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Carlisle announcing today that it has raised five point seven billion dollars for its latest flagship credit fund, with more than seven billion dollars with leverage. It's the funds ever largest ever credit poll, exceeding the roughly four points six billion dollars raised for the prior vintage in twenty twenty two for Opportunistic Credit.
For more on this, we are joined by Mark Jenkins.
He is head of Global Credit at Carlisle Investment Management. And we have to put this into context because you're looking at Opportunistic Credit, you have two hundred billion in credit here, So why is this pool of capital so interesting at this point in time. It looks like you're looking at very specific nimble ways to get into the market.
Yeah, thanks Chaneli for having me on.
You know, for us, this is like, you know, a very important step forward as we continue to develop the broad platform that we have. Opportunistic credit is one of our core strategies on a very diverse platform for us, So we focus on how we can have a diversity of so we can attack if you will, or look for opportunities across the market as we go through opportunities.
Opportunistic credit for US is really working with family employee owned type businesses that we structure bespoke transactions for and they're typically under banked organizations that look for capital solutions up and down the capital structure.
So I think we have a unique.
Perspective in that regard and I've been building that, you know, that reputation in the market over the past seven years.
It's interesting because you've seen over the last couple of years, ever since you saw the Silicon Valley bank kind of step back, and then you saw the interest rate movements really shut out a lot of banks from the market. Is this opportunistic opportunity bigger now that you're seeing the banking system step back a little bit?
Yeah, I think it's it's kind of twofold. One is when we look at these companies, they generally, you know, we the opportunistic strategy for US is going to where there's fewer participants looking to bank these people. So part of the pullback in the banking system, yeah, is not serving these companies.
Well, if you will. We also have a very large team.
In Europe as well, and there's a great dispersion, if you will, in fragmentation in that market, So it does create a lot of opportunity for us there in terms of how the banks have pulled back. But overall, I mean, it really is bringing the full scale of the platform to bear for capital solutions, and I think that's the key thing for us in terms of the strategy.
What's the return profile?
What can you expect back on a strategy like this, and how does it compare to other type of credits.
Yeah, because of the complexity, because of the bespoke nature of it, you're actually charging a premium above what somebody would get into capital markets. And because this is also typically not something that goes into the direct lending market, You're looking for returns that are three to four inner basis points above, sort of first lean direct lending.
If you will.
It feels like Carlisle and many of your peers are looking at direct lending and saying this is, yes, a large opportunity, but maybe there are larger ones elsewhere. You've been diving into asset back finance, now more opportunistsic credit as well.
What does this mean about the biggest growth.
Areas for your credit business moving forward?
Yeah, for us, we've been kind of consciously building out this platform, which really spans everything from public or liquid corporate credit, private credit, real asset and asset backs. So that broad spectrum, if you will, and right now are power allies, if you will, are really on the COLO side, the opportunistic side and asset backside, and I think that's where we see the growth. But it depends on where
you are in the cycle. So in twenty twenty three, for instance, the COLO market was closed effectively, we didn't do anything.
This year, we've had a record year.
We've priced over thirty six colos, refinancings, new issues, et cetera. And we've raised over nine hundred million of third party equity.
So quite a change.
So you have to have that diversity on your platform to take advantage of the market opportunities as you go through cycles.
Power ally a strong word. How are these things serving as power allies? Is there something about these markets growing faster now than they were before?
Yeah?
I think you know you've got specifically on the asset backside, you do have this secon shift where we've seen assets that weren't ordinarily available to us for private investment or now coming into the marketplace because of this shift you're seen from basically banks in the United States in particular, has to do with regulatory changes, how they manage our WA's. It has to do some of the counting changes, and that's been a secular shift that we've seen over the
past three years. But if it really has come to fruition in the past year where we're seeing more opportunities versus capital formations. So we see that as a great opportunity for our investors and certainly an area where we're going to lean into and grow over the next several years.
As money flows into private markets, where's the risk? We had this great story on the terminal today about the records COLO issue ince raising concerns because of the pick provisions that are arising as well. If you kind of look around the world here that you operate in, where's your biggest concern?
Yeah, I don't think it's so much the flows of capital into the private markets, because ultimately, when you think about who the actual investors are, they're much better matched to the private nature of it. I e.
You know, when it was.
Sat on bank balance sheets, you're financing those with customer deposits, You're financing them in the capital markets and that's not necessarily matching asset liability matching.
When you go to the private.
Markets, you're looking for much more longer investment horizons, so you can ride the volatility that you might see in a credit So the real risk isn't so much in capital coming in obviously. You know, as capital comes into certain pockets, some places get very expensive, if you will,
and that's always been through different cycles. I think the bigger issue is, you know, how we deal with the economic environment going forward, as opposed necessarily anything that's going to happen in the private capital markets in particular.
You know, there's this notion out there that public and private markets are converging, where some private capital providers have said, no way, private is private, public is public.
How do you feel about that?
Yeah?
I think credit is credit, right. I think equity is equity. So when somebody's putting it into their policy portfolio, nobody's saying, you know, should this be private or should this be public? They're thinking about what is that exposure that I have
in my portfolio? And I think the convergence that occurred coming out of twenty twenty three is you've seen both private and public markets and credit in particular, co exists in a very you know, I think fruitful manner for the community, if you will, and that's creating better opportunities. So when I look at Carlisle in particular, and look at the two Biot deals that we recently financed this year, they're very large biots. One's a carve out, but we
use the private markets to finance them. But at some point in the future, no doubt, we'll look to finance in the public markets. So they coexist as opposed to compete, I would say, And at various times they rub up against each other for that competition or that tension, but they're going to coexist going forward.
Last question from you, you were talking here about the macroeconomic environment, what happens next year. You know, you look at a rate environment where there is still a substantial amount of rate cuts price into next year's market, but investors also worried about even the possibility of a hike if certain policies come into play, like tariffs.
Are you worried about the dispersion here?
Yeah, Look, I think our view is that we're going to have higher rates for longer.
We've had that view for some time now.
I think the macroeconomic geopolitical tension that you see, and you know, the new administration coming is going to be very pro business, which I think is a good thing. Is going to keep rates at a relative, relatively high level relative to what the market's.
Predicted, if you will. And what does that mean.
I think what it means is it's good for the liquidity in the marketplace. But right now, if you take a look at financing costs for biotes right now and you look at the high yield and leverage low market, we're only about fifty basis points higher than when the FED started raising rates in March twenty twenty two. So you've got a very good environment right now for financing for biots et cetera. There seems to be good momentum
in terms of the economy. So as you look forward into twenty five, you know, we obviously going to see some volatility, but I think.
We're in a very safe environment for investing.
Mark, Well, thank you so much for joining us here on set. That is Mark Junggan's head of global credit at carre
Relyle on the heels of a record breaking fundraiser