Building Private Credit Inside a Global Bank

In Brief:

Private credit is evolving far beyond direct lending into a $14 trillion opportunity as banks retreat from traditional lending activities, yet most wealth channel investors remain underexposed and undereducated about the asset class. Robert Stark, CEO of Nomura Capital Management and Head of Investment Management in the Americas for Nomura Group, recently discussed building a private credit business from scratch within the century-old Japanese financial institution. With a career spanning McKinsey, Russell Investments, JP Morgan, FS Investments, and his own startup Alterum Capital Partners, Stark brings both consultant rigor and operator pragmatism to the challenge of serving the wealth channel with diversified private credit solutions.

Big Picture Drivers:

• Regulatory shift: Post-GFC regulations pushed banks away from lending activities, creating structural opportunities for private credit managers to fill the gap

• Public-to-private migration: Capital continues flowing from public markets into private markets across asset classes, accelerating over the past five years

• Fee compression: Pressure toward lower-cost products spans active, passive, public, and private strategies—ultimately benefiting end clients

• Market structure consolidation: Trillion-dollar firms are now table stakes for top-20 status, fundamentally changing competitive dynamics

Key Themes:

• Entrepreneurship within institutions: Building a startup mentality inside a 100-year-old global bank requires finding partners with long-term horizons and genuine commitment to innovation

• Client-centric product development: Starting with end-client needs rather than firm capabilities drives differentiated solutions—Stark's team interviewed 50 RIAs before launching their diversified strategy

• Education as competitive advantage: The wealth channel remains in early innings of private credit adoption, making advisor education as important as distribution and brand

• Partnership over closed architecture: Open architecture approaches enable scale and diversification that pure captive origination cannot replicate

Key Insights:

• Direct lending represents only a fraction of private credit: While direct lending totals roughly $1.5-2 trillion, other private credit categories including asset-based lending, real estate lending, specialty finance, royalties, litigation finance, and aircraft leasing represent an additional $12 trillion—most still on bank balance sheets but migrating to private managers

• Building private credit requires massive capital: Stark initially targeted $100 million in seed capital but now believes $200-500 million is necessary given competitive dynamics, plus substantial working capital for hiring teams across investment, distribution, operations, marketing, legal, and compliance

• The RIA channel offers natural alignment: As registered investment advisors themselves, Nomura Capital Management shares fiduciary mindset with RIA clients, creating authentic partnership opportunities that differ from transactional warehouse relationships

• Semi-liquid structures require honest positioning: Investors should treat interval and tender funds as illiquid because liquidity won't be available when needed most—appropriate for $1-10 million households but not for those with $100,000 portfolios

• Ten-year business plans require flexibility: Everything takes longer and costs more than projected, making institutional backing essential—Stark emphasized that having a long-term northstar matters more than precise annual forecasts

• The RIA landscape is bifurcating: Ten years ago only 10 RIAs had $10 billion or more in assets; today 280 RIAs exceed that threshold, with the first trillion-dollar RIA likely coming soon—creating mini-wirehouses while simultaneously driving some advisors back toward independence

Memorable Quotes:

• "If you have the right people, if you can attract and retain the right people, that's basically 80% of the equation." — Robert Stark, on what differentiates successful asset managers

• "You know one RIA, you know one RIA." — Robert Stark, explaining why each wealth channel relationship requires individual understanding rather than templated approaches

• "These products aren't bought, they're sold." — Robert Stark, emphasizing that education and distribution matter as much as investment excellence in private credit

• "When you need liquidity, it won't be there. Highly unlikely that there will be liquidity when you need it the most." — Robert Stark, warning advisors to position semi-liquid structures as effectively illiquid

• "Directionally right but wrong in two ways. One is everything is going to take longer and everything therefore is going to cost more money." — Robert Stark, reflecting on lessons learned from his 10-year business plan

The Wrap:

Stark's conversation reveals the tension between private credit's enormous growth potential and the operational realities of building businesses to capture it. The winners will combine differentiated investment strategies, robust distribution, and relentless client education—but success requires patient capital and long-term institutional commitment that pure startups struggle to secure. As the wealth channel matures from single-digit private market allocations toward institutional-caliber portfolios, the firms that genuinely understand advisor workflows and end-client needs will capture disproportionate share of what remains a multi-trillion-dollar opportunity.