Borrower size in direct lending is a variable, not a strategy. The fixation on “large vs. small” borrowers distracts investors from the actual drivers of credit alpha: resilient businesses, strong documentation and disciplined pricing.
The ability to lend across the borrower size spectrum supports a strong value proposition: It expands the opportunity set and enables more high-quality financings, wherever they reside.
Building the capability to lend across the Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) size spectrum requires significant investment in relationships, underwriting expertise and infrastructure. Few managers can execute this approach; those who can may secure a distinct competitive advantage.
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