Episode summary
Private Credit Is Changing (Here's What's Next)
How I Invest With David Weisburd
· · Hosts: David Weisburd · Guests: Rakesh Jain
Summary
Rakesh Jain argues that private credit secondaries exist to solve a simple problem: investors need liquidity and portfolio rebalancing in an asset class that has grown large and heterogeneous but has historically lacked an efficient exit market. Pantheon’s approach, he says, started with defining the investor value proposition, then building the underwriting process, origination channels, portfolio management, and operating scale needed to become a trusted liquidity provider. He frames the business as a response to the expansion of private credit to roughly 1.7 to 1.8 trillion and the rise of many managers, vehicles, and investors.
Jain distinguishes private credit secondaries from private equity secondaries by emphasizing that value comes from loan repayment dynamics, pull-to-par, call protection, and portfolio construction, not just headline discounts. He says Pantheon now has exposure to over 5,000 loans and sources from both LP and GP-led transactions, with GP liquidity solutions offering deeper diligence and more control over structure and alignment. He also argues that the strategy can reduce return dispersion, improve capital efficiency for insurers, and offer private wealth investors diversified access with shorter duration and attractive pricing.
On risk, Jain says the biggest pitfalls are misunderstood valuation marks, correlation risk, and weak alignment rather than the asset class itself. He believes skepticism about private credit often ignores the need to consider equity impairments first, and he expects tax-efficient structures and private wealth evergreen products to become major growth drivers over the next five years.
Key takeaways
- Jain says Pantheon built its private credit secondary platform around one core question: what investor problem does the strategy solve?
- He says the market needs credit secondaries because a 1.7 to 1.8 trillion private credit market needs a way to rebalance exposures and create liquidity.
- Jain says Pantheon has exposure to over 5,000 loans and sources opportunities across North America and Western Europe.
- He says GP-led liquidity solutions can be more downside-protective than LP purchases because Pantheon can influence structure, leverage, fees, and alignment.
- Jain expects tax-efficient solutions for private credit, especially in private wealth channels, to be a major next wave of product innovation.
Notable quotes
“what problem are we really solving for clients? So we we figured out what the value proposition was for credit secondaries”
“the credit the credit markets on a primary basis had gotten so large um call it around 1.7 $1.8 trillion in size”
“In credit secondaries, it's whether or not the credit instruments pays off. It's whether your loan is repaid”
“we have exposure to over 5,000 loans on a look through basis. We have relationships with over a hundred GPS globally”
“Buying someone else's problems is really much more of an equity risk, and that's not what our investors are looking for”
How the episode opens
Thanks for coming on. So Rick, you're the global head of private credit at Pantheon, overseeing one of the largest private credit secondary platforms in the entire world with over 12 billion raised from 250 institutions. When you look back across your chapters in your career, what were the first principles, lessons that shaped how you think about a private credit business inside a global alternatives platform like Pantheon?
We we really started with a kind of a really modest uh modest beginnings. We had uh a couple of investors and a and a first close in a fund. But I think it really starts with kind of formulating what the value proposition is for investors.
As leadership, what we were trying to figure out was with our team and with our platform, what's our edge? What's our angle uh in the marketplace? And what what problem are we really solving for clients?
So we we figured out what the value proposition was for credit secondaries. It was then from there figuring out how do how do we develop and communicate what the investment process should really look like when you're going after a market opportunity that's very nent and very new to a lot of different people. So we spent a lot of time developing the investment process and the underwriting philosophy and then you bookend that on both ends.
one with how do you originate those types of assets and then at the final part of it the other book end is how do you portfolio manage that. So once you have origination investment process and philosophy plus portfolio management set up you then figure out how do you scale how do you scale to become a trusted liquidity solution provider in that market. That's where you know team technology operations and everything else come to the forefront.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- private credit secondaries
- liquidity in private markets
- private credit portfolio construction
- diversification and underwriting discipline
- lp vs gp secondary transactions
Companies and tickers mentioned
- Pantheon
Watch the episode
Watch “Private Credit Is Changing (Here's What's Next)” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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