with deep expertise across them, creating a focused, high-conviction allocation.

5. The Evolving Bank-Manager “Frenemy” Relationship

Banks remain pivotal, not as competitors but as partners and capital sources.

• Strategic Partnerships: Alliances like Apollo-Citi are about expanding reach and enhancing capabilities. Chakravarty quantifies their value: “Are these things actually creating incremental value for the fund?”

• A Symbiotic Ecosystem: Banks provide deal flow and subscription line financing. The relationship is symbiotic, with deals flowing between BSL and private credit markets based on cycles and borrower choice.

6. Secondaries: A Vital Liquidity Valve, Not a “DPI Button”

Chakravarty pushed back against the negative stigma around secondaries.

• Strategic Utility: They are a crucial liquidity mechanism for LPs needing exits and GPs managing fund lifecycles.

• Timing is Everything: Entering a credit secondary fund ~3 years in offers seasoned assets and avoids J-curve risk. Entering at year 6 transforms it into an equity-like bet, demanding appropriate return expectations (~20% IRR, not 12%).

7. Cutting Through the Noise: A Long-Term Portfolio Lens

On macro trends, Chakravarty is pragmatic.

• Noise vs. Signal: He views fluctuating consumer sentiment data as “noise.” Hard data (CPI, PCE) is more useful but also currently “handicapped.”

• The Portfolio is the Compass: His primary signal is his portfolio’s performance. The investment horizon is ten years, not ten days, focusing on relative value and long-term resilience over short-term forecasts.

Key timestamps:

00:05 Introduction to the Fireside Chat
00:36 Siddharth’s Background and Role
01:45 Insights on Investment Management
02:35 The Role of Data in Investment Decisions
03:29 Evolving Data Availability in Markets
05:11 Creating a Unified Investment Framework
06:39 Assessing Manager Transparency
08:08 Understanding Spread Compression
10:30 The Power Dynamics of Borrowers
11:49 Specialization in Private Lending
14:13 Evaluating Manager Deal Access
16:14 The Role of Banks in Private Credit
18:59 Succession Planning in Asset Management
20:21 Understanding Secondaries in Private Credit
22:41 Distinguishing Market Noise from Reality
24:30 Conclusion and Closing Remarks