After years weighing how to dive deeper into private credit, JPMorgan Chase & Co.’s $4.3 trillion asset manager is committing to a strategy that will plow tens of billions of dollars into loans sourced by the firm’s commercial bankers.
JPMorgan is talking with institutional investors to raise several billion dollars to get started and has already secured some commitments, according to two of the asset manager’s top executives, George Gatch and Bob Michele.
If all goes to plan, the firm will be in a position to narrow the gap with its rivals in the asset class, many of whom are reeling after a series of high-profile credit blowups helped spur an investor exodus. It could also pave the way for JPMorgan to open the strategy up to its roster of affluent clients — though executives say that’s not part of the plan for now.
The push marks the asset manager’s most aggressive effort to reclaim ground in the $1.8 trillion market after the bank spun out a unit that became the juggernaut HPS Investment Partners in 2016 — a move executives came to regret.
It also comes as the private credit market faces its sternest test in years, strained by the surge in redemptions and anxiety over how AI will disrupt the software industry. Chatter about JPMorgan’s push has already incensed some competitors, after the bank’s long-time boss Jamie Dimon has repeatedly warned about the market’s potential risks and weakening lending standards.
“It’s an interesting time given the growth of the private credit business and some of the dislocations,” Gatch, chief executive officer of JPMorgan Asset Management, said. “We think there’s a great opportunity going forward.”
JPMorgan’s effort follows an attempt to buy its way deeper into the market. It held talks with Monroe Capital in early 2024, but the two firms ultimately decided not to pursue a deal. Shortly after, executives at JPMorgan began laying the groundwork for the strategy it’s raising money for now.
“We’ve looked at many different options over time and decided to organically expand our efforts in this area,” Gatch said.
Nearly a year ago, Gatch and Michele brought over Jeff Bracchitta from JPMorgan’s commercial and investment bank, where he was co-head of direct lending, to run the effort.
Bracchitta has since recruited about a dozen specialists, including from rival managers, to a team notably housed within the asset manager’s fixed-income business rather than its alternatives operations — a nod to the bank’s view that public and private credit markets are destined to converge. The team is likely to launch separately managed accounts and pooled vehicles as part of the effort.
“Clients have been asking for a while for a front-to-back JPMorgan offering in the direct lending space,” said Michele, JPMorgan Asset Management’s chief investment officer and global head of fixed income. Commercial bankers “will be sourcing and originating loans, asset management will look and take bites.”
The push is “genuinely independent of the credit cycle,” he added.
Wells Fargo, Citi
The plan echoes arrangements major rivals have struck — with a twist. Others have partnered with outside managers: Citigroup Inc. agreed in 2024 to work with Apollo Global Management Inc. on $25 billion worth of deals over five years, while Wells Fargo & Co. joined forces with Centerbridge Partners in 2023 on a $5 billion direct-lending fund.
In response to recent questions about their own private credit offerings, JPMorgan and some of its big-bank peers have highlighted their decades or, in some cases, centuries of lending history. Private credit shops, they note, swelled in size after the 2008 financial crisis and have yet to be tested by a true downturn. Dimon said last week that when the credit cycle turns, “people may be surprised that some of the players aren’t particularly good at it, and that business will probably come back to the banks.”
While the CEO has issued stark warnings about risks in the sector, including its opacity, he said earlier this month that the asset class “probably does not present a systemic risk.”
JPMorgan’s asset management business, which separately filed a prospectus for a planned interval fund last month, is just one front in the bank’s push into private credit. JPMorgan has earmarked more than $50 billion of its $4.9 trillion balance sheet for direct lending deals through its commercial and investment bank, and has assembled a group of co-lending partners that have allocated even more to that effort.
It also has a portfolio of about $50 billion in loans to private credit funds, a product known as “back leverage.” Because this business effectively layers debt on top of debt, it’s highly sensitive to market shifts. JPMorgan exercised its right to mark down the underlying collateral earlier this year, a move that amplified industry concerns. Still, Dimon said last week that he wasn’t “particularly concerned” about that business.
Deals
- Blackstone Inc. and KKR & Co. are leading a debt restructuring for dental services company Affordable Care, which has struggled to service a $1.4 billion private credit loan as earnings deteriorated
- Deutsche Bank AG is marketing a $230 million private-credit deal for Malaysian budget airline AirAsia Aviation Group, testing investor demand for the carrier amid rising fuel prices
- Private capital heavyweights including Apollo Global Management, Ares Management Corp. and Sixth Street Partners are in early discussions to help fund the National Basketball Association’s expansion into Europe
- Sotheby’s has struck a deal with KKR to borrow up to $100 million secured against the fees clients owe it on their auction purchases
- Banks and private credit lenders are looking to provide a large-scale financing package to back CVC Capital Partners’ attempt to buy Italian drugmaker Recordati SpA
Fundraising
- Blackstone Private Credit Fund has launched an $850 million investment-grade bond sale as private lenders known as business development companies ramp up debt issuance after a dry spell
- A team of former Credit Suisse bankers is preparing to launch a fund they say will offer double-digit returns in exchange for taking on some of the insurance risk tied to data centers
- Sideline Group closed a debut fund with $155 million in committed capital to the fund and its affiliated investment vehicles
- Flow Capital Partners plans to offer its $150 million private credit fund on a Singapore-based blockchain platform by month end, positioning itself among the first Asian managers to tap growing stablecoin liquidity
Job Moves
- Amundi SA is planning to add headcount to target deals that combine private and public capital for emerging-markets projects
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