Welcome to Lender Lens, our series for profiling leaders in the Lender community.
With private credit playing an increasingly important role in the financial system, we wanted to find out how lenders are navigating the evolving landscape and how they assess the market in the coming years.
Specializing in the European lower middle market, Kartesia offers a range of credit strategies, from opportunistic to senior secured to asset-based finance, designed to meet diverse investor needs while uncovering value in harder-to-reach corners of the market. With a pan-European presence and a focus on disciplined structuring, Kartesia brings a thoughtful, hands-on approach to sourcing and executing deals.
In this conversation, we speak with Duncan Browne, Head of Investor Relations at Kartesia. With a front-row view of investor sentiment and fundraising dynamics, Duncan shares how the firm is navigating rising competition, shifting LP expectations, and evolving demand for both traditional and asset-based lending strategies.
He also offers a personal glimpse into life beyond the deal room, one that’s just as fast-paced, thanks to his two young sons.
What sectors or strategies does Kartesia see the most opportunity in today?
As a multi-strategy credit specialist, Kartesia is fortunate to have a range of cross-sector products that cater to various client needs. Kartesia is deeply embedded in the more granular and harder to access European lower middle market, which remains less competitive and provides enhanced returns for those able to access it efficiently. Kartesia’s clients can gain exposure to this market via our opportunistic funds if they are looking for higher returns or our senior funds if they’re focused on strong risk-adjusted returns. Equally, if our clients are seeking exposure to asset-based finance then our Kartesia Asset Finance strategy provides strong senior secured returns against hard assets in the logistics and transport sectors characterised by predictable cash flows that are uncorrelated with traditional market cycles.
How is rising competition in private credit shaping the way you source, structure, and price deals today?
Genuine differentiation is the key to mitigating increased competition in any sector. Kartesia’s deep local presence with 115 investment professionals based across 8 offices throughout Europe provides deep access to sponsorless deals in the lower middle market where local relationships and a strong reputation are key to originating harder to source quality deals. Kartesia can then provide flexible, predominantly senior, financing solutions to high quality companies that appreciate our ability to understand their specific needs and work with them as partners to help execute their growth plans.
How does Kartesia currently balance asset-based lending and traditional direct lending across its portfolio—and do you anticipate that mix shifting as market conditions evolve?
As our clients become increasingly allocated to traditional direct lending, we have continued to see increased interest in our asset-based finance strategy – Kartesia Asset Finance – from both institutional and private wealth investors. We strongly believe that this is a trend that will continue and deliberately target areas of asset-based finance in the transportation and logistics sectors that have the potential for significant scalability. The enhanced downside protection from these fast-amortising hard assets that enhance capital protection through asset ownership and regular, stable cash distributions from predictable cash flows that are uncorrelated to the wider macro environment provides strong diversification to the majority of private credit portfolios.
What concerns are LPs bringing up most in today’s environment?
At the general level, many LPs still remain concerned about the amount of available capital they have to invest given the mismatch they are seeing between their forecast and actual cashflows from their private assets portfolios. This is predominantly being driven by their private equity exposure and remains a tailwind to the relative attractiveness of private credit as an asset class. A notable concern related specifically to private credit, and especially traditional upper mid-market lending, is the consistent move to increasingly covenant-lite structures in response to significantly increased competition. This is less of a concern in the lower middle market and Kartesia is extremely focused on maintaining the strength and integrity of our documents.
What does a fulfilling weekend look like for you when you’re not wearing the Kartesia hat?
Avoiding a trip to A&E because both of my young boys have managed to restrain themselves from doing something insane.
Stay in touch with all of our latest updates and articles. Sign up now.