Key Takeaways
- • Manager selection dominated the Alternative Credit Investor Conference 2026, held 20 October at the Royal Horseguards Hotel in London, as allocators weighed AI-driven dispersion, a crowded asset-backed finance (ABF) market and Europe's role as a diversifier.
- • Speakers described an AI-driven split between managers who have banked gains ("house money") and those under pressure to catch up ("tilt money"), with track record length increasingly a key allocator criterion.
- • ABF, dubbed by some the new direct lending, is becoming crowded, with many funds labelling CLO or corporate financing deals as ABF; managers with in-house origination and genuine collateral expertise were seen as having the edge.
- • Europe was positioned as a diversifier from US policy volatility and software-heavy exposure, with the middle market described as the biggest opportunity set, though pan-European origination was called "the challenge".
- • Solvency II makes ABF uneconomic for EU insurers, pushing demand toward the US, while sub-sectors such as sports finance, creative economy lending, data centres and the energy transition are emerging.
Summary
Manager selection was the recurring theme at the Alternative Credit Investor Conference 2026, held on 20 October at the Royal Horseguards Hotel overlooking the Thames. The one-day event brought together allocators, institutional investors and service providers for panels, networking and private sessions held under Chatham House rules. It was sponsored by Aztec Group, MillTech, Egan-Jones Ratings and Proskauer, with the Loan Market Association as industry partner. Speakers repeatedly asked which managers would survive the turn in the credit cycle, and urged limited partners to be selective about whom they back.
According to speakers at the event, the AI wave has divided the market between managers who profited and can now be selective, and those who missed the rally, face pressure to catch up and risk overpaying for popular assets. One speaker borrowed a casino phrase, "house money vs tilt money", to describe the split. Speakers said the same divide applies to how managers handle a volatile macro backdrop and deteriorating credit quality, with one describing AI as creating "zombies and embracers" among portfolio companies. Dispersion between managers is already significant, and track record length is becoming a key criterion for allocators.
Asset-backed finance was another central topic. Often described as the new direct lending, the market is becoming increasingly crowded, with newer entrants more often credit specialists than collateral experts. Speakers said many funds now label themselves ABF while running collateralised loan obligations or corporate financing with some securitisation attached. Managers with in-house origination platforms and real collateral expertise were viewed as best placed. One speaker argued that "ABF isn't risky, the businesses are," while another warned that rising rates could make allocators more cautious. Emerging sub-sectors include sports finance, lending against the creative economy, data centre financing and the energy transition. Europe remains largely underpenetrated in ABF, as Solvency II makes the asset class uneconomic for EU insurers, pushing demand toward the US.
European private credit was positioned as a diversifier from US policy volatility. Speakers said Europe was less exposed to the software-related sell-off, dubbed the "SaaSpocalypse", that hit software-heavy US-weighted books earlier this year, because technology is a small part of its real economy. One speaker said the software issue "could have been anything" and that "AI was the excuse" given how exposed private credit portfolios already were. Opportunities flagged included European direct lending, real estate credit amid debanking across the continent, infrastructure credit and the middle market, which several speakers called the largest opportunity set. Secondaries are growing in Europe but remain behind the US. Speakers cautioned, however, that Europe's fragmentation creates national champions but requires local teams on the ground, with pan-European origination described as "the challenge".
According to speakers at the event, the AI wave has divided the market between managers who profited and can now be selective, and those who missed the rally, face pressure to catch up and risk overpaying for popular assets. One speaker borrowed a casino phrase, "house money vs tilt money", to describe the split. Speakers said the same divide applies to how managers handle a volatile macro backdrop and deteriorating credit quality, with one describing AI as creating "zombies and embracers" among portfolio companies. Dispersion between managers is already significant, and track record length is becoming a key criterion for allocators.
Asset-backed finance was another central topic. Often described as the new direct lending, the market is becoming increasingly crowded, with newer entrants more often credit specialists than collateral experts. Speakers said many funds now label themselves ABF while running collateralised loan obligations or corporate financing with some securitisation attached. Managers with in-house origination platforms and real collateral expertise were viewed as best placed. One speaker argued that "ABF isn't risky, the businesses are," while another warned that rising rates could make allocators more cautious. Emerging sub-sectors include sports finance, lending against the creative economy, data centre financing and the energy transition. Europe remains largely underpenetrated in ABF, as Solvency II makes the asset class uneconomic for EU insurers, pushing demand toward the US.
European private credit was positioned as a diversifier from US policy volatility. Speakers said Europe was less exposed to the software-related sell-off, dubbed the "SaaSpocalypse", that hit software-heavy US-weighted books earlier this year, because technology is a small part of its real economy. One speaker said the software issue "could have been anything" and that "AI was the excuse" given how exposed private credit portfolios already were. Opportunities flagged included European direct lending, real estate credit amid debanking across the continent, infrastructure credit and the middle market, which several speakers called the largest opportunity set. Secondaries are growing in Europe but remain behind the US. Speakers cautioned, however, that Europe's fragmentation creates national champions but requires local teams on the ground, with pan-European origination described as "the challenge".
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