Spotlight on Marc Preiser, Portfolio Manager, European Direct Lending, Fidelity International
Global Thought Leader Spotlight
Marc Preiser, Portfolio Manager, European Direct Lending, Fidelity International
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I am a Portfolio Manager at Fidelity International and am currently responsible for the direct lending platform's investment and portfolio management aspects. Our 11-strong investment and credit management team spread across the UK and Continental Europe focuses on a broad pipeline of investment opportunities to both maximize choice and formulate risk reward across what is generally perceived as a mostly opaque market.
At present, our key area of focus is the core middle market, focusing on companies with EBITDA of €30 million or below. We believe that this realm of direct lending, the core middle market, is one of the few areas where manager differentiation exists thus allowing us to contribute some level of alpha to our underwriting process tangibly.
Direct lending: A market in transition
The direct lending market globally is transitioning into its third phase of growth and development. This phase is marked by the transformation of direct lending into its own distinct asset class, a trend that has been in process for the past several years.
Previously, a major build-up through the launch of direct lending and investing strategies, characterised Phase Two where managers were able to tap into the growing demand for the asset class.
On the shoulder between Phase Two and Three, the asset class experienced the phenomenon we are all too familiar with, COVID!
Managers across the board treated this event somewhat of a Force Majeure, impacting all companies irrespective of sectors, geographies, and industries. Compounded by massive government-led capital flooding of economies, together forestalling any concerns around defaults within portfolios and ironically leading to substantial growth in Limited Partner commitments across the asset class.
Presently, in Phase Three and hampered by a full year of substantially elevated interest costs, lingering inflation, and overall uncertainty in the geopolitical landscape. We are seeing cracks beginning to be exposed but are yet to witness any major defaults broadly.
However, under the stewardship of an experienced long-term manager, direct lending and private credit in general should be built to last, exhibiting the classic favourable characteristics of high income, floating rate and low volatility.
Implications of the transition for institutional investors
The direct lending asset class is increasingly becoming monolithic and commoditised. Sophisticated investors should not just focus on the cash pay rates and portfolio construction but also hone in on the quality of underwriting, consistency, and depth of reporting by the manager. Furthermore, investors must take into consideration the asset manager’s area of focus and whether their strategy adds value to investors’ existing investments in direct lending or other asset classes.
Following a full year of higher interest costs and inflation only normalising recently, default and recovery risks remain elevated compared to the more benign economic and geopolitical environment of prior growth periods. Hence, managers need to be eagled-eyed and highly diligent to ensure strong outcomes for investors.
Marc will be presenting at Global Investment Institute’s upcoming Private Credit Investment Forum, taking place on Thursday, 2 May 2024 as well as the Family Office Private Credit Roundtable, taking place on Friday, 3 May 2024. Both events will be held at the Grand Hyatt Melbourne, Victoria.
Register your interest in attending here or for more information email zlatan@globalii.com.au.
Marc Preiser, Portfolio Manager, European Direct Lending, Fidelity International
Marc is a Portfolio Manager, European Direct Lending at Fidelity International, having joined the organisation in April 2022.
Marc has a wealth of experience in private credit investing, having worked in the industry since 1992 and prior to joining Fidelity, he served as Senior Advisor to Next Wave Partners, a lower mid-market private equity firm. He also held the position of Head of European Private Credit for Apollo Global Management, where he led Apollo's entry into European Direct Lending, investing over €3 billion across Europe in directly originated middle market investments.
Marc's experience extends to the US, where he was Managing Director and founding team member of MidCap Financial, a US$25 billion US-based Direct Lending business, owned by Apollo since 2015. He also previously worked with Merrill Lynch Capital, BNP Paribas and Credit Lyonnais.
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