The recent surge of retail capital into private credit had a tangible market impact, forcing managers to deploy capital quickly. This resulted in tighter spreads and weaker lending terms. As these flows moderate, this trend is reversing, creating better opportunities for new investments.
The narrative that AI will immediately and negatively disrupt all software companies is flawed. Significant infrastructure capex is required before widespread adoption, delaying the impact. Furthermore, many well-positioned incumbent software companies will actually benefit from AI, using it to expand their margins.
Non-traded Business Development Companies (BDCs) intentionally have liquidity limitations. This design prevents a fire sale of illiquid assets during market stress, protecting the vehicle and the broader system from forced selling and cascading losses. It is a deliberate structural protection.
A significant opportunity exists in opportunistic or hybrid private credit, which provides flexible capital for M&A, growth, or balance sheet repair. This segment is attractive because far less capital has been raised for these strategies compared to direct lending, creating favorable supply-demand dynamics for investors.