Where a 20-year veteran sees the best returns today

Note: the interview was filmed on 6 June, 2024. You can watch the video or read an edited transcript below.

Kevin Hua of Keyview Financial Group has been involved in markets, specifically private credit markets, for over 20 years.

In case you haven't been paying attention, private credit has grown exponentially in recent years and is having its time in the sun right now. 

So, what is the most important lesson Hua has learnt over the journey? 

Whilst the numbers are always important in terms of due diligence and risk assessment, what stands out is relationship building.  

Hua cites building relationships, "both with our investors as well as the borrowers," as important, adding that "getting to understand why they're doing this transaction with us and understanding their motivations" helps with risk assessment. 

"Secondly, if they're really good borrowers, it's also a source of repeat business", says Hua. 

In the following episode of The Pitch, Hua shares more learnings from more than two decades in private credit, including how the space has evolved and where he is finding opportunity right now. 

Edited Transcript

Ally Selby: Hello and welcome to Livewire's The Pitch. I'm Ally Selby, and today we're sitting down with an investing veteran with more than 20 years experience in private credit markets to learn where he's seeing the most opportunity today. To do that, we're joined by Keyview Partner and Investment Committee member Kevin Hua. Thank you so much for joining us today, Kevin. Really excited to feature you on the pitch.

Kevin Hua: Thanks for having me.

Ally Selby: You've worked across nearly every single asset class. Why private credit?

Kevin Hua: I started investing broadly 20 years ago, as you say. When I started on the buy side, I was part of a firm that invested across all asset classes, but the appeal for private credit was two-fold. It was really the ability to generate outsized returns based on the risk that we assessed, and typically that risk was downside managed because we had credit protections and we were more senior in the capital structure. I think also, as an asset class, it was something that we believed we could invest through the economic cycle, so whether the economy was up or down, there was always room for private credit.

Ally Selby: As you mentioned there, you've been working in the industry for more than two decades. What are the biggest changes you've seen over that time?

Kevin Hua: Some of the changes I've seen are the fact that we've certainly become a lot more sophisticated in terms of credit enhancements in the structuring process and certainly the types of industries that we also lend to. When we first started, it was really a hard asset-backed business, but now, typically, private credit lenders will lend to asset-light companies, cash flow lends, etc. But that's obviously increased the need for more sophistication around structuring.

Ally Selby: You talked about the industry becoming more sophisticated over those two decades. Has there been any lessons or experiences that have helped you become more sophisticated as an investor?

Kevin Hua: Lending for any sort of financial investment is obviously very much numbers-based and very much an assessment of risk and due diligence. But I think part of the journey that I've had is also really building relationships, both with our investors as well as the borrowers. There's a two-fold reason for that. Firstly, it's really getting to understand why they're doing this transaction with us and understanding their motivations, and that's all part of risk assessment. Secondly, if they're really good borrowers, it's also a source of repeat business with them.

Ally Selby: Okay. Given all that experience in markets and those relationships that you've built, where are you seeing the most exciting opportunities today?

Kevin Hua: Like I touched on in the first question, I think we really are industry-agnostic. We always compare returns with risk and where we are in the capital structure. So we've lent traditionally to a lot of different companies, different sectors. So, to us, it's not really much of a focus on industries. It's really a function of where we see enhanced returns versus the risk that we're taking. There are certainly some under-service industries or sectors that we focus on, but really, it's private credit. Why we like it is the fact that we can invest across most different industries.

Ally Selby: Can we get a little bit more granular than that? Where are you specifically seeing opportunity today?

Kevin Hua: One area where we're seeing opportunity is lending to family-run businesses and family conglomerates because they typically have a diverse range of assets that we can lend against, and we can be a little bit more flexible in the types of security that we take and develop relationships with these families.

Ally Selby: Okay. Thank you so much for your time today, Kevin. It was awesome to feature you on The Pitch.

Kevin Hua: Thank you.

Ally Selby: If you enjoyed that too, don't forget to subscribe to Livewire’s YouTube channel. We're adding so much great content, just like this, every single week.

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Keyview Credit Opportunities Fund

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