What is Private Credit?

Private credit (also called private debt) refers to loans made by non-bank lenders to businesses, property developers, and other borrowers. These loans are typically originated and managed by specialist fund managers who raise capital from wholesale investors.

Types of Private Credit: - First mortgage/senior secured - First claim on assets, generally lower risk profile - Mezzanine/subordinated - Generally higher target returns but subordinate to senior debt - Corporate lending - Business loans for working capital, growth, or acquisition - Property development - Construction and development finance

Note: Target returns vary by fund and are not guaranteed. Review each fund's disclosure documents for specific details.

Key Characteristics: - Regular income from interest payments (monthly/quarterly) - Secured positions reduce loss severity - Lower volatility than equity investments - Floating rates often provide inflation protection - Diversification across multiple loans

Risks: - Borrower default risk - Concentration risk if lending is concentrated - Interest rate changes affecting borrower ability to repay - Property/asset values declining below loan amounts