Deutsche Bank and its asset management arm, DWS, announced on Tuesday a collaboration granting DWS priority access to private credit opportunities sourced by the bank. This move aims to give Deutsche Bank an advantage in the competitive market.
DWS will have a first look at select asset-based finance, direct lending, and other private credit opportunities sourced by Deutsche Bank, enabling DWS to offer these to its clients.
Stefan Hoops, CEO of DWS, emphasized the significance of private credit for clients seeking exposure to real-economy investments. He highlighted the importance of origination for Alternative Asset Managers, particularly for asset-based finance, which requires distinct origination channels compared to direct lending.
Private credit funds, as non-bank lenders, provide loans to companies with fewer regulatory constraints than traditional lenders. This sector has experienced significant growth, with firms like Apollo, KKR, and Blackstone challenging banks' market dominance.
To capitalize on the demand for alternative assets, banks are partnering with private credit managers. This strategic approach allows banks to maintain customer relationships while minimizing their own financial risk.
Amidst the rising investor interest in alternative assets, private credit funds offer new revenue opportunities for firms like DWS.
As part of the collaboration, Patrick Connors, Deutsche Bank's European head of global credit financing and solutions, will assume the role of global head of private credit at DWS. Alternatives make up 110 billion euros of DWS's total 1 trillion euros in assets under management.
Regulators have raised concerns about the growth of the 'shadow banking' sector, where private credit lending operates with reduced oversight. Moody's warned of new risks stemming from private credit expansion beyond traditional middle-market lending into areas like asset-based financing.