JPMorgan Asset Management expanding footprint in private debt

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JPMorgan Chase & Co.’s asset management arm is extending a push into the $787 billion private credit market as cash pours into the asset class from yield-hungry investors.

JPMorgan Asset Management announced Thursday it has appointed Meg McClellan to a newly created role as head of private credit. She will oversee the firm’s $10 billion in private credit assets, looking after the global special situations, infrastructure debt and commercial mortgage loan businesses, according to a statement. The firm has yet to disclose McClennan’s replacement as CFO.

As it grows its private debt business, JPMorgan Asset Management is considering acquisitions “that fit into our overall continuum of products,” and additional hires, said Anton Pil, head of the firm’s alternative assets group. “We’ve been fairly active in hires in that space over the last two years, especially in the distressed and special situations side,” he said in a phone interview. The reason behind the effort is the firm’s view that private debt is emerging as a permanent asset class.

“In the context of where we are in the economic cycle, we are focused on highly collateralized private debt” to mitigate risk, Pil said. This includes investments in real estate, real assets, or collateralized with ships or aircraft. The firm also sees attractive opportunity in special situations and distress.

Pil said the firm is avoiding traditional direct lending, because the illiquidity premium is insufficient compared to public credit markets currently.

JPMorgan Asset Management has already taken strides to expand its footprint in private debt. In October, the firm announced the closing of a $1.06 billion special situations fund for investing in stressed, distressed and event-driven situations in North America and Europe. The parent is also raising money for a mezzanine fund as part of a strategy to boost its alternatives business.

Bank MovesMcClellan’s appointment is the latest in a string of bank moves to capitalize on the booming private credit market, despite some concerns about a slowdown. Last month, Jim Amine stepped down as chief executive of Credit Suisse Group AG’s investment banking and capital markets division to take the role as head of private credit opportunities. DNB Asset Management recently hired a private debt team in Europe.

They join other big names already in private credit including Goldman Sachs’ merchant banking division, BNP Paribas Asset Management and Deutsche Bank AG’s DWS Group. The latter has a European direct lending unit which recently signed its first wave of third party fund investors with 350 million euros ($389 million) in commitments.

Bloomberg News