Callan's First Private Credit Study Helps Institutional Investors Better Evaluate Private Credit Funds

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Jul 06, 2023, 07:30 ET

Terms have shifted since the emergence of the asset class after the Global Financial Crisis

SAN FRANCISCO, July 6, 2023 /PRNewswire/ -- Callan, a leading institutional investment consulting firm, announced today the release of its inaugural Private Credit Fees and Terms Study. Analyzing the fees and terms for 330 private credit partnerships, the study helps institutional investors better evaluate private credit funds and serves as an industry benchmark when comparing a partnership's terms to its peers.

"Being able to evaluate a partnership's terms compared to those of its peers is an especially useful tool when conducting due diligence," said Catherine Beard, study author and senior vice president in Callan's Alternatives Consulting group. "We also envision that general partners may find the study useful as a way to determine how their fees and terms compare to other managers."

Study Highlights:

The 330 private credit partnerships represent fund offerings Callan reviewed that were in the market in 2016-YTD 2022 (as of 3Q).
The data was collected through manager outreach and provided by the general partners.
Callan focused on the following principal terms to provide a concise snapshot of the market: management fees, "waterfall" type, carried interest percentage, and preferred return.
The study is tilted toward North American and global strategies, which represented 86% of the dataset.
Private credit terms have shifted since the emergence of the asset class after the Global Financial Crisis, with management fees and carry evolving from 2% and 20% to a median of 1.5% and 15%.

Callan plans to update this study on a regular basis; each time, the dataset will broaden and become increasingly representative of the private credit industry.

Find the summary blog post and survey here.

About Callan

Callan was founded as an employee-owned investment consulting firm in 1973. Ever since, we have empowered institutional clients with creative, customized investment solutions backed by proprietary research, exclusive data, and ongoing education. Today, Callan advises on more than $3 trillion in total fund sponsor assets, which makes it among the largest independently owned investment consulting firms in the U.S. Callan uses a client-focused consulting model to serve pension and defined contribution plan sponsors, endowments, foundations, independent investment advisers, investment managers, and other asset owners. Callan has six offices throughout the U.S. Learn more at callan.com.

Media Contact:
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SOURCE Callan LLC