Thomas, who can look back on a career spanning more than 20 years, sees the Great Financial Crisis of 2008/2009 as a milestone in the growth of the private credit industry. He explains that as banks became less willing to lend capital to private companies, private equity sponsors sought alternative sources of private capital to grow their businesses.

Thomas considers diversification as the most important aspect of evergreen funds. These vehicles can invest in a much larger number of private credit deals than single-strategy closed-ended funds. Granularity reduces the volatility of the fund and means that if an individual loan or group of loans runs into difficulties, it can be offset by the rest of the portfolio. In addition, evergreen funds can invest in assets quickly and have the flexibility to accelerate exits due to their liquidity profile.

At LGT Capital Partners, Thomas and his team take a multi-strategy approach to their private credit evergreen strategy, as they value not only asset diversification but also asset class and geographic diversification. The ability to pivot between strategies has been a key source of alpha. The more diversification in private credit, the better, Thomas says.

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