How Reverence Capital Shaped Private & Structured Credit: Strategy & Lessons

In March 2020, Reverence Capital ramped into structured credit under the leadership of Jeff Verschleiser, with plans to raise $500-$600 million. [1] The focus was on asset-based lending, including real-estate collateral, plus purchasing credit assets, rather than equity investments in operating companies—signalling a move toward a hybrid private credit / special situations strategy overlapping financial institutions and specialty finance. [1] They emphasized synergies with their financial services private equity platform: sourcing, structuring expertise, and instrumental insight from their PE portfolio to feed credit deal flow. [2]

The strategy was backed by strong private equity pedigree: founders Berlinski, Aberg, and Chulack had deep experience in financial services investing and advisory. The firm’s PE Funds showed strong momentum: Fund I raised $500 million, later augmented by partner co-investments to $2.5 billion and delivering roughly 45% IRR; Fund II closed at $1.2 billion over target. [1] This track record likely underpinned market confidence in a credit platform, especially in early 2020 when dislocated credit markets and yield-hunting LPs were attentive.

Operationally, the private credit team has expanded—by 2024-2025, Reverence has launched multiple credit funds (Credit Opportunities Fund III and its offshore affiliate), raising material capital ($246 million offshore in Mar 2025, $135 million domestic in Mar 2024). [2][4] Their private credit team is led by long-time specialists: co-CIOs Peter Aberg and Josh Swidler among others, and a broader roster including structured investing, loan underwriting, real estate credit, and asset-based lending disciplines. [2][4]

Strategic implications: Reverence’s move reflects broader trends. In environments with tighter credit spreads, dislocation, and volatility—like post-2019 and after COVID shocks—asset-backed credit provides roll-down yield and potential upside from distressed or under-priced credit. Their stated strategy avoids direct equity exposure in the lending business, reducing risk of downside in operating company equity. The partnership between PE deal-flow and credit strategy gives potential downside protection and optionality. However, challenges include credit risk, underwriting accuracy in stressed sectors (real estate, specialty finance), and potential competition from direct lenders and non-bank financiers.

Open questions include:

• How successful was the initial $500-$600 million credit fund effort led by Verschleiser in terms of capital raised and performance? (Does there exist a disclosed Fund, e.g., Credit Opportunities I)
• How has market stress in 2020-2023 (COVID crisis, real estate dislocations, rising interest rates) affected Reverence’s structured credit positions?
• What are the portfolio allocations among asset classes (real estate loans, specialty finance, distressed credit etc.), and how is risk-adjusted return stacking up versus peers?
• How correlated is Reverence’s credit book with macro/credit cycles, given overlap in financial services exposures exposed via their PE portfolio?
• What is the fee and leverage structure of these credit funds (senior debt, mezzanine, CLOs, etc.)?

Overall, Reverence’s foray into private credit appears well-reasoned and institutionally executed, leveraging existing strengths and market conditions of 2020. The subsequent fund launches by 2024-2025 suggest partial success and continued scaling, though without full public disclosure of returns for the pure credit funds as of yet.