A unique opportunity in private markets
Note: This interview was recorded on 8 October 2024. You can watch the video or read an edited summary below.
Churchill Asset Management is a $50 billion asset manager, focused on middle-market opportunities in the US. They have their eyes on sponsor-backed businesses - and provide debt across all aspects of the capital structure.
This includes senior secured floating rate debt, junior capital investments, second lien debt, and equity co-investments, depending on the sponsor's preferences for Churchill's participation.
This scale is important in an increasingly competitive environment, with Churchill's Senior Managing Director and Portfolio Investment Strategist, Kelli Marti, arguing that strong relationships with private equity sponsors are the key to accessing deals - particularly as deal flow is starting to pick up.
"Over the last couple of years, M&A activity has been down and the real reason for that is just a delta between the valuation expectation of a selling sponsor and a buying sponsor. The reason they haven't been able to agree on the ultimate valuation of a business is due to the high cost of capital given where interest rates have been," Marti explains.
"With interest rates coming down, we're seeing that delta between the bid-ask of these businesses starts to shrink, and as a result, we're seeing an uptick in M&A activity, which is a very positive change for the market."
In this Fund in Focus interview, Marti explains what makes a good private credit deal, some of the red flags the team looks out for, and how investors can properly assess a private credit manager when deciding whether or not to invest.
Timecodes
- 0:00 - Intro
- 0:21 - What makes Churchill unique
- 0:57 - Tactical allocation strategy
- 1:23 - Advantage in accessing deals
- 2:08 - Deal flow revival on the horizon
- 2:53 - What makes a good private credit deal
- 4:06 - What are some red flags when assessing deals
- 5:04 - Risks investors should be aware of
- 6:06 - Key elements of the strategy
- 6:34 - How you can access this opportunity
Learn more about the Nuveen Churchill Private Credit Income Fund here.
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