Janus Henderson announced Monday that it acquired a majority stake in $6 billion Victory Park Capital, the latest private credit boutique to sell to a larger asset manager.

But Ali Dibadj, CEO of Janus Henderson argues that this deal isn’t like the others. Janus Henderson specifically wanted a skilled asset-backed lender and, after two years of searching, it finally found one in Victory Park, the executive told Institutional Investor.

In 2023, rising interest rates and a pullback by traditional lenders made private credit the hottest asset class of the summer. And the barn door of opportunity flung open last year isn’t closing anytime soon on. Investors — both institutions and individuals — want more of the asset class and the $1.7 trillion market is estimated to grow to $2.8 trillion by 2028.

Private credit is also maturing along the way. Direct lending to companies is the biggest subcategory and the one that usually comes to mind first. The other flavors, including mezzanine and distressed debt, have been around for decades. But demand for exposure to the smaller private credit strategies is growing. Victory Park Capital, or VPC, was an opportunity for Janus Henderson to capitalize on that trend.

“That's one of the reasons why Victory Park Capital is where we went. There aren't that many firms who do this. Certainly not as well,” Dibadj said. “They definitely have the best brand name in the space… I've continued to hear about that, not just in our diligence, but today from clients, [and] from others who know this business.”

The deal expands Janus Henderson’s $36.3 billion in securitized assets under management in multiple ways. (The firm has a total of $361 billion in assets under management.) It also recently acquired the National Bank of Kuwait’s emerging markets private investments team, NBK Capital Partners.

Not too long ago, a traditional asset manager getting into private credit might have been described as bold or interesting. Today, the framing is different. The allocations and types of private credit are expanding in portfolios and investors expect asset managers to offer those choices.

Those evolving expectations have been the driving force behind a lot of recent mergers and acquisitions in the industry, explained Kevin Gallagher, a principal at strategic consultant Casey Quirk, a business of Deloitte.

Beyond more assets under management, VPC is bringing other things that Janus Henderson is excited about. Dibadj called the technology the boutique uses to analyze assets and originate and underwrite loans “extraordinary,” and on par with anything he’d ever seen. “We believe we can leverage it in many ways. Stay tuned,” Dibadj said.

Richard Levy, the founder, CEO and chief investment officer of VPC, said in a statement that selling a stake to Janus Henderson will help the firm grow more quickly — a benefit that Dibadj said will be mutual. Janus Henderson counts sovereign wealth funds, pension funds, and endowments as clients. Still, VPC works directly with many institutional investors and Janus Henderson believes the firm will bolster its sales and distribution, especially to insurance companies. Insurers have long invested in private credit, but are increasingly outsourcing the duties of managing those assets to firms like VPC that have the experience in smaller subcategories of the market. In addition to asset-backed credit, VPC also does legal finance, invests in special situations, and builds custom portfolios for insurance companies.

The evolution of private credit is familiar to industry watchers. As Casey Quirk's Gallagher said, “Most institutions don't just want one equity manager, they want different managers with different focuses and different nuances within the equity portion of the portfolio. Increasingly, investors are thinking of private credit the same way."