Marathon Expands Private Lending, Eyeing $2 Trillion Opportunity

Marathon Asset Management is expanding its private credit team as the $23 billion asset manager looks to position itself for upcoming market turmoil.

(Bloomberg) — Marathon Asset Management is expanding its private credit team as the $23 billion asset manager looks to position itself for upcoming market turmoil.

The New York-based firm is soon adding five people to its direct lending business, which provides loans ranging from $25 million to $150 million, primarily for private equity-backed companies. Marathon has already hired three individuals for its 33-person corporate credit business in recent months, and is recruiting others to focus on asset management and sponsor coverage.

“We see a $2 trillion lending opportunity due to the amount of dry PE powder combined with the upcoming refinancing wall,” Curtis Lueker, who leads the firm’s sponsor coverage and direct lending business, said in an telephone interview. “With yields in the low teens it’s an opportune time to be lender.”

Lenders continue to rush into private credit to capitalize on soaring investor demand and lucrative fees. For borrowers, it gives them the chance to refinance in ways that many banks now find too risky or complex to handle. 

Lueker said the expansion will be a material increase for the team, and the firm will likely continue to hire as it grows the business. Marathon hired former Blackstone Inc. managing director Alex Howell as head of alternative credit earlier this year.

Marathon Chief Executive Officer Bruce Richards has talked up the opportunities in this space, saying earlier this month that the firm was waiting to deploy more capital ahead of a dislocation that hasn’t yet materialized, “but was in the process of happening.”

Read More:  Marathon CEO Sees ‘Golden Time’ in Private Credit Market Boom

The firm’s direct lending strategy will include senior debt for middle market borrowers, whose earnings before interest, taxes, depreciation and amortization range from $15 million to $50 million. 

“We’re also providing sponsors with direct lending and capital solutions, which means we can provide different types of capital that are more tailored,” Lueker said.

The money manager is also poised to capitalize on the growing distress in commercial real estate, saying earlier this month it will bid on Signature Bank’s $33 billion portfolio, which is composed primarily of multifamily properties in New York City. The firm also raised $1.7 billion for an asset-based lending fund earlier this year, which among other deals, buys assets tied to commercial mortgages.

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