Private Credit

Private credit advisory services for every stage of a credit investment lifecycle

The Private Credit market has expanded at such a pace that in developed economies, non-bank lending now exceeds bank lending. As well as opportunities, the market has seen significant disruption in the form of regulation, increased demand, and evolving technology. In such a rapidly changing environment, funds need to be more resilient and agile than ever.

Our specialist credit team provides advice at all stages of the credit lifecycle, from fund design and set-up through to deal execution and ultimate value creation. We work with a diverse range of clients across a broad range of asset classes including performing and non-performing loan portfolios, single credit distressed and structured lending, direct lending, and collateralised loan obligations (CLO).

As the Private Credit market continues to grow and evolve, funds need to be sure that they can adapt and respond to change. The challenges funds face as they establish and grow can be numerous and diverse, spanning performance, deals, tax, people, operations and governance.

Our team provides all the specialist advice and support you need, from a single point of access and covering the complete investment and deal lifecycle. We can:

Assess opportunities and identify the tax implications of investments.
Make sure that your structure remains fully suitable for its purpose as the business evolves.
Ensure that your operating environment can continue to effectively manage risks as complexity increases.
Provide customised solutions that fit your needs.

Geopolitical events and the Covid-19 pandemic have left many economies in a fragile state. This means that the largest capital deployment opportunities are likely to be in rescue financing, real estate, infrastructure and direct lending.

An increase in the rate of business failures places additional pressure on banks’ balance sheets and their ability to lend. Small and medium-sized enterprises are especially vulnerable to any dip in the availability of bank credit, which creates an opportunity for private credit funds to fill the gap.

Further growth opportunities include acquisition of distressed debt and debt for equity deals, especially in Europe and the US. Secondary debt markets have rallied substantially since lockdown. Growth potential remains in the market.

PwC can help at all stages of the credit fund life cycle

Asset Manager Issues

We support your journey in setting up your fund management group from the very start, and as you build out your management business (organic or M&A). We will aim to make sure that your structure is fully suitable for its purpose, that equity participation and reward structures are robust to enable your people to undertake their work without adverse tax consequences.

Operating Model and Governance

As your business grows in complexity and new tax, legal and regulatory obligations arise you will need to ensure that your operating environment can manage those risks. Data and technology will be key to ensuring that tax, legal and risk obligations are managed and met and that good tax and regulatory governance can be demonstrated to tax authorities and regulators. Investors are increasingly focused on these issues in their due diligence and within their ESG expectations.

Portfolio Management and Value Realisation

Having made your investments, your fund will have numerous and hopefully successful investments. Whilst holding these assets, ongoing tax input will be required to ensure that the tax treatments are consistent with expectations, for example, that operational taxes are managed and that the fund returns are appropriately reported to investors and tax authorities. At exit, there may be a choice of exit mechanisms, some of which may present adverse tax consequences. Our teams can help identify these options to help mitigate any unforeseen tax exposures at the end of the fund life.

Fund Issues

At this crucial phase, we can assist you in identifying a suitable location for your fund and investment platform to accommodate investors and the investment strategy, satisfy regulatory requirements and determine the optimal structure to facilitate the reward of carried interest and co-investment programmes for your people.

People Issues

People are at the heart of every asset management business, our aim is to help you get the best out of your team by supporting you with people-focused tax, legal and regulatory services covering areas such as rewards and benefits, payroll services, immigration and business visas, global mobility, promotion and progression. Our aim to is to help you get the best out of your team.

Evaluating Opportunities and Deal Execution

Over your business life cycle, you will assess many opportunities and will require a helping hand in identifying, amongst others, the tax implications of these investments. We can assist with evaluating the immediate tax risks associated with these opportunities, how they would fit within your structure and how returns from them will flow up to your investors and to your people through to the “press the button” implementation issues. Our services can help smooth the process, allowing the transaction to be effected into your fund structure in the envisaged tax efficient manner.

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