Spotlight on Robin Doumar, Founder & Managing Partner, Park Square Capital
Global Thought Leader Spotlight
Robin Doumar, Founder & Managing Partner, Park Square Capital
In my role as the Founder and Managing Partner at Park Square, I have been responsible for leading the firm since its inception in 2004. I also serve as Chair of both the Investment Committee and the Executive Committee.
Robin will share lessons learned from his multi decade career investing in global credit markets through multiple cycles at Global Investment Institute’s upcoming Private Credit Investment Forum, taking place on Thursday, 8 May 2025 at the Grand Hyatt Melbourne, Victoria.
In this article, Robin shares his views on current dynamics playing out in private credit and what investors should be thinking about in pursuit of desired goals.
Q. What factors will determine which managers perform better than others in this market?
A. It is really all about asset selection, the underlying quality of your portfolio, and ‘avoiding the zeros’, as we would say. This is an asset pickers’ market – it is not a market where you want to own beta. There are going to be winners and losers here. We are going to see significant divergence in how managers perform. The current environment is characterised by slower deal activity and lots of refinancing, and this will put pressure on large pools of capital.
In cases where the focus has been more on origination, driving AUM growth and stock prices, as opposed to disciplined asset allocation, that is where we are going to start to see accidents happening.
On the other hand, I think midsized managers that are not over-capitalised are well positioned in this market environment. They can afford to be disciplined in the way they invest, and have a powerful alignment with their teams around performance. Institutional investors are increasingly focused on the selectivity of their managers. They are realising that big managers are likely to produce beta at best, and may have a lotof problems in their portfolios. The most sophisticated institutional investors are picking managers that are focused on performance and asset selection.
Q. What should a good manager look for when selecting borrowers?
A. Warren Buffett would talk about businesses protected by ‘unbreachable moats’; we view a high-quality business as one that is stable, predictable and non-cyclical. They tend to be in sectors like business services, software, healthcare and high-margin niche industrials.
We remain cautious of businesses that can be disrupted. Technology – and artificial intelligence in particular – has the potential to be a disruptive threat to what I would describe as some of the lower-quality data centric and business process outsourcing business models. You’ve got to be very focused on avoiding the risks around those businesses.
Q. How should private credit managers think about diversification in their portfolios?
A. The interesting thing about credit – particularly in Europe – is there is not an infinite number of super high-quality opportunities, which inevitably leads to a trade-off between diversification and quality.
Diversification is important, and we want to be very diversified with a very high-quality portfolio. But if I had to give up a bit of diversification to maintain quality, I think that’s probably the right decision in Europe. The US market is slightly different. As a larger market, it’s easier to have a cream-skimming strategy where you can go with only very high-quality opportunities and remain diversified.
All of this is a fancy way of saying that we don’t want to buy the market. We don’t want to be so diversified that we end up being a beta manager. We want to be able to substantially outperform the market, and to do that, you need to be good at picking assets and focus more on quality. It’s a nuanced balancing act.
Q. How do you expect the private credit market to perform this year relative to other private markets asset classes?
A. There’s no question that elements of the credit market are very well-bid right now. It is a competitive market, so it is a time to be careful. But, private credit is in a good position compared with other asset classes that are even more stretched. I like having cash pay and contractual interest and a lot of seniority in the capital structure, with more than 60 percent equity invested beneath our positions, on average. In general, I like floating rate exposure in this kind of environment, considering the kind of volatility we have seen in recent months. Valuations, particularly on the equity side, feel a bit heated, especially around tech. If the market is going to experience a repricing, which I suspect it will at some point, high-quality credit is a good space to be in.
If you are a senior investment representative of an asset owner or an asset consulting organisation, please register your interest in attending Global Investment Institute’s upcoming Private Credit Investment Forum here or for more information email zlatan@globalii.com.au.
Robin Doumar, Founder & Managing Partner, Park Square Capital
Robin is the founder and Managing Partner of Park Square Capital, LLP. Robin chairs the firm’s Investment Committee and Executive Committee.
Before founding Park Square in 2004, Robin spent 15 years at Goldman Sachs in New York and London, where he headed the US Workout and Restructuring practise, headed the European leverage finance business, and headed the European Mezzanine business within the Principal Investment Area.
Robin received his AB from Brown University, and a JD and MBA from the University of Virginia.
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