Churchill Asset Management President & CEO Ken Kencel Talks Private Credit

Summary

Bloomberg Talks: Churchill Asset Management President & CEO Ken Kencel Talks Private Credit

Date: November 14, 2025
Guest: Ken Kencel, President & CEO, Churchill Asset Management
Host(s): Bloomberg Team

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Episode Overview

This episode centers on the state and future of private credit—an asset class drawing massive interest from both legacy players and new entrants, including hedge funds. Ken Kencel, a seasoned industry leader, shares his insights on market dynamics, the advantages of middle market lending, the impact of tariffs and deregulation, and how Churchill Asset Management differentiates itself in a rapidly evolving landscape. The conversation also tackles the risks of fee compression and the challenge of maintaining value in a competitive field.

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Key Discussion Points & Insights

The Boom in Private Credit and New Entrants

• Trend: Private credit has experienced explosive growth, with new players like hedge funds entering the space in search of yield.

• Kencel’s Perspective:

  • New market entrants (described as “tourists”) often focus on opportunistic, higher-yielding niches rather than relationship-driven lending.
  • Established firms benefit from deep relationships and differentiated sourcing, which, according to Kencel, will be critical for maintaining a competitive edge.

  “At the end of the day, private credit, in our view, is all about differentiated sourcing, origination and ultimately relationships.”
  —Ken Kencel [01:36]

  “You’ve got established players that have relationships built over decades... The new entrants that come in I think will probably focus more on opportunistic strategies...”
  —Ken Kencel [01:57]

Risks with Non-Specialist Entrants

• Host question: Hasn’t this story played out before—with new entrants making big moves that later backfire?

• Kencel’s Response:

  • Newcomers may seek returns in riskier/distressed areas.
  • Churchill remains focused on traditional mid-market lending, seeking stable, consistent returns from market-leading, non-cyclical businesses.

  “There are niches where those hedge funds will play. But it’s not where we play.”
  —Ken Kencel [03:29]

Churchill’s Middle Market Focus

• Market Niche: Churchill invests in U.S. firms with $10–100 million in EBITDA, primarily service-oriented, with minimal international exposure and manufacturing activities.

• Implications:

  • Insulation from external shocks like tariffs.
  • Lower international risk profile compared to larger, global organizations.

  “Very, very limited international customer base for these businesses... less than 10% are really impacted at all by tariffs.”
  —Ken Kencel [04:17]

Tariffs vs Deregulation

• Tariffs:

  • Largely a non-issue, with less than 10% of Churchill’s portfolio exposed.
  • Unexpectedly seen as a “positive” for fundraising, as investors find comfort in the insulation from tariff risks.

  “Our investors ... like the fact that there’s limited tariff exposure.”
  —Ken Kencel [04:48]

• Deregulation:

  • Reduces compliance burdens, especially for mid-market companies.
  • Acts as a net positive, enabling more efficient capital deployment.

  “Deregulation is a net positive overall.”
  —Ken Kencel [05:06]

The Data Center & “Re-Industrialization” Boom

• Discussion: Most private credit managers are eager to participate in large, infrastructure-type deals (such as data centers).

• Churchill’s Approach:

  • Rather than financing data centers directly, Churchill funds the myriad supportive businesses (e.g., HVAC, food service) that serve those projects.

  “We have about $6 billion invested... not in the data centers themselves, but in companies that are mid market companies that are supporting data centers.”
  —Ken Kencel [06:33]

  “There are thousands of companies in the mid market that are participating in that we finance... it’s a broad based benefit to the economy.”
  —Ken Kencel [06:48]

Continued Growth & Sticking to Core Strategy

• Investor sentiment: Strong interest in Churchill’s conservative, middle market approach.

• Growth Strategy: The firm is committed to “sticking to its knitting” and not chasing riskier or more commoditized segments.

  “Today they [investors] like the middle market and they want us to stay there. Right. So, they don’t want to see us…venturing off into some of these other areas. And we have absolutely no intention of doing that.”
  —Ken Kencel [08:01]

Fee Compression and Commoditization

• Industry-wide trend: Bigger players entering “syndicated loan” space are compressing spreads/fees, leading to asset-gathering strategies.

• Churchill’s Positioning:

  • Core middle market lending still enjoys a 200–250 basis point premium over syndicated loans.
  • Fewer competitors able to underwrite large, direct lending solutions keeps Churchill’s niche attractive.

  “Core middle market…has about a 2 to 250 basis point advantage over the syndicated market.”
  —Ken Kencel [09:12]

  “As you get into the larger deals, it’s a much, much more competitive dynamic.”
  —Ken Kencel [09:52]

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Notable Quotes & Memorable Moments

• On relationships as the industry edge:

  “I think you will have new entrants. I think there are certainly places to go with that capital... But the new entrants that come in I think will probably focus more on opportunistic strategies...”
  —Ken Kencel [01:34–01:57]

• On tariffs being a non-issue:

  “So the tariff dynamic has actually turned out to be a pretty good thing for us.”
  —Ken Kencel [04:34]

• On sticking to the middle market:

  “We have absolutely no intention of doing that [branching out from mid-market]. But I think sticking to our knitting is important right now.”
  —Ken Kencel [08:10]

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Important Segment Timestamps

• [01:31–01:57]: Kencel on new entrants and the importance of relationships
• [02:53–03:46]: Differentiation in private credit and Churchill’s sector focus
• [04:12–05:06]: How tariffs and deregulation impact Churchill’s portfolio
• [06:20–06:48]: Churchill's role in the “re-industrialization” and data center boom
• [07:43–08:10]: Growth expectations and executive strategy
• [08:45–09:52]: Industry fee compression and Churchill’s positioning

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Final Takeaway

Ken Kencel positions Churchill Asset Management as a disciplined, relationship-driven middle market lender thriving amid new entrants, a crowded field, and shifting macro risks. He underscores the importance of focus, resisting the urge to chase scale or trends, and leveraging decades of expertise in a differentiated market. For investors and industry watchers, Churchill’s strategy epitomizes a “stick to your knitting” approach as private credit matures.

Transcript

[Indiana University Representative]

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[Podcast Host]

Bloomberg audio Studios, Podcasts, radio news, private credit, where heavy hitters from Blackstone to 6th street have recently warned that returns will narrow following years of explosive growth. In that growth has been explosive. We spoke with Aquila Gray Wall of Apollo on her outlook. Credit has grown tremendously and our view is that it's going to continue to grow. Our view is that private credit is an enduring asset category and we've expanded the definition of what that means. We focus not just on kind of direct lending, of course, we have a big franchise that does that. But I think our leg up has really been the fact that we have an insurance balance sheet that has allowed us to originate private assets and private credit across the risk return spectrum. Joining us now is a man that knows this space very well, a veteran in a titan, Ken Cancel, president and CEO of Churchill Asset Management, a $57 billion private capital affiliate of Nuveen. Ken, thank you so much for joining us this morning. This weird thing is going on at the moment. Private credit is so hot. You look at your equity brethren and there's this talk of zombie firms popping up more than ever. But private credit is so popular. You have hedge funds like Point72 and Millennium launching strategies. What are those dynamics say to you that tortoise are now coming in, a.

[Ken Cancel]

Lot of tourists, a lot of new entrants. Look, I think, I think there's room for all of the players. I look, at the end of the day, private credit, in our view, is all about differentiated sourcing, origination and ultimately relationships. Right. So. So I think you will have new entrants. I think there are certainly places to go with that capital. Whether those are the most optimal places to go with the capital and where they're lending, I think is going to be an interesting question. But, but you've got established players that have relationships built over decades, and I think those firms are going to continue to enjoy the benefits of those relationships. But, but the new entrants that come in I think will probably focus more on opportunistic strategies, areas where they can drive somewhat higher returns, particularly if you look at hedge funds. Right? That's their, that's their thing, right. They're looking for, you know, a niche or a way to drive incremental return. So I think those firms will focus more on opportunistic areas and Relationship lenders, folks like ourselves that rely on those historic differentiated sourcing and relationships, I think have a place.

[Podcast Host]

Ken, Just, just one point on that. We've seen this movie play out before. We had some of the tiger cubs get into private equity, for example. It, it didn't work out well. Yes, A lot of them took a lot of losses and were forced sellers into the market. Who's to say that that won't happen again if you have firms again whose history and credentials aren't necessarily in private credit?

[Ken Cancel]

Yeah, yeah, well, I think, look, part of where I think you'll see them go is in distressed areas, you know, where they can come in and provide capital and maybe a higher risk scenario. Look, the world we focus on is more traditional, right? We're looking for high quality mid market businesses that are market leaders in their space, non cyclical, where we can drive a very consistent long term return. So you've got kind of the regular way private credit and then you've got situational or opportunistic credit. I mean, the reality in private credit is you hear about it as a monolith, right? We're in private credit. It's, it's venture lending, it's distressed lending, it's upper middle market, lower middle market. So there are lots of flavors of private credit. It's, you know, asset based lending, you know, we saw with, you know, First Brands and Tricolor. So it's, it's much more differentiated and I think there are niches where those hedge funds will play. But, but it's not where we play.

[Podcast Co-Host]

You play in the middle market. The firms that you invest in here in the U.S. are 10 to $100 million in EBITDA, right?

[Ken Cancel]

Yes.

[Podcast Co-Host]

And I'm wondering, there's two trends, big headline trends from the Trump administration. One is the tariffs and I imagine that is much more difficult for middle market companies to deal with than mega cap companies. The other is deregulation, which must be a tailwind for middle market companies. So how do those two balance out?

[Ken Cancel]

Yeah, sure. Well, the issue about tariffs is that when you look at our businesses, the companies we finance exclusively, US Companies primarily service businesses that interestingly have very little influence on their business internationally. Right. So very, very limited, you know, international customer base for these businesses, U.S. mid Market Service companies and actually very minimal manufacturing. So when you look at our concentration or tariff issue in our portfolio, less than 10% are really impacted at all by tariffs. So the tariff dynamic has actually turned out to be a pretty good thing for us. And in fact, our investors see that and like the fact that there's limited tariff exposure.

[Podcast Co-Host]

What about deregulation? Do you have to, do your companies have to spend less to deal with that kind of compliance?

[Ken Cancel]

It's certainly a positive. Look, I think deregulation overall is a good thing and certainly mid market companies, you know, those that maybe don't have or want to invest heavily in dealing with regulation, I think, you know, benefit from that, from not having to do that. So I think deregulation is a net positive overall that the tariff dynamic, I'd also say, you know, for us is something that, you know, has turned out to be even a positive from a fundraising perspective. Right. I think when tariffs came in there were a lot of questions about oh my gosh, you know, what's this really going to do to portfolios. And as things have played out over the last several months, investors can see that it really hasn't had a significant impact on our, on our portfolio. So that's for more fundraising, which is great. But I'd also, and I'll say that, that when you think about our, our, our dynamics going forward, being away from tariffs versus the broadly syndicated market where you have larger companies that have much more international exposure, makes us more attractive on a relative basis as well.

[Podcast Host]

Ken, one of the things that makes you unique is that you're staying in middle markets because it feels like every private credit company wants to get into big infrastructure, that they're all touting how great it is with these blue chip IG companies.

[Ken Cancel]

Yes.

[Podcast Host]

Is this also you may be seeing risk in there, participating in that?

[Ken Cancel]

Yeah, no, it's a great question. And actually I spoke with Romain about this at a, at a conference a few months ago. We actually there was a panel talking about exactly that. The, the, the re. Industrialization of the industrialization due to, to the data centers and how that's playing out. We did some research when we, when, when, when I met with him in advance because I always know what a great job he does in. And what we found is that we have about $6 billion invested in our portfolio not in the data centers themselves, but in companies that are mid market companies that are supporting data centers. So I think that, you know, there's a misconception that it's just building these data centers that's driving the activity. The reality is there are thousands of companies in the mid market that are participating in that we finance, for example, H Vac, build out businesses. Right. Well, they're supporting data centers, food service businesses that are actually supporting the workers that are working in the data center. So I think it's a broad based benefit to the economy and I think while data centers are part of it, and obviously those are the largest dollars. We're not financing data centers, but we are financing the companies that are, you know, participating in that opportunity you mentioned.

[Podcast Co-Host]

Fundraising is fantastic. What do you expect in terms of growth? I know you have tens of billions of dollars under management. You have 200 employees. What kind of growth do you expect?

[Ken Cancel]

Well, we just finished our, our annual investor meeting this week. I think we had something like, you know, $15 trillion of investors participating in the meeting. So I got lots of feedback on what we anticipate. And look, I think, I think certainly our investors are looking for a more conservative profile. You know, there's always the risk of, you know, recessionary dynamics from tariffs, and we haven't seen that at this point in our portfolio. But I think they're looking for us to stick to our knitting. I think, you know, five, six years ago, investors, I don't think fully appreciated all these differentials within private credit. Today they like the middle market and they want us to stay there. Right. So, so they, you know, they don't want to see us, you know, venturing off into some of these other areas. And we have absolutely no intention of doing that. But I think sticking to our knitting is important right now.

[Podcast Host]

There's been a real big conversation that the reason you've seen a lot of the giants of this space go into other areas is because there's been real fee compression and that in order to succeed, you need to asset gather when fees aren't as robust as they once were.

[Ken Cancel]

Yes.

[Podcast Host]

Is that a troubling trend if we are moving into the, the commoditization of private capital?

[Ken Cancel]

I think where you're seeing more of that is in the BSL market. Right. In the large cap companies that now have a syndicated option and a broadly syndicated and a private credit option. Right. So. So the private credit lenders that are moving into that space are actually competing with the syndicated loan market. So you've seen compression in spreads in the large cap market today. Core middle market, what we do in traditional private credit has about a 2 to 250 basis point advantage over the syndicated market. And I think a big reason for that is that compression of spreads we're seeing in the BSL world. So we like our space better, I would say, overall. But you're right, the largest private credit managers that are going into that space are competing with the syndicated loan market. Therefore there's a lot more. There's a lot more competitive dynamics that they're running into versus the core direct lending market where frankly delivering 3, 4, $500 million solutions, there are a fairly limited number of firms that can do that. So we like our space a lot. But you're right, as you get into the larger deals, it's a much, much more competitive dynamic.

[Podcast Co-Host]

Ken, we appreciate you joining us on Open Interest, even on a day when Romaine is here.

[Ken Cancel]

Romaine Bostick actually saw him earlier. So they'll be anchoring.

[Podcast Co-Host]

They'll be anchoring the clothes at 3pm A show you don't want to miss. Ken. Cancel there. Of Churchill Asset Management Old playbooks won't.

[Indiana University Representative]

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