Private credit is where a non-bank lender provides debt capital to borrowers who need to raise funds for the purpose of financing, operating or growing their business or to fund infrastructure or real estate development projects and/or assets. Alternatively, these borrowers would have to seek capital from a bank or through the public markets.

An example of private credit is an investor, such as HOOPP, issuing a loan to a company in need of capital. The loan is serviced from the income generated by that company through its operations, or through lease revenue in the case of a real estate asset, and ultimately repaid through a refinancing of the loan or sale of the company/asset.

Unlike traditional debt, private credit offers flexibility, increasing its attractiveness to borrowers that are looking to match their financing strategy with their business plan, typically in return for a higher interest rate. Private credit investments have varying levels of risk and return.

HOOPP’s private credit portfolio includes investments in loans and structured credit solutions across infrastructure, private equity, real estate and structured investments in other asset classes. Structured credit is a type of financial instrument, usually a secured-asset investment with a set coupon rate (i.e., interest payment), that has been packaged into various risk categories to meet specific investor needs or risk profiles. These loans and structured credit solutions provide organizations, real estate owners and others with the capital they need while generating returns for HOOPP.

Private credit investments are an important part of the Fund because they can generate income and capital gains, providing HOOPP with attractive risk-adjusted returns and a source of diversification. They are not directly correlated to the movements of equity markets so they can help provide stability when markets are volatile.

HOOPP has private credit expertise across various asset classes, including: