When asked how many times MV Credithas won the GlobalCapital “Best subordinated debt investor” award, Frédéric Nadal, the private credit firm’s managing partner, CEO and co-head of origination, has to ask a colleague. He writes back the next day to confirm: 12 times, or every year between 2009 and 2020. This year, then, marks the 13th win.
“It’s nice to be recognised as an industry leader, although not necessarily ‘the’ industry leader,” Nadal says. “We sell the fact that we’ve been in this industry for 22 years now. The seven partners have each been at MV Credit for more than 15 years, and the founders are still here. What we have is experience and consistency. It’s not sexy: We do the due diligence, raise money, invest the money and then get the money back.”
Built into this practicality is ESG, which MV Credit espoused from the start. “We launched 22 years ago with an exclusion list including few obvious industries like tobacco, alcohol and arms. Our focus is still on what companies, and humans, can do better - whether it’s transparency, governance, social good or the environment. This isn’t new, this is what we’ve always done.”
“Even as lenders, we’re trying to make things better, for our investors and our borrowers’ shareholders.” Internally, MV Credit’s staff is 60% female, and includes 16 different nationalities – not because of those characteristics, but because of their expertise, says Nadal.
It is this, the human capital side, which can often differentiate a firm from others. Yet the use of advanced technology is offering increasing value as well. “Automation is good for compliance and back-up, and potentially building models – something which we are currently testing,” says Nadal. “However, 50% of our work is about the human aspect: meeting with our borrowers’ shareholders, agreeing strategy objectives, determining how assets behave in good and bad times, how transparent they are, and how quickly these shareholders can support or replace management when needed.”
Even as lenders, we’re trying to make things better, for our investors and our borrowers’ shareholders
He adds: “It is very difficult to assess these things by a formula or algorithm…and what we offer are tailor-made products.” For instance, the firm’s entire portfolio has been rated for ESG, with all loans and companies matched with tens of ESG criteria, with a view to creating a more formal model.
In addition to the emphasis and focus the firm places on the human aspect of its business, it is also focused on expanding internationally. The firm now has three offices: the London headquarters; the Luxembourg office; and since March 1, a Paris office, which is home to the 16-strong CLO team that it acquired from Ostrum Asset Management.
MV Credit is now also partnering with investment manager Loomis Sayles, another Natixis affiliate, which specialises in the public debt market. Together, both firms have devised an innovative hybrid product mixing illiquidity premium and the ability to get some shorter liquidity features – as compared to more traditional private debt products.
For Nadal, he expects to see more consolidation in the private debt market. In fact, MV Credit is looking at “sizeable deals” in western Europe over the next two to three years. “We are in talks now, so at the beginning of our search,” he says.
But what about the firm’s strategy during these uncertain, turbulent times? Nadal says its focus “continues to be on stable geographies and investments,” with 70% of the portfolio comprising healthcare and software, sectors in which the firm has been active in for 22 and 12 years, respectively.
“We’ve always focused on industries and investors that would like to grow and expand internationally. We are more interested in financing growth than just lending money,” he says.
For Nadal, Covid triggered massive disruption in terms of evergreen growth and extended quantitative easing. However, he feels that the global economic impact of the war in Ukraine has possibly given rise to an extended period of inflation, and even potentially a recession.
“This won’t impact our standards of lending money, since we avoid GDP-reliant investments, but will surely affect other areas such as staffing and energy prices for these credits,” he says.
Whatever the headwinds, the big question is: will MV Credit win again next year? “I think that people keep voting for us [in the GlobalCapital awards] because we are consistent, treat people well - internally and externally, are transparent, and don’t overpromise,” says Nadal.