“Private markets and private credit can be very, very helpful,” says Andrew Davies, in reference to the emerging dislocations he sees in financial markets, on the latest Credit Exchange podcast with Lisa Lee. Davies is the head of credit at CVC Capital Partners, a global private markets manager with more than EUR 200bn in AUM.
That help could be in the form of helping banks that are struggling to offload underwritten debt, scooping up publicly trading debt that’s priced too low, or providing to financial sponsors who find banks pared back, Davies says.
“We’ve seen it every time there’s a period of volatility,” he adds.
CVC and private credit is still deploying, despite increasing geopolitical risks, fears of AI disruption, and negative headlines around the industry, particularly in the US. European private credit is different, Davies contends, with more stability in capital flows that are more reliant on institutional investors rather than affluent individuals. The opportunity in Europe is to access a fragmented market that is less mature and has less competitive tension.
“It’s been somewhat immune from that over the last year or so, in terms of what you’re sensing coming out of the news flow in the US,” Davies says.
His biggest worry is around a heightened risk environment in the geopolitical landscape. There has already been short-term price action in energy markets, which Europe is very exposed to. “Does that flow into inflation? Does that flow into rates? Does that flow into a number of things?” he asks.
