Private Credit

While traditional lending practices play an important role in standard investment processes, for high value investment opportunities they can sometimes prove too restrictive. With private credit investing, clients can invest directly into projects and businesses they see potential in, bypassing typical lending restrictions to pursue greater potential returns.

What is private credit?

Private credit, also often referred to as direct lending, is a type of investment where a client personally lends money to a business or investment opportunity, with the expectation of receiving interest payments in return, rather than buying traditional stocks, shares, or bonds.

This type of investing can be seen as higher risk, given its direct nature. However, because the client is directly lending into a company, they are able to maintain relatively high control over the terms of the loan and its repayment process.

Why consider private credit investing?

Private lending is typically focused on long term investment strategies for a steady rate of returns, with management available across personal, business, and family office services.

As a result, private credit offers an alternative avenue for investment, catering to those seeking opportunities beyond traditional public markets and lending options that aren't publicly traded, often through privately negotiated loans.

Clients may want to consider adding direct lending to their investment portfolio for the following reasons:

• Returns: Private credit pursues diverse sub strategies and risk return targets, aiming to outperform public debt with lower volatility. This may include attractive yields, such as those offered by floating rate direct lending strategies, where the interest rate on the loan changes over time. However, higher returns may come with increased default risk depending on the manager's expertise, making manager selection crucial.
• Downside protection: By prioritizing debt over equity, private credit offers lower risk exposure. Debt holders rank higher in the payout order, providing a protective buffer against downside risks compared to equity investments. The level of downside protection nonetheless depends on the strength of the covenant.
• Diversification: Private credit provides access to a variety of strategies unavailable to traditional credit funds, enhancing portfolio diversification. Private credit investing also typically exhibits lower cyclicality compared to traditional assets, further supporting its diversification benefits.
• Active management: Private credit funds can be actively managed, allowing for direct influence on the underlying debt or assets. For instance, we can collaborate with lenders to navigate and potentially improve challenging situations as needed. Since these are private loan assets, however, the liquidity profile is lower than other investment types, which may pose a challenge for some investors.

How do we help you manage risk?

Investing private credit funds into a business offers a variety of potential returns, but as with any investment type, it may also carry some level of risk. To manage and mitigate this, we maintain a series of due diligence frameworks that identify credit risk before any activity starts, while our expertise helps ensure a satisfactory agreement between all parties involved, so clients can invest with confidence while protecting their capital.

Why Zentrix Global for private credit investing advisory?

With access to an international network of experts, global opportunities, and a wide range of investment solutions, we help clients access tailored lending and wealth management services that meet their preferences, investment knowledge, and requirements, offering both closed and open ended structures.

To learn more about our private credit solutions, please speak to one of our experts.

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