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- Deep Dive: How to Specialise in Private Credit (and Why You Should)
🧠 Deep Dive: How to Specialise in Private Credit (and Why You Should)
As direct lending matures and the space becomes increasingly saturated, the most exciting—and rewarding—career moves in Private Credit are shifting toward specialisation.
What does that mean in practice?
It means moving beyond generalist underwriting and positioning yourself as an expert in a high-growth niche that LPs are hungry for and funds are increasingly building around.
In this article, we’ll cover:
Why specialisation is becoming the new edge
The sectors gaining the most momentum
How professionals are positioning themselves to win
What skill sets are in demand for each niche
🚨 The Issue Facing Middle Market Direct Lending
Let’s be clear: direct lending isn’t going anywhere. It remains a foundational component of most private credit portfolios.
But here’s the issue:
Everyone is in it.
From large-cap sponsors flooding the space to mid-market managers scaling fast, the sheer volume of capital chasing senior-secured deals has made it harder to generate alpha — and harder for individual professionals to stand out.
The edge is no longer just in sourcing or executing — it’s in how you differentiate your strategy, and your skillset.
🔍 Why Specialisation Matters (Now More Than Ever)
Specialisation in Private Credit gives you:
Stronger career durability in volatile markets
Premium compensation, especially when your expertise fills a capability gap
Greater deal visibility and decision-making influence, especially in leaner teams
Exit optionality (to funds, platforms, or LPs seeking niche exposure)
As more capital flows into alternative private credit structures, there’s rising demand for professionals who can underwrite complexity, think creatively about collateral, and price risk outside the plain-vanilla box.
🔮 The 5 High-Growth Sectors to Watch (2025–2027)
What it is: Loans made against the Net Asset Value of private equity portfolios, giving GPs access to liquidity without selling assets.
Why it matters: With capital calls slowing and exit timelines extending, NAV lending is becoming a core portfolio management tool — and it's growing fast.
Skills needed:
PE portfolio analysis
Fund finance mechanics
Legal structuring for fund-level recourse
Bonus: Exposure here puts you in a rare overlap of Private Equity, GP relationships, and complex credit structuring.
2. 🔹 Asset-Based Lending (ABL)
What it is: Lending secured by a borrower’s assets — inventory, receivables, equipment, etc.
Why it matters: In volatile or tightening markets, asset coverage becomes king. ABL is seeing renewed interest from sponsors and bank-partners alike.
Skills needed:
Collateral analysis and real asset valuation
Workout and restructuring exposure
Operational underwriting (logistics, working capital)
Professionals with ABL experience often step into credit risk leadership or portfolio strategy roles.
3. 🔹 Litigation Finance
What it is: Financing provided to plaintiffs/law firms in exchange for a share of settlement proceeds.
Why it matters: It's non-correlated, high-yield, and increasingly seen as an uncorrelated alpha source by LPs.
Skills needed:
Legal background or exposure
Risk modelling with binary outcomes
Patience for long durations + detailed diligence
This space rewards professionals who blend legal literacy with creative underwriting.
4. 🔹 Royalty Financing
What it is: Lending secured by future royalty streams (pharma, music catalogs, tech IP).
Why it matters: IP-backed finance is exploding — from Taylor Swift catalogs to oncology drug pipelines.
Skills needed:
IP valuation and forecasting
Deep sector knowledge (biotech, media, tech)
Partner negotiation and licensing models
It's a niche where cultural literacy and sector depth combine for outsized returns.
5. 🔹 Special Situations & Opportunistic Credit
What it is: Flexible capital deployed in dislocated, distressed, or transitional situations.
Why it matters: With macro headwinds rising, "rescue capital" and bespoke structuring will be a major theme over the next 24 months.
Skills needed:
Complex structuring (PIKs, convertible debt, equity kickers)
Downside protection analysis
Deep sector expertise + negotiation skills
This is where you go to write your own playbook — and get paid accordingly.
📈 How to Break Into a Specialised Credit Vertical
Even if you’re currently in a generalist role, you can begin positioning yourself to specialise.
Here’s how:
Study live deals in your target vertical — follow transactions, read case studies, and track who’s doing what.
Network with professionals already active in that space (LinkedIn, alumni intros, niche podcasts).
Tailor your resume and pitch to reflect relevant experience, even if indirect (e.g., “Led diligence on pharma-backed direct lending deal – sparked interest in royalty financing”).
Apply to lean teams or first-time funds where your interest can become hands-on expertise quickly.
Get certified or credentialed where relevant (e.g., CFA, legal finance courses, fund finance training).
💬 Final Take
Private Credit is no longer just about “getting into the asset class.” It’s about carving your lane within it.
Specialisation is your hedge against commoditisation.
It’s your leverage in comp negotiations.
And it’s your edge when the market turns.
Want more on this?
We’ll be breaking down these verticals one by one in future issues of career.credit.