Brookfield’s CFO Says Private Credit and Banks Can Co-Exist

Brookfield Corp. sees private credit firms and banks working together in the $1.5 trillion market, even as direct lenders continue to fill the gap left by their counterparts in a high interest-rate environment.

(Bloomberg) — Brookfield Corp. sees private credit firms and banks working together in the $1.5 trillion market, even as direct lenders continue to fill the gap left by their counterparts in a high interest-rate environment.

“I think private credit is continuing to be very relevant. Now as the banks come back into the market, we’ll see how they can co-exist with each other,” Chief Financial Officer Nicholas Goodman said at the Mizuho Finance Leaders Forum in New York, adding that there’s an opportunity for partnership as opposed to one displacing the other.

Goodman’s view echoes recent comments from John Zito, deputy chief investment officer at Apollo Global Management Inc., who said in a Wednesday interview with Bloomberg Television that he sees scope for private credit firms to work alongside banks. Earlier this week, Brookfield Asset Management Ltd. — which spun out of Brookfield Corp. in December — announced its plan to raise as much as €10 billion ($10.7 billion) with French bank Societe Generale SA for a “high-quality” private debt fund.

Competition still exists. Alternative asset managers have been pushing into private lending after banks pulled back last year as the Federal Reserve raised interest rates and investors shunned risk. Banks are concerned about this shift, with at least four major institutions making further strides into private credit in recent weeks.

Brookfield is aggressively pushing into the private credit arena. It expects its credit assets under management to grow to $500 billion over the next ten years from $170 billion, according to a presentation on Tuesday. The firm’s insurance assets are slated to more than double to $100 billion in the next few months after completing the acquisition of American Equity Life Holding Co.

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