Private Credit's Shakeout Will Reward Managers With Diversified Capital

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What's New

Private credit is in an ordinary cycle that ends in consolidation. Managers with diversified funding will take share from those who cannot raise it. David Golub, Co-CEO at Golub Capital, argues this in a podcast interview on Alt Goes Mainstream. Four years of falling base rates, tighter spreads, and a normal credit cycle have cut returns and widened dispersion. Firms that lose access to capital will shrink, and the survivors get better spreads and terms. Allocators should underwrite a manager's funding mix as closely as its loan book.

Why It Matters

The conventional read of falling BDC returns and elevated redemptions is that private credit is breaking. Golub treats the same data as a supply correction that improves pricing for whoever still has money to deploy. That challenges the bears and also the managers telling LPs nothing has changed. It suits Golub Capital, which is private, diversified across investor types, and positioned to take share while others retrench.

By The Numbers

4.5%: Average GAAP ROE at publicly traded BDCs in 2025. Golub puts 2023 and 2024 at high single digits, with the first half of this year down further.
90%: Share of Golub Capital's new deal volume written with existing repeat clients, every year for the past decade.
200: Private equity firms the firm has done multiple deals with, drawn from a US middle market Golub describes as thousands of firms.
$95 billion: Assets under management today. He puts the figure at roughly $3 billion in 2008.

Reality Check

Every claim here about credit stress, dispersion, and sponsor quality is self-reported. No non-accrual rate, loss rate, or return figure is offered for Golub Capital itself. He also concedes he does not know how much capacity the model has, saying only that the firm slows fundraising when the opportunity set shrinks.

Memorable Quotes

“There are two narratives that are out there. There's the sky is falling and there's the everything's green. Guess what? Neither is true.” His framing of the current market, and the ground he claims between the bulls and the bears.
“We're headed toward what I call a Darwinian moment.” The prediction the rest of the argument depends on.
“There's nothing proprietary about making a loan.” A concession that the product is a commodity, which puts the entire weight of the thesis on relationships and funding access.
“I think junior debt's going to be a bigger issue going forward than senior debt.” The most testable call he makes, and the one that will be checkable in filings.

The Wrap

Golub has watched this pattern run before, and his confidence rests on it running the same way again: weak managers lose funding, capital gets scarce, pricing swings back toward lenders who can still write checks. That holds if the damage stays concentrated at the junior debt end of the market. It breaks if stress reaches senior portfolios, where wider spreads would arrive for reasons no lender wants. The next four quarters of non-accrual disclosure will settle it.