Private Credit Marketing Guide for Investment Management Firms
How to Attract Investors and Interest in 2024
Visibility and interest in private credit opportunities are at all-time highs, and investment firms who offer these products are in a strong position to capitalize on their popularity and grab a share of a fast-growing sector—as long as they market them effectively.
With the right financial marketing strategy, investment firms can take advantage and increase that all-important AUM. This article will be broken up into three sections to go over the key marketing points and themes needed to provide potential investors with the information and incentives they need to put their money to work in private credit.
- Why is Private Credit Attractive?
- How Should Private Credit Be Marketed?
- What is Optimal Support Messaging?
The Case for Private Credit: Answering the Why
One of the most important aspects of marketing the current private credit investment opportunity to convey to potential investors is the why. Providing the reason why private credit is attractive will both inform potential clients, as well as put them at ease in what is likely a relatively new space for many investors. Here are the foundational messages:
- The Premise: The convergence of rapidly rising interest rates, liquidity strained bank retrenchment, and capital-driven regulatory reforms has created one of the most attractive environments for private credit investors since the great financial crisis.
- The Potential: The resulting volatility from this convergence, in addition to a cautious equity outlook, has provided ample interest across the private credit opportunity set for a wide range of investor objectives—and as demand for capital outstripping supply, investors are in a position to generate compelling returns without the need for significant risk-taking.
How to Market Private Credit Investments
Capitalizing on private credit opportunities must be accompanied by the ability to market these opportunities to the right outside investors. This requires an assortment of several key messages that engagingly inform, assuage fears and boost confidence. This involves telling a story, highlighting the opportunity set and demonstrating a long-term vision.
Tell a Compelling Story
Using the foundation put in place above—most notably the premise surrounding demand outstripping supply and generating strong returns relative to the amount of risk—you have both objective and predictive building blocks for the formation of the narrative that champions why your firm and your clients should continue investing in the space.
Key Insight: A compelling story that narratively notes why private credit, and by extension, why your firm, is where you should be investing your money—is critical in grabbing a reader’s attention and providing much needed context in an area of the market that is currently foreign and underserved to many.
Highlight An Exciting Opportunity Set
With equities taking the lion’s share of interest over the past few decades, fixed income and structured credit have suffered due to their perceived lack of excitement. Yet, the current environment, combined with the acknowledgment of historical data pointing to a tough road ahead for equities, has begun creating a shift in mindset—so it is critical to leverage this change of perspective.
“The last time S&P 500 P/E multiples were at this level, the index provided only a 7% annualized return over the next 10 years”
Key Insight: Use data-driven foundations with action-oriented private credit marketing and messaging that conveys a sense of exploration & discovery coupled with the potential for higher-than-historical yields (and ultimately total return) to truly excite the investor base.
Demonstrate A Confident Future
By creating a clear view of the situation in the story and opportunity set marketing, you have the elements in place to establish private credit opportunities as a key investment prerogative across the near, middle, and long term.
2023 Private Debt AUM (excluding real estate)
Increase from 2000 to 2023
Key Insight: Showing not only command of the private debt landscape, but also the confident vision of the future, provides much needed assurance to investors, especially ones without previous exposure to private credit.
Connecting the Private Credit Marketing Dots
With the right overarching private credit marketing strategy in place, you can then supplement these key messages with different forms of marcom support. Including:
- Value Proposition Clarification – Clearly define the value of the investment while highlighting resulting benefits like attractive risk-adjusted returns, diversification, income generation, and low correlation.
- Objective Alignment – Focus on messaging how these opportunities align with investors’ goals, such as portfolio objectives, risk tolerance, and return expectations.
- Team Credibility – Manager background in a traditionally opaque space is critical. Emphasize team member experiences, performance and investment styles.
- Educational Initiatives – Dive even further into the underlying causes for optimism that increases understanding through avenues like webinars, thought pieces and podcasts.
Private credit has rarely been in a better position than the current market environment. For investment management firms, navigating and taking advantage of this opportune landscape can help them get ahead of the expected private credit cycle and and find unique avenues for capital deployment. Informing, engaging and assuring potential investors are the three steps needed to put your private credit products on solid footing and highly visible in the marketplace.
We understand how complex the world of marketing for financial and investment services can be, especially when it comes to marketing to a niche product set, such as private credit. To learn more about how MBC Strategic can improve your financial and investment marketing and branding, please reach out to our team and we’d be happy to start a discussion.
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