As Chris has mentioned private credit lending means that the company has to go broke before we lose our capital rather than if SOL were buying shares in that same company. Of course this means the upside is capped too at the agreed upon interest rate.
GL you will probably notice that private credit in general has become a very trendy asset class in the past couple of years. Interest rates have risen but the banks have a significantly lower risk appetite on loans to businesses etc. than they once did so private credit has come in to fill that effective gap in the market. From an investment perspective the pitch is that you can currently get equity/direct property like returns of between 8 and 12 percent per year while taking far less risk on your capital.
I was talking to a friend recently who asked me about an investment in an unlisted Rixon private credit fund and showed me their prospectus and some of the returns on offer are actually pretty hard to believe at the moment. Pengana (which SOL has a large stake in) have actually just launched a listed private credit fund so that might be worth taking a look at to learn some more about the space.
Like most things it seems that plenty of people are racing into the space and this will increase competitions and make things less lucrative over time but at the moment it looks solid.
SOL Price at posting:
$32.63 Sentiment: Hold Disclosure: Held
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