In this episode of 'The Business Brew,' host Bill Brewster is joined by Larry Holzenthaler, a portfolio manager at First Eagle Alternative Credit (FEAC). The discussion focuses on the complexities and nuances of private credit. Recorded on February 3rd, the episode delves into the differences between traditional equity value investing and private credit, as well as the strategic transitions First Eagle has made in response to market changes. Larry explains First Eagle's cautious approach to investment, emphasizing measured risk, recurring revenue, and sponsor-backed deals. He discusses the evolution and growth of private credit markets, challenges and opportunities, and the impact of banking regulations on credit availability. The conversation includes detailed insights into various investment structures like interval funds and BDCs, and the importance of reading fine print in credit agreements. Throughout, Larry offers a compelling argument for the attractiveness of private credit as an investment, particularly in current economic conditions. 

00:00 Welcome to the Business Brew 

00:54 Introducing Larry Hosenthaler and First Eagle 

02:13 The Evolution of Private Credit 

08:34 The Impact of COVID on Private Credit 

12:22 Private Equity and Risk Management 

18:41 The Role of Banks in Private Credit 

31:37 Fee Structures and Market Dynamics 

36:40 Understanding Interval Funds 

37:11 The Redemption Process Explained 

39:55 Comparing Interval Funds and BDCs 

43:17 Risk Management in Private Credit 

44:38 The Role of Recurring Revenue 

45:24 Leverage and Deal Flow 

56:59 Active vs Passive Management in Credit Markets 

01:03:27 Why Invest in Private Credit Now? 

01:08:46 Conclusion and Final Thoughts