Public-private credit solutions via strategic partnership
To capture private market demand without disrupting internal culture, public asset managers should partner with established private equity firms rather than buying or building capabilities.
The argument
The speaker detailed Capital Group's partnership with KKR to launch a public-private credit solution. He argued that buying or building would have caused severe cultural disruption or distracted from their core public markets focus, making a fee-sharing partnership the optimal path for client outcomes.
The thesis, stress-tested
✓ What validates it
- ✓Successful asset gathering and strong credit performance of the joint Capital Group/KKR credit product
▸ Risks discussed
- ▸Giving up a portion of the economics/fees to the partner
- ▸Reliance on the partner's underwriting quality and long-term performance in private markets
Hear it yourself
"We were trying to deliver the best solution. When we launched public private credit and we did it with KKR, KKR has done this for fifty years in the private markets. Why are we gonna be better at them? By the way, why are they gonna be better at the public markets than we are?"
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