YouSaid · the spoken record

Ron Kantowitz

lines on the record: 71
first: 2025-07-17
most recent: 2025-07-17
sittings or episodes: 1
sources: podcast

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“There's opportunity for both, but certainly from my perspective and from our perspective, when we think about risk and we think about capital preservation, we love doing deals with private equity firms. We love to partner with firms that we've known forever. We know how they're going to behave when things don't necessarily go according to plan. For us, it's all about risk mitigation. The opportunity to pursue non-sponsored deals for the right type of investor, you can do very well there. You just need to make sure you've got the resources to be able to support it if things don't go well. And that can be very resource intensive.”
2025-07-17 · Capital Allocators · Ron Kantowitz – Direct Lending's Evolution and Invesco's Edge (EP.457) · IDENTIFIED FROM THE TRANSCRIPT · source
“Have some type of operating performance challenges unless these are truly dynamics where the business is permanently impaired, your sponsor is going to come up with a solution. They've got to protect their significant investment. Now you contrast that with a non-sponsored deal. Typically there you're dealing with private companies, family-owned businesses. There is no equity coming in beneath you. There is no private equity firm providing oversight. You are the lender. If something goes wrong You are the entity that's got to fix it. Why would you do that? There's a couple of reasons you do that. Number one, because you're probably going to get a better return because you're not facing off against a very sophisticated private equity investor who's very, very savvy in terms of exactly what terms are clearing in the market and how to negotiate that. And equally, you're probably getting a tighter document, perhaps leverages a little bit lower. The terms are a little bit tighter. I've done both in my career. They're very different.”
2025-07-17 · Capital Allocators · Ron Kantowitz – Direct Lending's Evolution and Invesco's Edge (EP.457) · IDENTIFIED FROM THE TRANSCRIPT · source
“Today, at least 70% of all direct lending is sponsored. Why is that, and what are the differences? Well, sponsored by its nature means you're working with a private equity sponsor. And the attraction of doing deals with private equity sponsors is, number one, they bring governance, they bring sector expertise, they bring best practices, and most importantly, they invest significant sums of equity in these businesses in front of your debt. Typically loan to values today are running in the mid-40s. If you're aligning with some of whom you think are the smarter private equity investors in the U.S. and you're lending senior secure debt, they're providing more than half the value of these businesses in first loss equity. And so when you think about it from a risk perspective, things have to go pretty bad before your senior secured loan starts to be at risk for being impaired. And typically what happens when you work with a sponsor, if a company does.”
2025-07-17 · Capital Allocators · Ron Kantowitz – Direct Lending's Evolution and Invesco's Edge (EP.457) · IDENTIFIED FROM THE TRANSCRIPT · source
“next month, not in three months. You have certainty and you're done. Now, for that, you'll pay a premium, but at the end of the day, if you're the borrower, you know who your counterpart is going to be. And it's not just the efficiency of getting the deal done, but banks, they have certain regulations, lots of boxes that they have to neatly fit their deals within. When you're dealing with direct lending, they have the flexibility to be more pro-”
2025-07-17 · Capital Allocators · Ron Kantowitz – Direct Lending's Evolution and Invesco's Edge (EP.457) · IDENTIFIED FROM THE TRANSCRIPT · source
“What is a syndicated deal? A borrower or a sponsor hires a bank. A bank puts together documentation, goes to market, figures out what they think the structure should look like, and then they go out and they syndicate that deal. And sometimes they'll commit to it, and sometimes they'll do it on a best effort basis, but they'll give the counterparty an indication what they think the deal is going to look like. They run a bank meeting, they go to the rating agencies, and ultimately, if they're successful, they'll syndicate they'll sell that deal down and they'll bring in, depending upon the size of the deal, five, ten, twenty, even 50 participants into that transaction. It takes time, and it is, in most cases, beholding upon where the market says it's going to clear. Now, you contrast that with a direct lending deal on the large end of the market, you will have one counterparty sit across the table from the sponsor or the borrower, and they'll say, I'll tell you what, I'll do your deal, $2 billion, you're done sofa plus six. Here are the terms. I don't have to go to the rating agency. I don't have to sell it to anybody else. I'll get it done.”
2025-07-17 · Capital Allocators · Ron Kantowitz – Direct Lending's Evolution and Invesco's Edge (EP.457) · IDENTIFIED FROM THE TRANSCRIPT · source
“who are managing massive sums of capital and don't spend any time worrying about the middle market because it just doesn't work for them instead what they've done is they've set their sights on the banks i remember the first couple of times we would hear about a billion dollar unitronch and everybody scratched their head go oh my god how are they going to do that today i mean you know billion dollar unit tranches there's nothing unique about them you know five billion dollar unit deals are getting done and so the evolution of the market i think the market's just gotten bigger as more capital has come in you've just seen the bigger players continue to accumulate significant pools of capital and push on the wider end of the market”
2025-07-17 · Capital Allocators · Ron Kantowitz – Direct Lending's Evolution and Invesco's Edge (EP.457) · IDENTIFIED FROM THE TRANSCRIPT · source
“Post to GFC, your direct lending for the first 10 years was singularly focused in the middle market. Banks were still doing the large syndicated deals. There was this huge gap in the market to be able to provide capital to middle market sponsors, middle market companies. You start to see capital come in, and it was very successful. If you look at the entities that were dominant in the middle market 10, 15 years ago, they don't play in the middle market anymore. As their AUM, their capital base has grown, deployment pressures have become so significant that they've had to find more efficient ways to deploy that capital. The evolution of this market is whereas maybe for the first five, ten years it was predominantly focused in the middle market, when we now talk about direct lending, we sort of talk about the core middle market and we talk about the large end of direct lending. And the large end of direct lending today is probably comprised of eight or ten huge, very sophisticated lenders.”
2025-07-17 · Capital Allocators · Ron Kantowitz – Direct Lending's Evolution and Invesco's Edge (EP.457) · IDENTIFIED FROM THE TRANSCRIPT · source
“Default experience initially was treated as a nice asset hedge for investors across a liquid portfolio, but as the asset has grown, it's become just a key component in many individuals and many entities portfolios.”
2025-07-17 · Capital Allocators · Ron Kantowitz – Direct Lending's Evolution and Invesco's Edge (EP.457) · IDENTIFIED FROM THE TRANSCRIPT · source
“Often get asked this is a pretty new asset class how do you think it's going to perform if the market cycles, things like that. To that I always say, is not a new asset class? What has changed is the constituency that provide those capital solutions. If you go back before the GFC, middle market finance was the purview of banks. They dominated it. They were great at it. They had tremendous relationships. Post the GFC, the OCC leveraged lending guidelines came in place and Basel III was put in place. The intent of those regulations was to make it more difficult and more expensive for banks to participate in that asset class. So what you saw happen was simply a shift in the providers of that capital from the regulated banking side to the non-regulated private capital providers. The reason for that is when you think about the world we live in today, the volatility in the markets, this is an asset class that across cycles has demonstrated stability, consistency.”
2025-07-17 · Capital Allocators · Ron Kantowitz – Direct Lending's Evolution and Invesco's Edge (EP.457) · IDENTIFIED FROM THE TRANSCRIPT · source
“All the sectors. I came on board, I brought a handful of my partners from RBS, all of whom are with me today. Great sponsored coverage folks with tremendous credit skills. We put the business in place as if we'd never stopped working together and we called up all of our old relationships and picked up the business right where we left off.”
2025-07-17 · Capital Allocators · Ron Kantowitz – Direct Lending's Evolution and Invesco's Edge (EP.457) · IDENTIFIED FROM THE TRANSCRIPT · source
“It starts with big institution. At the time, we were a mere trillion dollar asset manager. Today we're approaching two. We had a really large private credit platform. The private credit platform had been in existence for 2025 years. We were known in the industry. In Vesco has great brand recognition. And importantly, the infrastructure was in place. When I thought about what it would take for me to build a successful direct lending platform, one of the key things that I believe you must have is sector expertise. The beauty of this platform that had been built was they had one of the largest private side sector teams in the market. We have 22 dedicated sector research analysts who focus within their dedicated sector on everything today from distress to liquid to direct. As I thought about coming in, I could build the origination execution team. We could leverage off this built-in wealth of knowledge, IP, via existing portfolio companies and experience across the world.”
2025-07-17 · Capital Allocators · Ron Kantowitz – Direct Lending's Evolution and Invesco's Edge (EP.457) · IDENTIFIED FROM THE TRANSCRIPT · source
“Something myself. And then that brings me to InvestCo. I got a call from Scott Baskin, who runs Invesco's private credit platform, which today is about a $50 billion credit platform. At the time, Scott was running a series of strategies within that platform, but was interested in thinking about whether he could leverage that platform into direct lending. Again, I had known each other over the years, and I remember we had this breakfast. We're really at that time, he was just trying to understand what I thought it would take for Invesco to break into this space after back and forth for probably about six months. I made the decision to go build it. And that's about a little bit less than eight years ago at this point.”
2025-07-17 · Capital Allocators · Ron Kantowitz – Direct Lending's Evolution and Invesco's Edge (EP.457) · IDENTIFIED FROM THE TRANSCRIPT · source
“We've raised a lot of capital. We're here to help you solve your problem defined as we'd love to buy your assets at 50 or 60 cents on the dollar. What I discovered in the process is that you had some very, very sophisticated investors who had managed to accumulate significant pools of capital. They weren't burdened by a lot of the regulatory dynamics that the banks were now suffering from. It just became very obvious at an early point that this was where the market was going. Back then, we called it shadow banking and then we called it nonbanking and then ultimately we landed on the more eloquent direct lending. So after I did what I could to help bring that non-core bank down and shore up the balance sheet at RBS, I decided it was time to move to the shadow banking or the non-banking side of the market. I took a position at an opportunistic credit platform that was looking to expand into more traditional direct lending covering private equity firms. And I spent a handful of years there helping them build it out. But for me, I sort of had the itch. I want to get back to bed.”
2025-07-17 · Capital Allocators · Ron Kantowitz – Direct Lending's Evolution and Invesco's Edge (EP.457) · IDENTIFIED FROM THE TRANSCRIPT · source
“The noncore bank at RBS housed all the highly structured assets. They weren't necessarily bad performing assets, but they were the assets that required significant regulatory capital. Capital with which the bank didn't have I was put in charge of the noncorp bank in the US, which was about a $30 billion vehicle. And my task was to figure out how to liquidate and monetize those assets so I could return capital to the core bank. Sort of fix the balance sheet. In those times that I got my first exposure to private. I would get calls from platforms. I hadn't heard.”
2025-07-17 · Capital Allocators · Ron Kantowitz – Direct Lending's Evolution and Invesco's Edge (EP.457) · IDENTIFIED FROM THE TRANSCRIPT · source
“It was absolutely fantastic. I built out sponsor coverage, execution, portfolio management, sector expertise and distribution. And over a period of five or six years, we built that business to be one of the leading middle market providers in the US. So it's a wonderful time. To be in the business. Unfortunately, Good things coming to The GFC RBS fell pretty hard, like many other banks across the globe. In the case of RBS in particular, Exacerbated the challenges for them they just bought ABN Amro the prior year in a competitive process. all cash market topic bid. The GFC hit for RBS Consequences were pretty significant Bank went through Restructuring whereby they created two banks. Created what they called the Core Bank and the non Core Bank.”
2025-07-17 · Capital Allocators · Ron Kantowitz – Direct Lending's Evolution and Invesco's Edge (EP.457) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I spent about six years at Chase. Worked with some really great people, many of whom are not just friends today, but many of whom run private equity firms that are my clients today. Six, seven My time at Chase, and I was offered the opportunity to go build for the Royal Bank of Scotland. Middle market leverage finance business focused on private equity. Knew what RBS was in the US. But if you actually looked at the bank, it was the fifth largest bank. The world by market cap. Perhaps more importantly, they were the dominant provider of acquisition capital in Europe. You had this huge bank that had decided that they wanted to come into the US and replicate what they'd done in Europe and the US.”
2025-07-17 · Capital Allocators · Ron Kantowitz – Direct Lending's Evolution and Invesco's Edge (EP.457) · IDENTIFIED FROM THE TRANSCRIPT · source
“Maybe it's part personality, maybe it's part going through intense credit training, but we support private equity. There's a very different risk when you're a private equity investor than when you are a senior debt lender. What was unique about this opportunity is we could pick our spots. We could decide, you know what, we don't want to lend senior here. We're going to do junior capital. We're going to do mezzanine. We're going to do equity. When I make an investment, I want to be able to sleep at night and not worry about it. What types of businesses did I tend to lean in on, the stable businesses, the businesses that were predictable, were less volatile? The businesses that were... themselves to traditional senior debt le”
2025-07-17 · Capital Allocators · Ron Kantowitz – Direct Lending's Evolution and Invesco's Edge (EP.457) · IDENTIFIED FROM THE TRANSCRIPT · source
“from an investor perspective. It was a wonderful education process and it's informed my investment process and methodology for the rest of my career.”
2025-07-17 · Capital Allocators · Ron Kantowitz – Direct Lending's Evolution and Invesco's Edge (EP.457) · IDENTIFIED FROM THE TRANSCRIPT · source
“To study with legends in finance because, like Merton Miller and Eugene Fommer, these were the guys who actually wrote corporate finance theory. I had a great two years there. And then when I graduated, I got a job at Chase Manhattan Bank in the Leverage Finance business. So I made the transition. But while I was in the training program, Chase sort of went through a little bit of a restructuring and they combined three groups. They combined the leverage finance group, which was the traditional acquisition finance business that we all think of when we think of banks. With their mezzanine finance group and their equity investment group. And we rebranded it Chase Merchant Banking. For me, for somebody learning their skill, it was a really unique opportunity because not only were you tasked with evaluating companies, taking them apart, figuring out if they were investable, but at the same time you were looking at them across different types of assets where you could invest. So you had to think about relative value, risk adjusted return, really think about these businesses not just from a credit perspective.”
2025-07-17 · Capital Allocators · Ron Kantowitz – Direct Lending's Evolution and Invesco's Edge (EP.457) · IDENTIFIED FROM THE TRANSCRIPT · source
“When I graduated college, I went to work as a systems engineer for a company called Electronic Data Systems. EDS was Ross Perot's company. It was a technology company that provided IT facilities management and business process outsourcing to companies across a wide variety of industry sectors. And the model was one where you co-located with your clients. So when I got out of the systems engineer training program, I was positioned at a regional bank on the East Coast. By the end of three years, what I'd figured out is I was much more interested in the finance side than I was the technology side. And so I decided to try to make a change. But without the benefit of traditional finance training prior to that, it was very difficult to move into investment banking. So I decided to go back and get an MBA. And at the time, the two best schools, if you wanted to focus on finance, were Wharton and the University of Chicago. I was fortunate enough to have the opportunity between the two, and I decided to go to the University of Chicago. Absolutely loved it there.”
2025-07-17 · Capital Allocators · Ron Kantowitz – Direct Lending's Evolution and Invesco's Edge (EP.457) · IDENTIFIED FROM THE TRANSCRIPT · source
“My guest on today's sponsored insight is Ron Cantowitz, Head of Private Debt for Investi Loan Platform, where he leads a team that manages $50 billion focused on middle market, senior secured direct lending. Our conversation traces Ron's path to lending and three decades of experience alongside the evolution of the lending markets. We discussed this direct lending strategy, investment process, and perspectives on competition, the role of banks, and opportunities ahead for private credit investors”
2025-07-17 · Capital Allocators · Ron Kantowitz – Direct Lending's Evolution and Invesco's Edge (EP.457) · IDENTIFIED FROM THE TRANSCRIPT · source