Private Credit

Private credit is everywhere in the headlines right now — and it’s particularly relevant for the energy transition. The podcast with Howard Marks & Oaktree’s private credit team highlighted 3 misconceptions:

1️⃣ Lower volatility ≠ lower risk Business risks remain the same whether financed publicly or privately. 2️⃣ Sponsor-backed ≠ always safer Sponsor = private equity–backed. Non-sponsor = independent/founder-owned. Each structure has pros and cons such as sponsors can bring scale while founders can bring stronger emotional and reputational commitment. 3️⃣ Leverage ≠ uniform Leverage varies dramatically across private credit managers. Some managers use 0.8x debt-to-equity, others 1.75x. Used poorly, leverage destroys value:

"If you use leverage to enhance returns, you typically end up without a car"🚗

Why does it matter now: Scaling energy transition requires scaling capital, and understanding some of these nuances separates thoughtful investors from those following the herd. Capitalism can solve planetary challenges.

Link (Oaktree Capital | Insights Live: Howard Marks on Top Misconceptions About Private Credit) https://lnkd.in/gh_PfPwM

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