SuperReturn Private Credit Europe took place earlier this month at the Royal Lancaster London, attracting LPs and GPs from across the continent for panel discussions and networking opportunities relating to the exciting world of private credit.

Alternative Credit Investor was a media partner and in attendance. Here are three key topics that came up in discussion with delegates…

Fundraising is challenging to varying degrees 

The challenging fundraising environment was one of the most commonly cited topics among private debt professionals at the conference.

While panellists were a little more measured when speaking about the challenges, some investor relations (IR) executives on the sidelines of the event were very vocal about fundraising conditions. “It’s so hard!” lamented one attendee, while two other IR professionals nodded in agreement.

However, other industry stakeholders suggested that it depends on the strategy. While fundraising is not necessarily easy for anyone, some areas are proving more difficult to raise funds for than others.

One private credit lawyer said it was easier to raise money for direct lending funds at the moment than niche strategies. “Even if there’s a compelling story, if it’s difficult to explain to investors that’s a challenge,” they said.

Fund managers are taking a longer time to raise funds as a result and are requesting extensions.

Unsurprisingly, established fund managers with a good track record are finding it less difficult than emerging managers, stakeholders said.

But there’s light at the end of the tunnel. After a year when “LPs just hit pause” there are signs of improvement in the market – “the tone in 2024 feels a lot better,” said one fund manager.

Regulation and risk

Attendees noted that the private debt sector is receiving more attention from authorities globally, amid concerns about the risks involved.

Stakeholders affirmed that there is a need for more market-wide data and analytics.

Diversification was also cited as an issue – LPs can be exposed to the same unitranche loans that have been syndicated across different funds.

Risk is being brought to the forefront as everyone in the sector is seeing more stress, stakeholders said.

Whether that stress will evolve into a high volume of distressed debt opportunities is yet to be seen, but the distressed and special situations space is coming up in conversations more often, attendees said.

NAV financing

NAV financing is a hot topic in the world of private credit but it’s also one that attracts conflicting views. While some LPs may have concerns about NAV financing and the impact it has on risk and returns, other stakeholders were excited about its potential for the industry.

The use of capital was highlighted as a key differentiator in terms of risk – is it being used for distributions to investors, or to increase investment capacity for things such as M&A?

“There’s NAV financing and there’s NAV financing,” said one attendee.