The investment bank on the one hand challenges the specialised asset managers and on the other hand allies with them.
JPMorgan said during the 30th Global Leveraged Finance Conference that it committed to invest 50 billion US Dollars of its own resources in the private credit asset class and attracted a further 15 billion from co-investors (see here the press release)
The banck already invested 10 billion in mod than 100 private credit deal since 2021.
Kevin Foley, JPMorgan head of global capital markets, said: “We want to assist our clients with products and solutions that best meet their capital structure needs, be it a direct or syndicated loan or a bond. Our extensive client relationships, combined with the size and scale of our origination capabilities, allow us to be a reliable source of financing throughout a company’s growth cycle.” He added: “The combination of our extensive origination platform with our lender customer base has enhanced our ability to offer borrowers greater scale and lenders greater deal flow. Given the current success of our co-lending initiative, we continue to seek opportunities with new partners to increase our capabilities in large transactions”.
Jamie Dimon, chairman and ceo of JPMorganChase, added: “We are proud to provide banking services to 80000 companies worldwide through our Commercial and Investment Bank, including 32000 mid-market customers in the US. Extending this commitment gives them more options and flexibility from a bank that they already know and see in their communities and that is known for having a presence in all market environments”.
In October 2024, Bloomberg quoted sources as saying that JPMorgan was holding talks with FS Investments, Cliffwater, Shenkman Capital Management, Octagon Credit Investors, and Soros Fund Management for co-invest 10 billion or more in the asset class.
In late 2024, Citi, Apollo Global Management and its portfolio company Athene, and Abu Dhabi’s Mubadala Investment Company signed a partnership for investing 25 billion in direct lending deals in North America ahead of targeting further geographic arease (see here the press release).
Since it allocated 50 billion of its own resources, JPMorgan is going to fiercely compete with private credit firms which experienced a drop in fundraising in 2024. Preqin data saud that at the end of 3Q24, global private debt firms attracted 118 billion or 157 billion on an annual base, which is far below the 2023 peak of 214 billion, but close to the 10-year median figure of 161 billion.
Furthermore, the good fundraising results of fundraising in 2Q24 and 3Q24 offset the sluggish start of 1Q24 as macroeconomic data improved that consolidated the expectations for a soft landing, Preqin analysts explained, pointing out that investor preference within the asset class goes to direct lending strategies. The global fundraising share for such a sector increased from 54% in 2023 to 79%, with 93 billion raised in 3Q24. The distressed debt class became again a niche strategy as it attracted the preference of only 35% investors compared to 51% of the previous year.Preqin says that market participants expect the currently 1,7 trillion worth assets under management of the private debt funds to increse to 2.64 trillion by 2029.
