Investors have embraced sponsored direct lending in their private credit allocations for some time, but many are yet to explore the non-sponsored* private credit market. This is partly owing to common misconceptions around the associated risks. However, well-structured loans to non-sponsored borrowers can offer attractive risk-adjusted returns, robust downside protection and valuable diversification – especially if the loans are asset-based and originated by a manager with the relevant experience, skill set and market access.
This note discusses:
- The non-sponsored lending opportunity set in the European mid-market
- Common misconceptions around the risks associated with non-sponsored lending
- How exposure to a well-designed strategy can offer valuable benefits to investor
*‘Non-sponsored’ refers to borrowers owned by entrepreneurs, families and shareholders other than private equity funds.
General risks. All investments carry the risk of capital loss. The value of investments, and any income generated from them, can fall as well as rise and will be affected by changes in interest rates, currency fluctuations, general market conditions and other political, social and economic developments, as well as by specific matters relating to the assets in which the investment strategy invests. If any currency differs from the investor’s home currency, returns may increase or decrease as a result of currency fluctuations. Past performance is not a reliable indicator of future results. Environmental, social or governance related risk events or factors, if they occur, could cause a negative impact on the value of investments.
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Related strategy
European Credit Opportunities
Asset-based private credit solutions for mid-market, non-sponsored borrowers.
