Private Credit Lawyers are Bullish on Alternative Market Future

Demand for private credit deals is likely to remain strong as banks look to get in on alternative lending, according to lawyers at Akin Gump Strauss Hauer & Feld.

“I don’t see the banks taking back what’s been taken from the bank markets,” said Bill Brady, a New York private credit lawyer who joined Akin as a partner on Monday. Multi-billion dollar deals are being done without banks involved, said Brady, who previously led the alternative lender and private credit group at Paul Hastings.

Private credit deals, which became popular in the wake of the 2008 financial crisis, more recently have surged as an alternative to traditional lending in an era of high borrowing costs. Total private credit assets are expected to reach $2.2 trillion by 2027, according to London-based investment data company Prequin Ltd.

Private lenders court borrowers with flexible terms, deferred interest payments, and upfront pricing. The deals are not subject to the same level of oversight as banks, which has caught the attention of regulators.

Some banks, like JPMorgan Chase & Co., have targeted sovereign wealth funds, pensions, alternative asset managers and others to raise cash to grow their own private credit strategies, Bloomberg reported. Others launched joint ventures with capital providers, said Ranesh Ramanathan, co-leader of Akin’s special situations and private credit practice

“They’re doing that to see the broader business where they can bring in client capital, high net worth and other client channels that they have to put the capital behind it,” Ramanathan said of banks with dedicated cash for private credit. “I think they’re not a real competitor.”

Private credit work has buoyed some major law firms amid a slowdown in M&A transactions.

Brady joins Akin’s special situations and private credit practice group in Manhattan, the firm said. The team now counts around 16 lawyers that focus on credit funds in the US and another eight outside the country. Akin reported nearly $1.4 billion in gross revenue last year and has more than 900 lawyers across the globe.

In January, the firm advised Intrum, a European loan servicer, in its sale of a portion of its investment portfolio to affiliates of Cerberus Capital Management L.P. for more than $1 billion. In March, it advised Kennedy Lewis Investment Management in a $550 million senior secured term loan facility for VoltaGrid, an energy generation company.

“We certainly continue to look to grow, it’s an incredibly core part of our firm” Dan Fisher, also a co-leader of the practice, said.