Unpacking Private Debt Funds: Risks, Returns, and Growth

Brattle Principal Dr. Jan Jindra and Associate Dr. Ariel Lanza are joined by Dr. Isil Erel, the David A. Rismiller Chair in Finance at The Ohio State University’s Fisher College of Business and the Executive Editor of The Review of Corporate Finance Studies. Together, they explore the evolving landscape of private debt funds – the fastest-growing segment in the private capital market.

Jan, Ariel, and Isil examine what private debt funds are and how they expanded rapidly, stepping in to fill the gap left by commercial banks post-financial crisis. Isil discusses her research about the performance and risk profile of these funds, including their equity-like characteristics. Their conversation also explores the challenges facing retail investors, the effects of competition among non-bank lenders, the risks associated with limited transparency, and the increasing interconnectedness between banks, private debt funds, and institutional investors.

The papers discussed in the episode can be found here and here.

The opinions expressed are those of the speakers and do not necessarily reflect the views of their employer or its clients. This podcast is for general information purposes and is not intended to be and should not be taken as legal advice.

Timestamped Overview

00:00 Private Debt's Rapid Growth

05:22 Private Debt's Post-Crisis Surge

07:27 Non-Banks Transforming SME Lending

10:41 Private Debt Fund Performance Analysis

13:15 Caution Urged for Retail Investors

19:13 Non-Bank Lending: Risks & Impacts

20:22 Private Debt Risks to Investors