JPMorgan on the prowl for a partner in private credit

investmentnews.com:

JPMorgan Chase & Co. is on the hunt to buy a private credit firm to augment its $3.6 trillion asset management arm, as the biggest US bank makes more inroads into Wall Street’s buzziest sector.

The JPMorgan unit is seeking a private credit shop that could bolster its private capital business, according to people familiar with the matter. As part of the effort, the company held talks to buy Chicago-based Monroe Capital this year, but the two firms ultimately decided not to pursue a deal, the people said, asking not to be named describing private discussions.

Spokespeople for JPMorgan and Monroe declined to comment.

Interest in the $1.7 trillion private credit industry has exploded in recent years. Alternative-asset titans such as Ares Management Corp. and Apollo Global Management Inc. have poured money into ever-larger deals for their portfolios. Other investors, as well as banks themselves, are also keen to make more wagers.

JPMorgan’s investment bank has already earmarked more than $10 billion of the firm’s balance sheet for direct lending. The bank is also putting together a partnership with asset managers to join it in private credit deals, Bloomberg previously reported.

The asset-management unit, which handles money for wealthy people and institutions including endowments and pension funds, is seeking to grow its private credit offerings. It managed $17 billion in private credit assets at the end of last year — less than the nearly $19 billion in committed and managed capital that Monroe had as of April 1.

For a direct lender, selling to a big bank could have implications for its franchise. The business would jump from a less regulated corner of the financial industry to one that is subject to stringent rules and a