Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Carlisle announcing today that it has raised five point seven
Speaker 2: billion dollars for its latest flagship credit fund, with more
Speaker 2: than seven billion dollars with leverage. It's the funds ever
Speaker 2: largest ever credit poll, exceeding the roughly four points six
Speaker 2: billion dollars raised for the prior vintage in twenty twenty
Speaker 2: two for Opportunistic Credit.
Speaker 1: For more on this, we are joined by Mark Jenkins.
Speaker 2: He is head of Global Credit at Carlisle Investment Management.
Speaker 2: And we have to put this into context because you're
Speaker 2: looking at Opportunistic Credit, you have two hundred billion in
Speaker 2: credit here, So why is this pool of capital so
Speaker 2: interesting at this point in time. It looks like you're
Speaker 2: looking at very specific nimble ways to get into the market.
Speaker 3: Yeah, thanks Chaneli for having me on.
Speaker 4: You know, for us, this is like, you know, a
Speaker 4: very important step forward as we continue to develop the
Speaker 4: broad platform that we have. Opportunistic credit is one of
Speaker 4: our core strategies on a very diverse platform for us,
Speaker 4: So we focus on how we can have a diversity
Speaker 4: of so we can attack if you will, or look
Speaker 4: for opportunities across the market as we go through opportunities.
Speaker 4: Opportunistic credit for US is really working with family employee
Speaker 4: owned type businesses that we structure bespoke transactions for and
Speaker 4: they're typically under banked organizations that look for capital solutions
Speaker 4: up and down the capital structure.
Speaker 3: So I think we have a unique.
Speaker 4: Perspective in that regard and I've been building that, you know,
Speaker 4: that reputation in the market over the past seven years.
Speaker 2: It's interesting because you've seen over the last couple of years,
Speaker 2: ever since you saw the Silicon Valley bank kind of
Speaker 2: step back, and then you saw the interest rate movements
Speaker 2: really shut out a lot of banks from the market.
Speaker 2: Is this opportunistic opportunity bigger now that you're seeing the
Speaker 2: banking system step back a little bit?
Speaker 4: Yeah, I think it's it's kind of twofold. One is
Speaker 4: when we look at these companies, they generally, you know,
Speaker 4: we the opportunistic strategy for US is going to where
Speaker 4: there's fewer participants looking to bank these people. So part
Speaker 4: of the pullback in the banking system, yeah, is not
Speaker 4: serving these companies.
Speaker 3: Well, if you will. We also have a very large team.
Speaker 4: In Europe as well, and there's a great dispersion, if
Speaker 4: you will, in fragmentation in that market, So it does
Speaker 4: create a lot of opportunity for us there in terms
Speaker 4: of how the banks have pulled back. But overall, I mean,
Speaker 4: it really is bringing the full scale of the platform
Speaker 4: to bear for capital solutions, and I think that's the
Speaker 4: key thing for us in terms of the strategy.
Speaker 1: What's the return profile?
Speaker 2: What can you expect back on a strategy like this,
Speaker 2: and how does it compare to other type of credits.
Speaker 4: Yeah, because of the complexity, because of the bespoke nature
Speaker 4: of it, you're actually charging a premium above what somebody
Speaker 4: would get into capital markets. And because this is also
Speaker 4: typically not something that goes into the direct lending market,
Speaker 4: You're looking for returns that are three to four inner
Speaker 4: basis points above, sort of first lean direct lending.
Speaker 3: If you will.
Speaker 2: It feels like Carlisle and many of your peers are
Speaker 2: looking at direct lending and saying this is, yes, a
Speaker 2: large opportunity, but maybe there are larger ones elsewhere. You've
Speaker 2: been diving into asset back finance, now more opportunistsic credit
Speaker 2: as well.
Speaker 1: What does this mean about the biggest growth.
Speaker 2: Areas for your credit business moving forward?
Speaker 4: Yeah, for us, we've been kind of consciously building out
Speaker 4: this platform, which really spans everything from public or liquid
Speaker 4: corporate credit, private credit, real asset and asset backs. So
Speaker 4: that broad spectrum, if you will, and right now are
Speaker 4: power allies, if you will, are really on the COLO side,
Speaker 4: the opportunistic side and asset backside, and I think that's
Speaker 4: where we see the growth. But it depends on where
Speaker 4: you are in the cycle. So in twenty twenty three,
Speaker 4: for instance, the COLO market was closed effectively, we didn't
Speaker 4: do anything.
Speaker 3: This year, we've had a record year.
Speaker 4: We've priced over thirty six colos, refinancings, new issues, et cetera.
Speaker 4: And we've raised over nine hundred million of third party equity.
Speaker 3: So quite a change.
Speaker 4: So you have to have that diversity on your platform
Speaker 4: to take advantage of the market opportunities as you go
Speaker 4: through cycles.
Speaker 2: Power ally a strong word. How are these things serving
Speaker 2: as power allies? Is there something about these markets growing
Speaker 2: faster now than they were before?
Speaker 1: Yeah?
Speaker 4: I think you know you've got specifically on the asset backside,
Speaker 4: you do have this secon shift where we've seen assets
Speaker 4: that weren't ordinarily available to us for private investment or
Speaker 4: now coming into the marketplace because of this shift you're
Speaker 4: seen from basically banks in the United States in particular,
Speaker 4: has to do with regulatory changes, how they manage our WA's.
Speaker 4: It has to do some of the counting changes, and
Speaker 4: that's been a secular shift that we've seen over the
Speaker 4: past three years. But if it really has come to
Speaker 4: fruition in the past year where we're seeing more opportunities
Speaker 4: versus capital formations. So we see that as a great
Speaker 4: opportunity for our investors and certainly an area where we're
Speaker 4: going to lean into and grow over the next several years.
Speaker 2: As money flows into private markets, where's the risk? We
Speaker 2: had this great story on the terminal today about the
Speaker 2: records COLO issue ince raising concerns because of the pick
Speaker 2: provisions that are arising as well. If you kind of
Speaker 2: look around the world here that you operate in, where's
Speaker 2: your biggest concern?
Speaker 4: Yeah, I don't think it's so much the flows of
Speaker 4: capital into the private markets, because ultimately, when you think
Speaker 4: about who the actual investors are, they're much better matched
Speaker 4: to the private nature of it. I e.
Speaker 3: You know, when it was.
Speaker 4: Sat on bank balance sheets, you're financing those with customer deposits,
Speaker 4: You're financing them in the capital markets and that's not
Speaker 4: necessarily matching asset liability matching.
Speaker 3: When you go to the private.
Speaker 4: Markets, you're looking for much more longer investment horizons, so
Speaker 4: you can ride the volatility that you might see in
Speaker 4: a credit So the real risk isn't so much in
Speaker 4: capital coming in obviously. You know, as capital comes into
Speaker 4: certain pockets, some places get very expensive, if you will,
Speaker 4: and that's always been through different cycles. I think the
Speaker 4: bigger issue is, you know, how we deal with the
Speaker 4: economic environment going forward, as opposed necessarily anything that's going
Speaker 4: to happen in the private capital markets in particular.
Speaker 2: You know, there's this notion out there that public and
Speaker 2: private markets are converging, where some private capital providers have said,
Speaker 2: no way, private is private, public is public.
Speaker 1: How do you feel about that?
Speaker 3: Yeah?
Speaker 4: I think credit is credit, right. I think equity is equity.
Speaker 4: So when somebody's putting it into their policy portfolio, nobody's saying,
Speaker 4: you know, should this be private or should this be public?
Speaker 4: They're thinking about what is that exposure that I have
Speaker 4: in my portfolio? And I think the convergence that occurred
Speaker 4: coming out of twenty twenty three is you've seen both
Speaker 4: private and public markets and credit in particular, co exists
Speaker 4: in a very you know, I think fruitful manner for
Speaker 4: the community, if you will, and that's creating better opportunities.
Speaker 4: So when I look at Carlisle in particular, and look
Speaker 4: at the two Biot deals that we recently financed this year,
Speaker 4: they're very large biots. One's a carve out, but we
Speaker 4: use the private markets to finance them. But at some
Speaker 4: point in the future, no doubt, we'll look to finance
Speaker 4: in the public markets. So they coexist as opposed to compete,
Speaker 4: I would say, And at various times they rub up
Speaker 4: against each other for that competition or that tension, but
Speaker 4: they're going to coexist going forward.
Speaker 2: Last question from you, you were talking here about the
Speaker 2: macroeconomic environment, what happens next year. You know, you look
Speaker 2: at a rate environment where there is still a substantial
Speaker 2: amount of rate cuts price into next year's market, but
Speaker 2: investors also worried about even the possibility of a hike
Speaker 2: if certain policies come into play, like tariffs.
Speaker 1: Are you worried about the dispersion here?
Speaker 4: Yeah, Look, I think our view is that we're going
Speaker 4: to have higher rates for longer.
Speaker 3: We've had that view for some time now.
Speaker 4: I think the macroeconomic geopolitical tension that you see, and
Speaker 4: you know, the new administration coming is going to be
Speaker 4: very pro business, which I think is a good thing.
Speaker 4: Is going to keep rates at a relative, relatively high
Speaker 4: level relative to what the market's.
Speaker 3: Predicted, if you will. And what does that mean.
Speaker 4: I think what it means is it's good for the
Speaker 4: liquidity in the marketplace. But right now, if you take
Speaker 4: a look at financing costs for biotes right now and
Speaker 4: you look at the high yield and leverage low market,
Speaker 4: we're only about fifty basis points higher than when the
Speaker 4: FED started raising rates in March twenty twenty two. So
Speaker 4: you've got a very good environment right now for financing
Speaker 4: for biots et cetera. There seems to be good momentum
Speaker 4: in terms of the economy. So as you look forward
Speaker 4: into twenty five, you know, we obviously going to see
Speaker 4: some volatility, but I think.
Speaker 3: We're in a very safe environment for investing.
Speaker 2: Mark, Well, thank you so much for joining us here
Speaker 2: on set. That is Mark Junggan's head of global credit
Speaker 2: at carre
Speaker 1: Relyle on the heels of a record breaking fundraiser