JPMorgan Asset Management is prioritizing lending to companies with high-quality assets as more cash-hungry borrowers need fresh funding.
The firm has recently had “ample opportunity to match our capital with borrowers’ needs,” said Meg McClellan, head of private credit. It’s largely seeing opportunities in non-cyclical sectors, as well as deals with lots of asset coverage like infrastructure and real estate, she said.
“No one wanted the cycle to end like this and it’s a terrible human tragedy, but the reality is people need capital,” McClellan said.
Money managers like JPMorgan’s have taken advantage of cheaper valuations outside public markets amid the spread of the coronavirus. BlackRock Inc. said last month it saw more opportunities emerging in private debt, as well as better terms for investors, while UBS Global Wealth Management has said the asset class is attractive for those with a long-term horizon.
McClellan said the firm is investing in debt with lots of collateral protection in the $812 billion market. Commercial mortgage lending also presents a compelling risk-reward proposition, she said.
“We try to make loans in places where there is less cyclicality, and we don’t chase risk,” she said.
McClellan was tapped in December to lead JPMorgan Asset Management’s further push into private credit, overseeing $10 billion in assets and looking after the global special situations, infrastructure debt and commercial mortgage loan businesses. She was previously the unit’s chief financial officer.
Head of alternative assets Anton Pil has previously said the firm could consider acquisitions to further expand its inroads in the asset class. The group is still mulling potential deals, and open to exploring opportunities related to corporate and asset-based lending in Europe, McClellan said.
“We are very open to exploring organic and inorganic growth,” McClellan said.