The Rise of Private Credit in a Post 2008 World
Money Tree Investing
Money Tree Investing Podcast
4.6 • 658 Ratings
🗓️ 19 July 2024
⏱️ 49 minutes
🧾️ Download transcript
Summary
Nelson Chu joins us today to discuss the rise of private credit! He's here to share how private credit emerged as a significant player post-2008 financial crisis when banks scaled back their lending. Despite his initial lack of experience in credit, Nelson was drawn to private credit for its potential to offer shorter durations, lower minimum investments, and attractive yields compared to traditional bank loans.
Today we discuss...
- How Nelson started his career in finance, working at Merrill Lynch, Bank of America, and BlackRock.
- He left traditional finance to start a consulting company and then founded Percent, focusing on private credit.
- Non-bank lenders fulfill the ongoing demand for loans by raising money from the private credit market.
- How banks are finding ways to re-enter the lending market through joint ventures and leveraging other business parts.
- The private credit market seeing pressure due to high interest rates and increasing defaults in consumer credit.
- Competitive tension between banks and private credit lenders influences the cost of capital and lending rates.
- How Nelson's company Percent focuses more on conventional private credit opportunities rather than real estate.
- Lenders are being more selective in extending small business loans due to the current risk cycle.
For more information, visit the show notes at https://moneytreepodcast.com/the-rise-of-private-credit-nelson-chu-626
Today's Panelists:
- Kirk Chisholm | Innovative Wealth
- Phil Weiss | Apprise Wealth Management
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Transcript
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| 0:00.0 | Welcome to the Money Tree Investing Podcast. |
| 0:04.8 | Stock market, wealth, personal finance, value stocks, invest in your life. |
| 0:11.1 | Hello, the Smart Money Tree podcast listeners. |
| 0:12.8 | Welcome to this week's show. |
| 0:13.8 | My name is Kirk Chisholm and I'll be your host. |
| 0:15.9 | So today I'm joined with Nelson Chu. |
| 0:17.9 | How are you joining in Nelson? |
| 0:19.0 | I'm good. |
| 0:19.6 | Thanks so much for having me. |
| 0:20.7 | Good. We're glad to having the show. I wanted to address this topic. |
| 0:23.9 | It's a topic that's been on my mind for a while and really just hunting around, try to find someone good to talk about it. |
| 0:29.9 | So, Nelson, maybe you can tell us a little bit about your background. finance and given what we're about to talk about, probably makes sense that I did start there and I start my career there. Spends about two and a half years at Merrill Lynch, Bank America and BlackRock. |
| 0:41.7 | Didn't really touch anything related to fixed income, but here we are today. |
| 0:45.3 | Left that to really do my own thing, start a consulting company, helping all their founders |
| 0:48.6 | build their companies in the ground up. And then from there, start a percent. And so percent is very much firmly in what you were mentioning, which is probably one of |
| 0:56.4 | the most interesting asset classes in the market today, which is private credit. |
| 1:00.5 | I'm happy to dive into more about sort of what that asset class is, why investors are interested |
| 1:05.1 | in it, both retail and institutional, and what our role is in this entire broader ecosystem |
| 1:09.8 | that is growing very, very quickly. |
| 1:11.7 | Why did you decide to get into the private credit field? |
| 1:14.8 | Yeah, especially given my lack of background and credit, I guess. So it's definitely an open question. |
| 1:19.5 | So back in 2017, 2018, we were kind of doing a lay-of-the-land exercise here in terms of what was out there in the fintech universe that would be interested |
... |
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