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Alternative Market Briefing

Credit managers hold off new launches

Thursday, November 26, 2020

Bailey McCann, Opalesque New York:

Credit managers appear to be in a bit of a holding pattern according to new data from law firm Ropes & Gray. The pandemic has disrupted new launches and is pushing managers to focus on their existing platform products.

Early in 2020, 50% of managers stated they were considering launching new investment strategies. Six months later, only 20% were, reflecting a distinct shift away from pre-COVID-19 enthusiasm. 23% responded that they were closing less popular strategies, and in light of the COVID-19 pandemic, managers and investors alike are more focused on existing strategies. 30% of managers reported that investors had pulled out of a new fundraise and were opting instead to re-up existing relationships.

These trends are likely to continue into 2021. 30% of managers said that managers sticking with current relationships would be the biggest fundraising challenge of next year. Only 20% of managers plan to launch a new strategy within the next 12 months.

The report suggests that when it comes to launching new strategies, it's likely that managers will be building out separately managed accounts to go after distressed opportunities. SMAs have already proven to be a popular option with investors who want to be able to take advantage of opportunities arising out of the pandemic. Pandemic-related distressed debt SMAs and comingled funds are launching with a timeframe of 18-24 months in order to capture immediate opportunities.......................

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