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Alt Goes Mainstream

Nomura Capital Management's Robert Stark - building a private credit business within a global bank

55 min episode · 2 min read
·
Robert Stark

Episode

55 min

Read time

2 min

Topics

Productivity, Personal Finance, Investing

AI-Generated Summary

Key Takeaways

  • Private credit diversification strategy: Beyond direct lending's $1.5-2 trillion market, private credit includes $12 trillion in asset-based lending, real estate lending, specialty finance, royalties, litigation finance, and aircraft leasing—mostly still on bank balance sheets but shifting to asset managers.
  • Product development process: Interviewed 50 RIA founders and CIOs before launching, discovering all firms only had direct lending exposure and wanted diversified private credit solutions. This client feedback drove an 18-24 month development cycle from concept to market-ready fund structure.
  • Capital requirements evolution: Initially planned $100 million seed capital, but competitive dynamics now require $200-500 million for private credit launches. Building requires 25+ hires across investment, distribution, operations, marketing, legal, and compliance—impossible as standalone startup without institutional backing.
  • RIA channel dynamics: Ten years ago, 10 RIAs managed $10+ billion; now 280 firms exceed this threshold. Each RIA operates differently—large firms don't guarantee centralized decision-making, while smaller firms may have total centralized allocation. Coverage requires 5-6 meetings before discussing specific solutions.

What It Covers

Robert Stark explains building Nomura Capital Management's private credit business within a global bank, focusing on diversified private credit strategies for wealth channel clients with $1-10 million, requiring open architecture and long-term capital commitment.

Key Questions Answered

  • Private credit diversification strategy: Beyond direct lending's $1.5-2 trillion market, private credit includes $12 trillion in asset-based lending, real estate lending, specialty finance, royalties, litigation finance, and aircraft leasing—mostly still on bank balance sheets but shifting to asset managers.
  • Product development process: Interviewed 50 RIA founders and CIOs before launching, discovering all firms only had direct lending exposure and wanted diversified private credit solutions. This client feedback drove an 18-24 month development cycle from concept to market-ready fund structure.
  • Capital requirements evolution: Initially planned $100 million seed capital, but competitive dynamics now require $200-500 million for private credit launches. Building requires 25+ hires across investment, distribution, operations, marketing, legal, and compliance—impossible as standalone startup without institutional backing.
  • RIA channel dynamics: Ten years ago, 10 RIAs managed $10+ billion; now 280 firms exceed this threshold. Each RIA operates differently—large firms don't guarantee centralized decision-making, while smaller firms may have total centralized allocation. Coverage requires 5-6 meetings before discussing specific solutions.

Notable Moment

Stark warns investors should treat interval and tender offer funds as illiquid despite semi-liquid structures, because liquidity disappears precisely when investors need it most. He advises against households with $100,000 allocating 20% to private markets regardless of age.

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Episode Transcript

This episode of the Alcos mainstream podcast is brought to you by Ultimus, a leading full service fund administrator for asset managers in private and public markets. As private markets continue to move into the mainstream, the industry requires infrastructure solutions that help funds and investors keep pace. Ultimus is a leading full service fund administrator for asset managers in both private and public markets, offering a wide range of capabilities across registered funds, private funds, and public plans, as well as outsourced middle office services. Services. Delivering operational excellence, Ultimus helps firms manage the ever changing regulatory environment while meeting the needs of their institutional and retail investors. Ultimus provides comprehensive operational support and fund governance services to help managers successfully launch retail alternative products. Trusted by institutions, investment consultants, registered investment advisers, state governments, and fund managers, Ultimus provides solutions for nearly every investment structure in the marketplace. Visit www.ultimusfundsolutions.com to learn more about Ultimus' technology enhanced services and solutions, or contact Ultimus executive vice president of business development, Gary Harris, on email at gharris@ultimusfundsolutions.com. We thank Ultimus for their support of Alts going mainstream. Welcome back to the Alco's Mainstream podcast. Today's episode dives into private credit and building an asset management business inside of a leading global bank. We sat down in Nomura's NYC office with Robert Stark, the CEO of Nomura Capital Management and head of investment management in The Americas for the Nomura Group. Robert brings deep experience in financial services to Nomura. He was previously the founder and CEO of Alterum Capital Partners, where he focused on building an investment management business at the intersection of private markets and RIAs. Prior to Alterum, he was a senior managing director and a member of the executive committee at FS Investments, where he was responsible for corporate development. He also spent seven years at JPMorgan across asset and wealth management. He joined JPMorgan from Russell Investments, where he was a member of the executive committee. And he started his professional career at McKinsey and Company, where he was a partner serving clients in asset management, investment banking, insurance, and private equity. Robert and I had a fascinating and wide ranging discussion about the state of private credit market, how to build an asset management business, and what it takes to work with The Wealth Channel. Thanks, Robert, for coming on the show to share your wisdom and expertise on private markets and wealth management. Robert, welcome to the Alcos Mainstream podcast. Michael, thank you for having me. Well, pleasure to be here with you at Nomura here in New York. Such a fascinating conversation on tap. They built a business here at Nomura. We'll get into that. How you've basically taken an entrepreneurial environment startup within much larger global bank, and then there's lots of talk about on private credit. So first, we'd love to start with your background. You've seen the asset management space evolve. You've been in the asset management space in a …

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