Private debt investment: Where to find the best opportunities

Private debt has emerged as one of the world's fastest-growing alternative asset classes, witnessing a remarkable surge from $205 billion in private loans in 2007 to a staggering $1.4 trillion in 2022. This significant growth has piqued the interest of investors and experts alike, as they delve into the nuances of this dynamic market. CNBC Africa recently had the privilege of hosting Dino Zuccollo, the Head of Product Development and Distribution at Westbrooke Alternative Asset Management, to shed light on the intricacies of private debt and the investment opportunities it presents. The conversation delved into various aspects of private debt, from its origins as unstructured finance from non-banking institutions to its potential as a lower-risk, lower-volatility asset class. Zuccollo emphasized the importance of risk management and capital preservation in private debt investments, highlighting the role of diversification in mitigating potential risks. The discussion also touched on the nuances of private debt yields, with Zuccollo noting that the returns are largely dependent on the manager's strategy and the specific market niches they operate in. The interview further explored the opportunities within the private debt landscape, pointing out key sectors such as specialty finance and real estate lending where private lenders can capitalize on market gaps left by traditional banks. While acknowledging the inherent risks associated with private debt investments, Zuccollo stressed the importance of strategic investment decisions and playing in niches where the risk-return profile favors investors. Overall, the dialogue offered valuable insights into the world of private debt and the strategies employed by alternative asset managers to navigate this burgeoning market.