Reverence Capital’s $500M Structured Credit Fund: Private Credit’s Next Wave

Reverence Capital, co-founded in 2013 by Milton Berlinski, Peter Aberg and Alex Chulack, has built a strong footprint in private equity focused on financial services. Their decision in early 2020 to launch a structured credit fund represents a shift into debt-based investing, underpinned by a strategy to deliver risk-adjusted returns with capital preservation at the core.,

Jeff Verschleiser’s move to Reverence as chief investment officer for the credit pool signals intent to bring flow credit, municipal and mortgage trading experience to bear. He was formerly a senior trader at Goldman Sachs overseeing flow credit, municipals, and mortgage trading, leaving the firm in late 2019.,

The fund’s targeted size of $500-600 million places it in the smaller middle market for credit funds, suggesting a niche strategy rather than seeking scale dominance. The firm explicitly does not plan to become a middle-market direct lender, but rather act as an asset-based lender, providing financing secured by assets (including property), but not equity in borrowers.

Reverence’s prior fundraising history shows momentum: its Opportunities Fund II closed with $1.2 billion, nearly double its $750 million target, and its first fund—initially $500 million—ended up nearly quintupled via co-investments. Returns have been impressive, with Fund I IRR around 45%, and Fund II already meaningfully invested. These metrics give credibility to the credit fund launch.

Strategic advantages include leveraging Re­verence’s deep networks and proprietary sourcing in financial services, plus the opportunity to engage investment opportunities less favorable for equity in turbulent environments. However, challenges include crowded competition from private credit specialists, regulatory and rate environment headwinds, and structuring risk. Moreover, the onset of the COVID-19 pandemic shortly after March 2020 likely shifted both risk dynamics and pricing in credit markets substantially, which may have affected both fundraising and deployment assumptions.

Open questions to probe include: how the firm intends to differentiate its asset-based credit approach versus established direct lenders; what terms (covenants, leverage, duration, asset collateral quality) it will demand; how it will manage downside scenarios; and whether the $500-600 million target remains achievable or has been adjusted post pandemic onset and subsequent macro stress. Additionally, assessing the success in deal flow in dislocated/performing credit sectors, and the competition from both bank buy-outs and larger credit funds, remains crucial.