At a private markets conference focused on the ultra-rich in London this week, the typically discreet sector was notably candid about its growing interest in private credit.
“We like selective parts of alternative credit,” said Harinder Hundle, managing partner of multi-family office Hundle, on a panel at the London Private Markets Meeting. “We can see it generates yield and income for investors and that’s great in the current environment.”
Family offices represent a vast pool of capital — around $3.1 trillion globally as of 2024 — and are increasingly seeking new sources of returns as private equity distributions slow. Private credit, unlike PE, doesn’t rely on an exit to return money, but rather, throws cash off regularly through quarterly or even monthly interest payments. The burgeoning $1.6 trillion asset class is expanding its sources of cash as traditional buyers, including pension funds and endowments, become fully allocated to the sector.
Posing less risk than an equity portfolio, private credit funds are also producing high single digit returns, according to the Cliffwater Direct Lending Index, just shy of the roughly 10% performance of the S&P 500, according to data compiled by Bloomberg.
Family offices also typically have a buy-and-hold mentality, making them comfortable with an illiquid asset class like private credit. Volatility in public markets is also increasing the appeal of privately-held assets.
