Percent continues to expand its reach and deliver solid returns amidst evolving economic conditions
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We are pleased to report that following a strong first half of 2024, Percent maintained its momentum and further solidified its position in the private credit space during Q3. This quarter saw continued growth across key metrics, with the addition of new underwriters, borrowers, and investors underscoring our marketplace’s ongoing expansion and increasing sophistication.
As of September 30, 2024, our Assets Under Management (AUM) reached a new all-time high of $244.1 million, representing a 13.3% increase from the previous quarter. Excluding our Blended Note products, which account for $48.1 million across Percent Blended Notes and Bespoke Blended Notes, our core AUM stood at $196.0 million – effectively doubling our position from the same period last year.
Q3 2024 By The Numbers:
These figures translate into tangible benefits for our valued investors:
- Expanded Investment Opportunities: Our marketplace is becoming increasingly diverse, focusing on lender finance and asset-based lending. This provides you with an even wider array of high-quality investment options to strategically diversify your portfolio and potentially enhance returns.
- Strong Underwriter Partnerships: Percent’s reputation for quality and transparency attracts leading underwriters who bring their expertise and exclusive deals to our platform. This ensures you have access to a curated selection of the most promising investment opportunities.
- Enhanced Deal Flow: With a growing number of deals, you have more choices than ever to align your investments with your specific financial goals and risk tolerance.
Expanding Borrower and Underwriter Ecosystem
Q3 2024 welcomed six new borrowers and three new underwriters to the Percent platform, further diversifying our marketplace offerings:
New Borrowers
- Muse ($0.6M across 1 deal): A UK-based technology-driven trade finance platform offering working capital solutions to businesses.
- Capec ($1.5M across 1 deal): Florida-based, specializing in eCommerce financing solutions in the U.S.
- Crediface ($0.5M across 1 deal): A Peru-based lender providing consumer loans to individuals with fixed salaries.
- Mustang ($1.3M across 1 deal): A non-bank originator offering pre-settlement litigation advances.
- Bareburger Locations Holdco ($0.5M across 1 deal): Holding company focused on acquiring Bareburger restaurant locations.
- Coventry ($0.4M across 1 deal): A Los Angeles-based consulting and asset management firm specializing in structured alternative investments.
New Underwriters:
- BEQ Investment ($0.5M across 1 deal): Colombia-based firm specializing in financial advisory, investment banking, mergers, acquisitions, and project financing.
- Stochastic Capital ($1.5M across 1 deal): San Francisco-based advisory firm specializing in structured debt solutions for fintech and specialty finance lenders.
- Avon River Ventures ($0.5M across 1 deal): A structured financing firm providing loans for startups and lower to middle-market companies.
This diverse range of new participants spans multiple asset classes, geographies, and deal structures, providing Percent investors with an ever-expanding array of investment opportunities.
Investor Marketplace Performance: Consistent Returns in a Growing Market
In the past 12 months (Q3 2024 LTM), investors earned $27.3 million in interest, with an average return of 13.5% after losses and fees. This improvement from $23.1 million in H1 2024 LTM demonstrates our consistent ability to generate competitive returns for investors, even in a fluctuating market.
Transparency in Action: Active Workouts
Transparency is foundational to Percent. While workouts are an expected part of private credit, we proactively manage these situations to optimize investor recoveries. Currently, eight borrowers have deals in workout status, with comprehensive recovery plans underway.
We provide detailed reports and updates on our Current Workouts and Historical Deals Charged-Off and Recoveries pages, ensuring that you have full visibility into our recovery efforts and the performance of our underwriting partners.
Market Insights & What Lies Ahead
Adapting to a Transforming Landscape
As we look ahead, the private credit landscape is poised for significant transformation. Private credit continues to mature, becoming an increasingly critical part of investor portfolios while mirroring some aspects of later-stage markets. We expect to see heightened competition within the syndicated loan space as traditional bank markets begin to challenge private credit funds, ultimately benefiting issuers by providing more diverse funding options.
Market expectations for interest rate cuts may be overly optimistic. This situation could lead to attractive total yields if rates remain elevated. In a “higher-for-longer” base rate environment, we anticipate that private credit will continue to offer resilience, particularly in direct lending. Private credit’s diverse landscape—including areas such as litigation finance, consumer lending, and commercial finance—will continue to provide substantial value to investors, especially when public credit spreads remain tight.
There’s robust investor appetite for private credit across various sub-sectors. This demand, coupled with available dry powder, should keep origination active, but maintaining strong underwriting standards remains paramount. As the private credit market continues to mature, we anticipate increased segmentation. Managers, particularly in the middle market, will likely seek to differentiate themselves from larger funds, leading to more specialized offerings.
Looking ahead, we believe private credit will continue to offer attractive opportunities for investors seeking yield and diversification. However, careful selection and robust due diligence will be more important than ever in navigating this evolving landscape.
Percent In the Spotlight
In Q3, our growth and innovation drew notable attention from the media. Here are some of the highlights:
- Professional Wealth Management: Nelson Chu’s op-ed on the private credit talent war was featured in PWM, a division of the Financial Times, highlighting Percent’s insights into market trends.
- U.S. Fintech Awards: Percent was selected as a finalist, underscoring our innovation in the fintech space.
- Fintech TV: Nelson appeared live from the NYSE floor, discussing the rapid growth of private credit.
- Nasdaq Trade Talks: Nelson joined Trade Talks to discuss generational investment trends and the rise of alternative assets.
- Forbes: Nelson shared insights on forging resilience through adversity in his latest article
Be sure to check out our Founder and CEO’s new podcast, “Founder Notes with Nelson Chu,” where he provides an unfiltered look at private credit, fintech, and the realities of building a disruptive platform in intimate, voice-note style episodes.
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As we move toward the end of 2024, we remain excited and committed to the opportunities that lie ahead. Our expanding network of underwriters, growing investor base, and steadfast commitment to transparency and innovation ensure that we are well-positioned to continue driving growth and delivering value in the private credit space.