UBS nearing push into $1.6T private credit market

by Gillian Tan, Jan-Henrik Förster and Silas Brown

UBS Group AG is in advanced talks with alternative-asset manager General Atlantic to push into the $1.6 trillion private credit market through a strategic partnership, according to people familiar with the matter. 

The two firms are working toward a cooperation agreement that could be announced as soon as next week, the people said, asking not to be identified because the talks are private. The partnership will involve UBS’s investment bank originating loans for which GA Credit will receive preferred status or a so-called “first-look”, one of the people said. 

The partnership will aim to make loans of as much as $500 million and will focus on borrowers in North America and Europe with earnings before interest, taxes, depreciation and amortization of $50 million or more, one of the people said. The partnership materialized from a conversation between UBS CEO Sergio Ermotti and General Atlantic chairman and CEO Bill Ford, the person added.

Representatives for both firms declined to comment.

Large Wall Street banks, the traditional funding source for corporations and buyout firms, have gradually lost market share to private-credit funds in recent years, as borrowers turn to the more flexible terms and predictable financing costs offered by direct lenders.

Big banks have responded by hammering out lending partnerships in all shapes and forms. JPMorgan Chase & Co. recently set aside an additional $50 billion to expand into direct lending, while forging partnerships with credit funds, and Wells Fargo & Co. joined forces with Centerbridge Partners on a $5 billion direct-lending fund in 2023. 

Over in Europe, Societe Generale SA and Brookfield Asset Management partnered to launch a €10 billion private debt fund. Last year, Barclays Plc and AGL Credit Management teamed up with backing from the Abu Dhabi Investment Authority.

Such agreements often define the types of loans a private credit fund will manage, with the bank originating loans that fit that criteria and selling them to the asset manager.

UBS last year revamped the way it sells private-market funds under the leadership of wealth management chiefs Iqbal Khan and Rob Karofsky. UBS also has many touchpoints with alternative asset managers including buyout funds through its investment bank, which advises sponsors across the globe. 

The partnership would be the latest indication of the Swiss bank’s ambition to grow its global banking business and leveraged finance offerings in the Americas.

General Atlantic’s credit unit, GA Credit, manages $4.8 billion of assets, according to its website. It is led by Tripp Smith, who co-founded GSO Capital Partners, now known as Blackstone Credit.

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