Private Credit for Advisers: Understanding what is in the portfolio

Host Natalie Philips, Head of Distribution NSW & QLD at Privity Credit, is joined by Andrew Rocks, Co-Founder of Lydian Financial Services, and Atiya Habib, Managing Partner at Privity Credit.

The conversation explores some of the questions advisers should be asking beyond headline yields – from the inherent illiquidity of private credit and how portfolios are constructed, to sector exposure, borrower quality, capital structure and the importance of knowing exactly where an investor’s dollar sits in the capital structure.

With increasing scrutiny on areas such as technology and SaaS lending, the discussion also highlights why understanding what a manager doesn’t invest in can be just as important as understanding what they do.

The discussion helps clarify:

• Why seniority matters when assessing risk and how being a senior lender versus a mezzanine lender can materially change the way cash flows and downside protection work.
• Why understanding what a manager doesn’t invest in matters, particularly as sectors such as SaaS and technology face increased scrutiny around their longer term business models and valuations.
• How portfolio construction can help manage liquidity, including the role of cash reserves and the importance of aligning redemption expectations with the underlying loans.
• Where private credit can fit within a modern portfolio, particularly for investors looking to access income-producing investments, while understanding the liquidity and risk characteristics of the asset class.

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