Robert Sinclair (pictured), managing director at AB CarVal, talks to Alternative Credit Investor about the firm’s push into the wealth channel, the structural resilience of asset-based finance (ABF) and why discipline and experience are key as the market evolves.
Alternative Credit Investor (ACI): Can you tell us about your role at AB CarVal and the key areas you focus on?
Robert Sinclair (RS): I’m a managing director for AB CarVal and am responsible for sourcing and managing ABF investments in Europe. AB CarVal has been managing these types of investments over its entire history with a focus on whole loan portfolios, forward flow agreements, financing lines and specialty finance platform investments. In Europe, we predominantly pursue opportunities in consumer, residential and commercial assets.
ACI: AB CarVal recently launched a private credit evergreen fund aimed at retail investors, and the firm has talked about expanding into the wealth channel. What’s driving this push toward retail and private wealth investors now?
RS: There is a demand for a wider range of vehicles from more investor types seeking private credit exposure, either for volume, diversification or yield. What was once largely only accessible for institutional investors, now has broader interest from retail, private wealth and insurance investors. Asset managers like us are adopting new structures to meet this demand.
ACI: Where do you see the strongest investor appetite for private credit at the moment, is it in the above areas or elsewhere?
RS: Many investors are trying to grow their private credit books, relative to tight public markets, so there is increased interest in ABF as an attractive, diversifying profile within a broader private credit allocation. Systemic shifts have occurred in the banking sector and non-banks are stepping in to fill that gap, but they need financing. In the real economy, people are going to buy cars and homes and they need loans. Developers must build to meet the demand for housing. Banks must keep their balance sheets healthy and regulatory compliant. Thus, there’s increasingly more demand for capital. Asset-based finance has grown into a market that is too big to ignore and we expect opportunities for it to continue to grow.
ACI: There’s been a lot of talk in the press about a potential bubble forming in private credit. Do you think that criticism is fair?
RS: Private credit isn’t one monolithic market. We certainly see some parts of the corporate direct lending market showing signs of crowding, with compressed spreads, more borrower-friendly structures and new entrants chasing similar opportunities. Whenever capital outpaces underwriting discipline, risks can build.
But the specific area of ABF where we focus is a very different segment. These are granular, amortising, asset-backed portfolios tied to the real economy. We believe they de-risk naturally over time and don’t rely on refinancing or capital markets access for exits and returns. In our view, that makes our version of ABF structurally more resilient and less exposed to the leverage and valuation pressures you might see elsewhere in private credit.
However, even within the ABF space, discipline and experience remain crucial. When this asset class is core to your business, not a cyclical trade, you build the infrastructure, data, and partnerships over many years to underwrite these assets rigorously and structure them for resilience. You need to be selective in how and where capital is deployed, focusing on bilateral transactions and structures that can withstand economic volatility. The most disciplined firms underwrite complexity and are focused on diligence, tailored solutions and risk mitigation and workout capabilities. When done properly in this way, I believe ABF can offer stability, downside protection, diversification, and genuine economic purpose.
ACI: We’ve also seen some high-profile collapses, which some have said point to deeper, systemic risks in private credit. How do you view those concerns?
RS: As private credit continues to grow, it’s receiving more attention and also more scrutiny. In my experience in financial markets, all asset classes have a few stumbles. As investors assess asset managers, we believe that it’s critical that they choose those with deep expertise and the capabilities and track records to underwrite complexity and appropriately manage risk. Experience matters in these markets.
ACI: Beyond direct lending, where do you see the biggest opportunities for growth in private credit right now? Are there areas of the market that are becoming more interesting to you?
RS: At a time when equities and public credit are tight, ABF is an attractive diversifier for a credit portfolio that likely has more exposure to direct lending or private placement investments. ABF may offer strong net yield potential, low correlation, low volatility and granularity in underlying portfolios. We look at the ABF opportunity primarily across three main segments, residential mortgages, consumer loans and small commercial lending. It’s also a rapidly growing market reflecting a secular re-intermediation of credit, a structural shift away from bank balance sheets toward institutional capital. Regulatory change, capital constraints, and investor demand for yield are all driving that evolution. The progress and pace of this evolution in the lending market differs across geographies with the US having led the way and Europe following the path. We see a substantial opportunity set in Europe as this dynamic continues to play out.
ACI: How is the current macroeconomic backdrop shaping the market for private credit deals?
RS: I will give you an example. There is steady growth in the need for small balance residential development financing as there are chronic housing shortages in several markets, including the UK, Ireland, the Netherlands and Germany. But bank lending in this space has retrenched in recent years, in part as a function of the capital and operational intensity of this type of lending. Private credit therefore has a role to play in providing this financing to developers. While we’re still doing whole loan portfolio purchases in residential mortgages when banks are selling, we’re seeing more opportunities in providing financing via non-bank lending platforms in this way than we were several years ago.
ACI: Looking ahead, how do you see AB CarVal’s strategy evolving, and what do you expect to change across the private credit landscape over the next few years?
RS: We believe the changes we’ve seen in the banking sector and the growth of the non-bank sector are a systemic change. It’s leading to a greater need for private capital, which we expect will continue to grow. We’re focused on sourcing compelling opportunities in this market, and underwriting and mitigating risk, as we’ve been doing for a long time. Also, as investor appetite for these types of assets grows, I think you’ll continue to see new structures from asset managers with different return profiles and risk appetites.
ACI: And finally, with DealCatalyst’s Annual SLF Conference coming up later this month, what are you most looking forward to discussing or taking away from the event?
RS: I’m looking forward to my panel right at the start of the conference. We’ll be discussing a number of the themes touched on in these questions. For those of us who been doing specialist lending and asset-based finance for decades, it’s nice that others are noticing and want to find out more about what we do. We think it’s a really exciting time in our space.
Alternative Credit Investor is a media partner to DealCatalyst’s 4th Annual SLF Conference, which takes place on the 24th November at the Royal Lancaster London.
