Spotlight on David Ross, Managing Director & Head of Private Credit, Northleaf Capital Partners
Global Thought Leader Spotlight
David Ross, Managing Director & Head of Private Credit, Northleaf Capital Partners
In my role as the Managing Director and Head of Private Credit at Northleaf Capital Partners, I am responsible for leading Northleaf’s global private credit platform across corporate direct lending and asset-based finance (“ABF”), which includes open-end and closed-end funds as well as a number of custom mandates.
In addition, I serve on Northleaf’s Executive Committee, overseeing the firm’s strategy for our broader private markets platform.
Key themes driving risks and opportunities
Investor optimism at the start of 2025 has given way to caution, with geopolitical tension and higher macroeconomic uncertainty expected to drive further public market volatility. Against this backdrop, it’s important to note that private credit has historically outperformed its leveraged loan and high yield counterparts through periods of market dislocation (i.e. COVID, peak base rates), generating attractive relative value and taking share as banks and liquid credit markets retrench.
Private credit continues to deliver attractive absolute and risk-adjusted returns. Private credit spreads had begun to stabilise in early 2025 following several quarters of tightening, and recent volatility has led to early signs of upward repricing, reflecting the higher risk environment. In particular, the core mid-market and ABF offer pockets of stronger relative value due to more favourable supply/demand dynamics for lenders.
As private credit portfolios continue to evolve, investors are looking to increase exposure to ABF and benefit from both higher returns and lower correlation. ABF is a large and established market, but the private credit opportunity is rapidly growing as borrowers increasingly favour private capital solutions for flexibility and ease of execution. From an investor perspective, ABF helps to diversify portfolios away from corporate risk and provides strong downside protection through underlying asset collateralisation. There are several segments within ABF (consumer, real asset/ commercial, niche contractual), enabling investors to build portfolios across different asset types, risk-return profiles and investment structures.
Implications for institutional investors
Private credit is a mature asset class that has proven itself through multiple cycles, providing enhanced returns and diversification benefits to investors. Private credit has consistently offered stable cash yields and low losses driven by conservative structures, lender protections and strong borrower fundamentals. Investors should maintain their allocation to private credit, especially during periods of market dislocation when private credit has historically outperformed liquid credit. During periods of market turbulence, banks and public markets tend to retrench, paving the way for private credit solutions that can often be priced attractively with strong collateral protections.
In a higher risk environment, portfolio diversification becomes even more critical to risk management. Portfolios with targeted diversification across geographies, sectors, borrower strategies can be better insulated from idiosyncratic risk and macroeconomic shocks. Managers with the flexibility to invest across these dimensions may also be better positioned to crystallise relative value and take advantage of market dislocations as they arise.
Exposure to low-correlation assets such as music royalties, healthcare receivables, commercial litigation can offer attractive yield, mute volatility and enhance diversification within a broader private credit portfolio. Notably, low-correlation ABF is less influenced by macro, market and geopolitical shocks as these assets exhibit idiosyncratic demand drivers and credit risk. Furthermore, specialised structuring creates high barriers to entry while diversified collateral pools, significant asset coverage and extensive lender protections help manage downside risk. The risk/return characteristics of low correlation ABF are complementary to direct lending and complementary to traditional forms of consumer and commercial ABF.
David will be presenting at Global Investment Institute’s upcoming Private Credit Investment Forum, taking place on Thursday, 8 May 2025 at the Grand Hyatt Melbourne, Victoria. To register your interest in attending, click here or for more information email zlatan@globalii.com.au.
David Ross, Managing Director & Head of Private Credit, Northleaf Capital Partners
David is the Managing Director and Head of Private Credit at Northleaf. He is head of Northleaf's private credit program and a member of the Private Credit and Private Equity Investment Committees. David oversees all aspects of Northleaf’s private credit investment activities, including the origination, evaluation and monitoring of private credit investments globally. In addition, he is involved in Northleaf’s investor relations and business development activities.
Prior to joining Northleaf, David was at Bain Capital Credit, a leading global credit specialist, as a Managing Director, Global Head of Sourcing and a member of Bain Capital's Opportunistic Credit and Private Credit team. Previously, David served as the Co-Head of Bain Capital Credit's London office from 2009 to 2013. David began his career with Credit Suisse First Boston in Investment Banking before joining Bain Capital Credit in 2003.
David received a B.A. from Harvard College.
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