The indispensable role of private credit, especially in the face of crisis economics is well respected by equity investors, fund managers, and high net worth financiers. Gareth Henry, master of investor relations, is most familiar with the implications of private finance on public debt.
Reminiscent of J.P. Morgan and Company’s 1895 gold syndicate set up to sell gold bonds on behalf of a struggling U.S. Treasury, the wizard of Omaha would step up during the Great Recession of 2008 with a plan of his own to save an economy in dire straits. Offering a $5 billion emergency loan package earned Warren Buffett above average interest returns while simultaneously helping to prevent immediate financial implosion- a very real, imminent threat at the time. Buffett’s capital infusion achieved two goals; the transaction allotted the Federal Reserve time to execute its TARP (Troubled Asset Relief Program) plan, and set precedence for the proliferation of similar deals across the board. Learn more about Gareth Henry at angel.co
An experienced manager and advocate of private credit himself, Gareth Henry has operated in the alternative investment class for decades. He has seen firsthand how private funds can balance the results of stock market corrections by keeping companies liquid in order to keep the lights on, and maintain operative flow.
In addition to its function, private credit can take many forms including structured and mezzanine financing, direct lending, and distressed asset debt. Gareth Henry highlights direct lending as a prime reason for rise in alternative finance. The main reason? Where traditional lenders are forced to realign according to changing regulatory rules, direct lenders retain a much greater amount of autonomy in the markets. While traditional capital strategies continue to make headwinds post-crises, an upward trend in “special situation” sponsorships is more than a response to crisis as Gareth Henry explains. It is now a definitive reality.