Hedge Fund
Jeff Haas On Private Credit Fund Structures & Matching Assets & Liabilities
Post financial crisis many private credit investors have become comfortable investing in a more traditional private equity closed-end structure. Over time, as the private credit investor universe has expanded, other investors, namely family offices and the wealth management community, have expressed a desire for evergreen or open-ended structures for operational reasons. Some of the operational challenges cited include managing capital commitments, executing subscription documents for subsequent investments and/or rollover investments, subsequent fund diligence, among others. These newer investors are attracted to investing in the asset class due to floating rates, high cash coupons, strong yield and downside protection. However, earlier attempts at evergreen or open-ended structures used for private credit investing were flawed and many created a significant asset-liability mismatch.