Making hay from private credit: Stanlib’s Johan Marnewick  

If you think credit crises are a modern scourge, think again. 

As David McWilliams writes in his excellent book, Money, the world’s first credit crisis probably took place in 31BCE – that is, well over 2,000 years ago. 

Credit is the “dynamic parallel” to money and, as McWilliams writes, “the energy released by credit pushes up the price of everything, affecting the national mood, leading to spending, risk taking and all sorts of economic activity triggered by the availability of credit … This forward propulsion is money in action.” 

And sometimes, it gets carried away. If 31BCE is too far back for you, think the global financial crisis of 2008, and, more recently, the 2026 wobble in private credit funds. This corner of the market now rivals the high-yield bond market in size and, if banking giant Morgan Stanley is right, could be worth as much as $5-trillion globally by 2029.  

Yet there has been rising angst about the quality of loans these funds have made in recent years. “Fear has been rising … that funds run by some of Wall Street’s biggest names could be overvalued because their loans are riskier than previously believed,” wrote the Financial Times’s Brooke Masters recently.  

As a result, “individual investors tried to pull billions of dollars out in the first quarter, forcing BlackRock, Morgan Stanley and others to impose redemption limits”. 

The poster child for this tantrum is a company called Blue Owl, whose portfolio of alternative investments had grown to more than $300bn in just 10 years, before its flagship funds were hit by a wave of redemptions – that it wasn’t able to honour. Blue Owl is listed and its shares have slumped 50% in the past year. 

But for Johan Marnewick, Stanlib Asset Management’s head of private credit, there is no systemic problem, but rather an age-old cycle playing itself out. 

“Up to 26%, and in some portfolios 36% [of funds], had a concentration into the software industry,” mainly in the US, he explains. And it is these software companies that are especially vulnerable to the unknowns of the AI revolution. 

A 2008 throwback? 

Still, “it has throwbacks to the financial crisis”, admits Marnewick. “Lenders lent too much to certain components of the industry that shouldn’t have had that much gearing or access to finance.” 

In short, private credit funds extend capital to a wide range of borrowers, including start-ups and companies that look for funding outside of traditional bank loans. These funds, in turn, became increasingly popular with pension funds and wealthy individuals looking for better returns from alternative assets. 

Where the 2026 wobble differs from the global financial crisis is that banks aren’t the ones with major exposure here, mainly because regulators made it much more expensive for the banking system to host certain credit assets. In Marnewick’s view, this is unlikely to become a systemic problem that necessitates the intervention of the US Federal Reserve.

Still, as the founder of Libfin’s credit business for life insurer Liberty in the jaws of the financial crisis, this is a fascinating corner of the market. He gives three reasons why this hiccup is unlikely to develop into a full-blown tempest. 

“People who are redeeming from private credit funds in the US and Europe do so through the terms of those funds.” Generally, these don’t allow for immediate redemption, and the only option to exit is to get others to buy in. “That’s not a crisis, that’s  a willing-buyer, willing-seller opportunity actually,” he says.  

Second, private credit is not the same everywhere.  

“Just because manager A has gone into software, doesn’t mean that manager B has to. He may have an impact fund that has to do with green energy and Africa. Because there’s a component that’s experiencing stress doesn’t mean the whole sector is,” he points out. 

And the third point is that the stress is already in the price of the fund – and that price is visible. Like the 50% drop in Blue Owl’s share price, for example. 

“A lot of people who have fled their private credit funds globally are retail investors, and they may not have understood what they were buying,” says Marnewick. In his view, this is an opportunity for institutions with teams that can take a much closer look at the assets in a fund, and find bargains as a result. 

Here it’s worth a slight detour into the history of credit markets, which predate equity markets by hundreds of years. As Marnewick sees it, credit “is a primal foundational asset in the world and globally it’s never only vested in the hands of banks. It’s always been a cohort of financiers that are broader than the banks and for that reason it is a very important source of funding to individuals and corporates globally.”  

Outsize stock exchange  

South Africa’s story was different though; our capital markets developed around mining, and it was the equity market that helped fund the mining sector, which dwarfed the debt markets in size and sophistication. 

“The mining sector was funded through the JSE, which played an enormous part in bringing capital to South Africa, meaning debt has always been a poorer cousin,” says Marnewick.   

Yet Marnewick’s fascination with credit is precisely because of its difference to equity. 

“Unlike equity where I now own a piece of your business, credit [implies] that this is someone else’s money and we demand a return that is paid in cash; monthly or quarterly, plus the principal,” he explains. 

That is the protection of a loan – being able to demand your money back. 

“Apart from the critically important role that credit has played in the development of the world, in a developing economy this is a very efficient way to give smaller enterprises access to capital markets – credit, not equity,” he says.  

Morgan Stanley argues that private credit has historically offered a “compelling performance in relation to other segments of the fixed-income market and leveraged finance”, at lower assessed risk.  

This is possible, says Marnewick, because private credit markets are big and diversified, and offer the ability to get into any segment of the economy. But much depends on the skill of the manager signing off on these loans – and his or her ability to price those loans correctly. 

“The manager who goes and finds these assets needs to be very aware of risk, and not just focused on returns,” says Marnewick. 

“If you see that risk coming to realisation, you must have a plan. If you can have that philosophical approach to private credit, that statement of Morgan Stanley is true.

“But if you become greedy and you just see returns, and you forget about the fact that there’s a risk that drives that return – you make mistakes and you veer off the road.”  

Tallying the returns

So what does this credit cost? Or, put differently, if you’re an investor in a private credit fund – what kind of money can you expect to make? Depending on the risk parameters of the fund, between 8% to 20% a year. 

Of the R65bn of portfolios Marnewick manages, they generally have exposure to companies in the middle band. On some fund offerings, returns start at 11.5% per year. But throw in compound gains, he says, and the returns go into the mid 10%s. “If you compare this to the stock exchange over the last 20 years, you’ve made comparable returns at much lower volatility out of private credit.”   

It raises the question as to why more investors aren’t drawn to these funds. 

“It’s not without risk, and you can get it wrong. Everyone makes mistakes, but it’s the degree of the mistake that differentiates one manager from another,” says Marnewick. 

His view is that a private credit manager should function as a rational and “friendly” enabler of companies looking to grow, but “in the same way I make that promise, the guy next to me might make a promise and fail – and give credit a bad name”. 

So how did the one-time law student and chartered accountant make the leap from auditing to banking to setting up a private credit fund? 

Marnewick did his BCom law LLB at what was then RAU, now the University of Johannesburg.  

“I was working as a judge’s registrar at the Supreme Court of Johannesburg [back in 1994], listening to top advocates argue their cases and I thought if this is what I want to be one day, then I’m going to have to be better qualified.”  

His not-exactly-ecstatic father said, okay, fine: do a conversion course to a CA, which was hosted at the University of Cape Town at the time. It was also the cheaper option, laughs Marnewick.   

Big pivot  

The two-year course took in students from all backgrounds – doctors, musicians, engineers and geneticists. Marnewick emerged with his CA after which he did articles at Deloitte. In 2001, as he was finishing, the Twin Towers terror attacks took place.   

Deloitte back then had a “Just in Time” programme where the company would take newly qualified CAs out of the Joburg office to be placed anywhere in the world to deal with the year-end audit requirements of the northern hemisphere. Only, thanks to the fallout from the 9/11 attacks, the programme was iced. Marnewick applied for a position at Deloitte in Joburg – along with everyone else – and luckily got in. But when banks started hiring again in 2002, Marnewick applied for a job in structured finance at Standard Bank; his boss was none other than Standard’s now group CEO, Sim Tshabalala. 

“I had, through fortune or misfortune, found a role into a very interesting part of the group,” reflects Marnewick, “I was very lucky.”  

It was there that Marnewick learnt what banking is all about and the role it plays in the economy; six years later the financial crisis would prove both painful, and a huge career leap, through his involvement with Libfin. 

“The moment the crisis happened, credit was being completely mispriced. People couldn’t differentiate, so if you could establish a credit business, you could also buy these deeply discounted assets out of the marketplace and/or extend fresh funding at very compelling terms. You could make huge money, which we did,” he says.  

Almost 20 years on, in Marnewick’s telling, the opportunities – and the risks – seem as vivid as ever. 

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_{Top image: Johan Marnewick. Picture: supplied.}