Marsh: Private Credit is Insurers Defining Allocation Theme
Fundraisings from Sagard, IPF and Creation Capital
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“LCD has not tracked a single LBO financing over $2 billion by direct lenders since early March”
📕 Reads of the Week
Market Updates
Green shoots in the exit market
After three years of offloading assets below book value, Partners Group believes that sponsors are back to exiting companies at a premium to what remains in their portfolios. History suggests this is an early-cycle signal rather than a peak, the last two times the uplift turned positive, exit conditions improved for up to 7 years afterward.
👉Partners Group: 2026 Mid-Year
KKR: Base rates are driving fixed-income returns
KKR’s 5-year expected returns building blocks show that returns are predominantly driven by higher base rates, especially for Investment Grade exposures. KKR believes that investors should focus on high-grade credit, durable cash flows, and portfolio construction discipline, rather than reaching indiscriminately for yield or duration.
👉 KKR: An Expanded Toolkit for the Next Investing Regime
European direct lending had its weakest quarter in two years
Direct lenders funded twice as many buyouts as syndicated lenders by count. Direct lending spreads fell to 503 bps. Professional & Business Services displaced Technology as the biggest driver of new deal activity in the YTD.
👉 Pitchbook’s European Credit Monito
9fin’s European Private Credit Rankings
👉 S9fin’s European Rankings here
Hamilton Lane: The Rise of Opportunistic Credit. 👉 Read the paper
Manager Updates
Apollo is investing in Mexico
Apollo plans to deploy up to $20 billion in private credit opportunities in Mexico. It is reportedly in discussions over financing a range of infrastructure developments as well as other debt transactions. More here
👉 Coverage on Private Equity Wire
BCIs Investment Grade Fund.
British Columbia Investment launched its Investment Grade Private Credit Fund. The fund launched with $1.8 billion in direct co-investment commitments and a deployment target of $13 billion over three years. The fund includes investment-grade corporate credit and asset-backed financing, with a primary focus on North America and Europe. More here
Partnership Updates
Nuveen x CalSTRS
Nuveen announced a strategic partnership with CalSTRS to invest up to $2 billion in sustainable infrastructure through Nuveen’s Energy Infrastructure Credit business. CalSTRS will serve as an anchor investor for the sustainable infrastructure portfolio in the Energy & Power Infrastructure strategy.
Arrow Global in Italy
Arrow Global, a UK-based alternative manager specialising in private credit and real estate, announced the acquisition of Borio Mangiarotti, a leading Milan-based real estate development and management business. Founded in 1920, Borio Mangiarotti has played a significant role in shaping Milan’s urban landscape, with more than 500 completed buildings mainly across Lombardy.
Marsh: Private Credit is Insurers’ Defining Allocation Theme
Marsh surveyed 123 insurers around the world, representing over US$4 trillion in total investment assets.
Below are my key highlights.
More than half of insurers expect to increase private credit exposure over the next 12-24 months
This was a sharp contrast to their 2024 survey, when 37% of insurers reported plans to increase allocations to core fixed income, while just 32% intended to increase their allocation to investment-grade private debt
Private credit demand outstripped fixed income for the first time ever
Interest in private credit is even more pronounced at the larger end of the market, with 81% of insurers with more than US$25 billion in assets under management, planning to increase allocations to private credit compared.
Life insurers (73%) were more likely to allocate than Health (56%) and P&C (40%).
Despite the short liability profiles of Health/P&C players, private credit interest was robust and on par with public investment-grade fixed income.
North American insurers are more likely to allocate to IG Structured Credit (48% of US and 42% of Canadian insurers versus 33% and 23% for European and the UK, respectively), which is unsurprising given the maturity of structured finance markets and conducive regulatory regimes.
Insurers’ concerns about the asset class reflect a broader focus on where the market is in the credit cycle.
A reduction in the illiquidity premium and a weakening in credit discipline are the most prominent concerns, followed by fears of higher default rates.
The market opportunity remains attractive, but selectivity across manager selection and deal due diligence are of the utmost importance.
Beyond credit fundamentals, there is a second tier of concern around regulation, valuation, and the health of adjacent private equity markets. AI disruption seem to be viewed as longer-term issues, rather than immediate barriers to allocation.
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💰Fundraising News
Sagard $1bn Credit Partners III.
Sagard, a Canadian alt manager, held a first close of $1 billion for its Sagard Credit Partners III. The fund lends senior loans to mid-market companies across Canada and the U.S., focusing primarily on non-sponsored companies. Since inception, Sagard Credit Partners has deployed over US$1.9 billion.
IPF $275m Fund IV
IPF, a European Healthcare Growth Debt provider, raised $275 million for its fourth fund. The fund focuses on senior and unitranche debt across European healthcare businesses. IPF typically lends between €10–25 million per company.
Creation Capital $190m Listed Fund
Creation Capital, a South African investment firm, launched the Creation Yield Fund, a listed private credit vehicle targeting $190 million. The fund was listed on the Cape Town Stock Exchange on 15 July. It will invest in SMEs through non-bank financial lenders.
👉 Creation Capital’s Announcement
Tailwater Capital $170m Royalties Fund
Tailwater Capital, A Dallas-based Energy and Infrastructure manager, announced a final close of $170 million for its second Royalties Fund. The strategy acquires mineral and royalty interests across Tier 1 U.S. shale basins. Roughly half of the capital has been deployed across 30 Permian Basin transactions.
This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.