The Carlyle Group and OppenheimerFunds have formed a joint venture with an investor base of high-net-worth investors to target private credit, the firms said on Monday.
The new JV will underwrite opportunistic credit, direct lending, distressed and structured credit investments across US, Europe and Asia, according to a statement. The JV will start operations next year, with Kamal Bhatia, head of investment solutions at Oppenheimer, and Mark Jenkins, head of global credit at Carlyle, as co-heads.
The venture allows accredited investors “to capitalise on the unique market premium of non-public investing” into which institutional investors have been tapping, the statement read. “Providing the same access to the non-institutional segment will add another source of diversification for investors seeking greater risk-adjusted returns in a low yield and rising rate environment.”
Accredited investors like high-net-worth individuals or family offices have a substantial appetite for private debt and other alternative assets, according to survey data that KKR released this spring.
Based on the asset allocation profiles of over 50 ultra-high-net-worth investors – individuals or family offices with more than $30 million in investable assets – surveyed by the research firm, the average investor had 46 percent of their asset allocation dedicated to alternatives, more than equities (29 percent) and fixed-income (15 percent). High-net-worth investors with less than $30 million of investable assets had an average of 22 percent in alternatives.
“The CIOs for our ultra HNW clients we interviewed were early to take advantage of a shifting landscape in the banking system, deploying billions of dollars into areas such as private credit and asset-based lending when traditional financial intermediaries backed away,” the KKR report on the survey results read. “Given the long duration of their liabilities and minimal payout commitments, they have taken advantage of the illiquidity premium in areas like private credit and private equity.”
KKR did not respond to a request to comment further.
Oppenheimer, a subsidiary of the insurance company MassMutual, had formed a similar partnership in 2015 with Apollo Global Management to tap into mid-market loans, structured credit and real estate through the Oppenheimer Global Strategic Income Fund, as Private Debt Investor reported then.
Oppenheimer managed more than $243 billion in assets as of 30 September, the statement showed. Carlyle had $170 billion of AUM across its investment vehicles as of 30 June.
Carlyle declined to comment further about the JV, while Oppenheimer was not immediately available to comment.