Billionaire CEO Dismisses Private Credit Bubble Fears
Lawrence Golub, billionaire founder and CEO of Golub Capital, has reportedly dismissed concerns that the rapid expansion of private credit and direct lending indicates a market bubble. Speaking at the ninth annual Forbes/SHOOK Top Advisor Summit in Las Vegas, sources indicate Golub emphasized that direct lending continues to provide investors with superior risk-adjusted returns and serves as a hedging tool for traditional stock-and-bond portfolios.
Superior Returns and Portfolio Enhancement Cited
According to reports from the summit, Golub asserted that “It’s for sure not a bubble,” addressing a room of financial advisors. Analysts suggest his view is that allocations to private credit and direct lending improve the risk-adjusted performance of standard 60/40 portfolios. The report states he highlighted that “The returns from direct lending across decades are often better than half of private equity funds,” underscoring the asset class’s historical performance.
Context of Recent Market Challenges
Golub’s comments come as the private credit sector faces scrutiny following the bankruptcy of Ohio auto parts conglomerate First Brands, which reportedly accumulated substantial off-balance-sheet direct loans. Sources indicate the default has raised questions about underwriting standards, with the company owing creditors including Jefferies, UBS, and Nomura at least $10 billion. This event has intensified debates over sector risk, even as leaders like Lawrence E. Golub defend the industry’s stability.
Middle Market Less Saturated, Says Golub
While acknowledging that approximately $3 trillion had flowed into private credit by early 2025, according to Morgan Stanley data cited in the report, Golub argued that competition has been concentrated in large, syndicated loan substitutes. Analysts suggest this bifurcation leaves the core middle market—where Golub Capital focuses—relatively unsaturated. “It has seen vastly less competition,” he reportedly stated, preserving opportunities for disciplined lenders.
Emphasis on Net Returns and Manager Selection
The billionaire CEO advised investors to evaluate net returns after credit losses over full cycles, not just loan spreads. Reports quote Golub stating, “It is net returns after credit losses across the site… credit losses or the absence of credit losses drives premium returns over time.” This underscores the importance of due diligence and manager selection, which analysts suggest is critical in private markets to avoid losses and achieve consistent performance.
Broader Economic Impact and Industry Outlook
Golub concluded by defending private equity’s role, stating, “Private equity has been great for the U.S. economy. It continues to be great for the U.S. economy.” His firm, founded in 1994 and now managing about $75 billion, emphasizes acting as a “finance company” with 90% repeat business from private equity sponsors. This approach, sources indicate, positions it as a solution provider amid evolving market dynamics.
Related Financial Developments: As debates over credit markets continue, other sectors show notable activity. GE Aerospace’s stock reportedly surged 65%, while federal student loan repayment overhaul advances. Meanwhile, European defense tech investment is surging, and healthcare’s data revolution accelerates. In tech, Meta’s stock reportedly delivered a $167 billion gain to shareholders, highlighting diverse investment trends.
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