LPs want a window into deal-by-deal diligence
Novell's panel of allocators from New Reinsurance Company, Aon, LGPS Central, and NEST Pensions covered where they're repositioning across direct lending, asset-based finance, and specialty credit, what real GP quality looks like, and how they're preparing for 2028.
The answers kept returning to underwriting. Allocators ask for loan tapes, deal files, and underwriting models, then track each loan's performance; a polished pitchbook counts for little. They also probe origination quality, marks, and whether a manager can really run semi-liquid or evergreen vehicles. Retail co-investors are a watch point after this year's BDC issues, since retail money creates pressure to deploy, and the insurer on the panel expects solvency capital charges on private credit to rise.
Large LPs are trimming rosters and concentrating capital with GPs that offer breadth and tailored solutions. Those that make the cut win bigger relationships, held to a higher standard. New managers can still break in: when an LP enters a strategy like asset-based finance, it often searches broadly, and mandates go to GPs already visible and credible.
"Private markets is an asset class that absolutely rewards diligence and brutally penalizes the lack thereof," one panelist said.
Fund structure and liquidity are part of the diligence
Nick Smith of the Alternative Credit Council opened by calling private credit an established financing channel, with an estimated $3.5 trillion in global AUM at the end of 2024. He warned that semi-liquid does not mean liquidity on demand.
The opening panel, moderated by Caroline Hedges of Railpen, called liquidity, not covenants, the real stress point: once cash flow breaks, a company has three to six months to fix it, less without sponsor support. The European direct lending panel, moderated by Gurvinder Singh of Indus Valley Partners, flagged far more detailed LP data requests.
The lower mid-market panel, moderated by Joe Ellis-Grewal of Centralis Group, argued for private-equity-style lending built on close borrower relationships. Over two-thirds of lower mid-market deals carry covenants, versus about one-third in large-cap, which panelists linked to lower defaults. Sourcing through fragmented intermediary and sponsor networks makes that origination story harder to tell, and more important to prove.
Your tech stack must enable this diligence
Two requirements follow for private credit managers.
First, infrastructure for loan-level data. If LPs want the loan tape, underwriting model, and performance history for every position, the GP needs that data current, in one place, and securely shareable. Ad hoc spreadsheet exports won't scale as the same LPs return each quarter and more start asking. The investor portal becomes where LPs run their own diligence without waiting on IR.
Second, evidence of origination. For lenders sourcing through intermediaries and sponsors, that evidence lives in the CRM: which relationships produce deals, how many opportunities come in, and how many close. The same CRM shows which LPs are moving into new strategies, so the team is visible before a search starts.
InvestorFlow supports granular LP diligence
InvestorFlow's AI-driven CRM gives origination and IR teams one view of the intermediaries, sponsors, and LPs behind each fund. Its investor portal gives LPs secure access to the documents and data they need.
If you're rethinking how your firm supports LP diligence, we'd be glad to show you how private credit managers use InvestorFlow for fundraising, deployment, and investor servicing to drive AUM, returns, and transparency. Book a demo here.
