Dell Family Office Hunts Private Credit ‘Gems’ Amid Turmoil

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(Bloomberg) — Tumult in private-credit markets is turning into a buying opportunity, even as default rates are likely to rise in 2027 and 2028, according to Alisa Mall, the chief investment officer for Michael Dell’s family office.

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“There’s going to be a huge amount of secondary activity in the private-credit market, and we are well-positioned for that and have spent a lot of time thinking about it,” Mall said at a Bloomberg New Voices event in New York on Monday. She predicted that not all private credit will perform the same, anticipating a “dispersion” that will require close attention to details.

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“We’re looking for the gems that we can access because somebody is effectively a non-economic seller,” she said. “We love a discount, of course, but we’re looking for fundamentally good businesses that can withstand.”

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Private credit funds have been hit by a wave of redemption requests amid growing anxiety around the $1.8 trillion market’s lending practices and exposure to businesses that are vulnerable to disruption by artificial intelligence. Much of the pressure on funds, Mall said, stems from managers’ growing reliance on investors who may need access to cash quickly and are inclined to rush for an exit, rather than on institutions with longer investment horizons.

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“A lot of the concern around the industry is more sentiment-driven than fundamental-driven,” she said, pointing to the mismatch in consumer expectations of liquidity and the products they’re actually being offered.

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She expects the private-credit secondary market to continue to grow as more firms face redemption requests or as current investors need liquidity. Last year, secondary deals jumped to a record $226 billion, up 41%, according to a report from Evercore.

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Apollo Global Management Inc. and Ares Management Corp. both said this week that they’ll curb withdrawals from private credit funds. Apollo Debt Solutions, a $25 billion business development company for retail investors, capped redemptions at 5% of outstanding shares, while Ares Strategic Income Fund also limited withdrawals to 5%. 

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Recently, Dell’s family office bid — but lost out — on an energy portfolio that was trading below par, but would have been “a gem of exposure” for the firm, she said.

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Dell’s family office, called DFO Management, is separate from MSD Partners, which grew out of MSD Capital, a previous family office. Mall joined in 2022 after two years at biotech investor Foresite Capital. She had previously spent almost 12 years at Carnegie Corp., where she focused on its natural resources and real estate portfolios.

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In 2023, MSD Partners merged with Byron Trott’s merchant bank BDT & Co.

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Dell is currently the world’s ninth-richest person with a $145.4 billion fortune, according to the Bloomberg Billionaires Index. In December, he announced that he and his wife would be giving $6.25 billion to fund “Trump accounts” for 25 million children.