There were 33 acquisitions of alternative credit managers in 2024, involving $267bn (£215bn) in acquired assets under management (AUM).
Gapstow’s 2024 annual review of such acquisitions revealed that direct lending firms accounted for 70 per cent of transactions and 88 per cent of acquired AUM last year.
Twelve minority-ownership-stake purchases accounted for 18 per cent of acquired AUM, up dramatically from 2023.
However, the was only one collateralised loan obligation (CLO) based transaction, a category which usually accounts for 15-20 per cent of activity.
The largest transaction was Blackrock’s $12bn acquisition of direct lender HPS, which accounted for half of acquired AUM alone.
Read more: PE funds in APAC tap private credit for acquisitions despite bank liquidity
Other transactions of note in 2024, included German asset manager Wendel’s acquisition of Chicago-based corporate lender Monroe Capital, Brookfield acquiring 51 per cent of asset-backed lender Castlelake, and Blue Owl acquiring both commercial real estate lender Prima Capital Advisors and Atalaya Capital.
Elsewhere, Janus Henderson acquired speciality finance lender Victory Park Capital and Third Point acquired AS Birch Grove, which has corporate credit strategies include lending and CLOs.
Despite total transaction volume hitting a record in 2023, there were only four minority stake acquisitions that year, accounting for $3bn in AUM.
By contrast, 2024 brought a resurgence in minority stake acquisitions, with twelve transactions for $48bn in acquired AUM.
Read more: CapitaLand Investment acquires Wingate’s property and corporate credit business
According to data from Gapstow’s Alternative Credit Acquisition Database, last year’s acquired AUM volume was close to 2023’s record-breaking volume of $285bn.
Apart from a dip during the 2020-2021 Covid era, 2024 continues a ten-year trend of increasing transaction volumes, which has a constant annualised growth rate of more than 20 per cent since 2015. This growth rate is stronger than that of the broader investment management industry.
Looking ahead, Gapstow expects elevated transaction activity to continue. “Growth in demand for alternative credit is still strong in absolute terms and relative to other asset classes. Both traditional and alternative investment managers believe that gaining and/or building exposure here is a strategic imperative,” the report said.
It also anticipates a rise in acquisitions of firms which currently have minority owners and fewer larger “mergers of equals”.
“Firms attempting to grow past $50bn in alternative credit AUM and ultimately toward the $100bn mark, may consider a larger scale merger rather than multiple smaller acquisitions,” it added
Read more: Ares tops European direct lender rankings
