$24bn and Counting: Why Private Credit Isn't a Bubble, with Monroe Capital's Ted Koenig
Key points
Key takeaways from a How I Invest with David Weisburd interview with Monroe Capital Chairman & CEO Theodore "Ted" Koenig (September 2026):
From lawyer to lender. Koenig spent 14 years as an M&A and bank-financing lawyer — mostly for private equity transactions — before founding Monroe Capital in 2001 with three bankers, each leaving $100k jobs. His original ambition was a business deploying a few hundred million dollars; today Monroe has grown to $24bn in assets, deploying around $10bn a year.
A market turned upside down. When Koenig started, 90% of buyout financing ran through the banking system; today 90% sits outside it with private credit managers. He credits the GFC: banks proved unable to fund their LBO commitments when the music stopped, TARP bailed them out, and post-crisis regulation imposed punitive capital requirements on bank LBO lending — pushing the business into the institutional market.
The boom in numbers. There are roughly 550 private credit firms today, 40% of them younger than a decade and fewer than 15 predating the crisis. Koenig puts the market at $2tn today heading towards $5tn within five years; big private equity houses such as KKR, Carlyle and Apollo are now around two-thirds private credit.
Alpha in a fixed-income world. In private credit there are only two ways to generate alpha: make more than the next guy, or lose less than the next guy. Pension funds need 8–9% and insurers around 6% in steady, stable returns, which is what the asset class exists to deliver. Monroe lends senior secured at roughly 50% loan-to-value — top of the capital stack — so the real risk, he argues, sits on the equity side.
A moat in the lower middle market. Monroe targets companies with $35–440m in EBITDA: main street America, home to 50% of the US workforce, around 200,000 middle-market companies and a third of US GDP — big enough to matter, too small for Wall Street to bother with.
The retail wave. High-net-worth investors are the fastest-growing pool in private credit. A 40 Act fund Monroe launched about six years ago now holds roughly $8bn from some 15,000 individual investors averaging about $100k each. The firm is today about 30% retail/ 70% institutional, targeting a 50/50 split within three to four years.
Bubble? Not his read. The recent wobble was a retail pause, not a structural break: with 38% of the M&A market in software, AI-driven fears of software obsolescence froze high-net-worth inflows for a few months. Nine months on, nothing materialised — institutions are leaning into the dislocation and Koenig expects retail to return from Q4.
Organic, aligned growth. Monroe has compounded around 25% a year for 15 years with no acquisitions; 350 people manage the $24bn. Private and not AUM-chasing, the firm pays distributions every quarter and has seen no senior-level turnover, crediting a "raise the bar" hiring rule and a "pie, not slices" partnership culture.
Read more: How I Invest with David Weisburd — YouTube
