London-based Coller Capital, “a global leader in the secondary market for private assets”, has been trumpeting the success of its latest fundraise – this time, in the private credit space. It has announced the final closing of its Coller Credit Opportunities II fund, at US$6.8 billion for “senior direct lending and high-quality performing credit investments across LP-led and GP-led opportunities”.
Coller claims that this raise is a record size for this type of vehicle. The growth of the opportunity can be seen by the new fund’s increase on its preceding vehicle, the Coller Credit Opportunities I 2022 vintage debt fund which closed at $1.4 billion. That is almost 5x growth in just three years. Coller reports in its announcement that it “has seen $53 billion of secondary credit investment opportunities since January 2024, with substantial growth anticipated as more private credit funds mature”. It also claims that it has committed some $10.1 billion to date to private credit, having made its first investments in the space as early as 2008.
Jeremy Coller, CIO and managing partner of Coller Capital, described the raise as “a milestone fundraise that reaffirms the significant evolution and maturation of the private credit secondaries market. Investors increasingly recognise the strategic importance of private credit secondaries in achieving defensive exposure, liquidity, and enhanced portfolio management amid heightened market volatility”.
Despite this statement and the persuasive numbers, one outstanding question remains unanswered by the new fund raise: how necessary is it? Private credit’s robust growth of late has been partly fuelled by growing LP realisation of how effective it is at delivering liquidity versus private equity.
“Most private credit investments provide predictable cash flows in the form of regularly scheduled payments”, explains private markets ERP platform Carta. “This is very different from private equity, where returns to investors tend to be infrequent”. Private credit therefore suffers far less from the current liquidity crunch that has been hampering private equity exits. Presumably there won’t be quite so much demand in private credit for secondary transactions to free up illiquid positions and return money to LPs.
Of course, there are other reasons for LPs to adjust allocations than just current liquidity levels, and funds like Coller’s will service those. The LPs in Coller’s new fund clearly believe that the demand is there. If nothing else, provision of that option at least shows how far and how fast private credit is maturing as its own asset class.
