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JPMorgan Chase said that it would put aside $ 50 billion to lend risky companies supported by investment capital companies when it increases its push on the booming private credit market.
The largest American bank by assets said that it had allocated $ 50 billion in its own capital and had commitments for $ 15 billion to other investors to grant loans directly to businesses, bypassing debt markets traditional.
Jpmorgan launched its direct loan push In 2021 and has so far deployed $ 10 billion in more than 100 private credit transactions.
The announcement comes as traditional Wall Street lenders are looking to strengthen their own offer in the $ 2 private credit The asset class, which has developed considerably since the regulations adopted after the global financial crisis, removed banks from risky loans on their balance sheets.
Many of the biggest competitors in JPMorgan have announced partnerships with private credit funds. At the end of last year, Citigroup unveiled a $ 25 billion partnership With Apollo Global Management, which followed the coecent of Wells Fargo with Asset Manager Centerbridge.
Others, such as Goldman Sachs and Morgan Stanley, turned to their own wealth and asset management weapons, which have devoted funds to invest in the sector.
Jamie Dimon, Managing Director of JPMorgan, declared that the effort had provided companies with companies “more options and flexibility of a bank they know and already see in their communities, and is known to be there in all market environments ”.
Dimon told Investors last year that the private credit “has real advantages” in that it allowed longer -term financing than what was generally available by collecting funds through bonds and loans unionized. However, he criticized the way the industry assessed his books and said bad players could cause problems.
JPMorgan has so far established a partnership with seven asset managers on its private credit efforts, including Cliffwater, FS Investments, OCTAGON CREDIT INVESTORS, Shenkman Capital Management and SOROS FUND Management, according to a person informed of the issue. The leaders hope to add other managers in the coming months to strengthen its firepower.
The bank’s decision to exploit its own assessment comes from its sale of HPS investment managementOne of the largest private credit players in 2016. The main JPMorgan leaders at the time had little appetite to invest in the unit in the face of an increased regulatory examination, which prompted the founders of HPS to buy the business.
In the years that followed, the asset class exploded, with private credit funds pulling hundreds of billions of dollars from insurers, pensions and sovereign funds. Private credit loans generally have higher interest rates than bank loans, but can give a borrower more flexibility.
This money allowed managers such as ARES management, Blue OWL Capital and Apollo Global Management to write loans of $ 1 billion and, in turn, created a rival for traditional high -efficiency bond markets and leverage. Hps accepted to sell In BlackRock for $ 12 billion last year.
Private credit has become one of the rare ways in which buyout groups could finance their acquisitions when the markets seized in 2022, taking market share and lucrative costs far from the banks of Wall Street. In shock from this experience, banks have sought to provide their own financing solution.
Immediate pressure on banks to offer private credit loans has decreased as the credit markets gathered in 2023 and 2024. Banks helped refinance several private credit loans on the unionized markets, Dimon noting the Last year that “private credit costs more money for the most part”.
He added: “It changes all the time.”
