Ron Kantowitz – Direct Lending's Evolution and Invesco's Edge

**Ted Seides** (0:05)
Hello, I'm Ted Seides, and this is Capital Allocators. This show is an open exploration of the people and process behind capital allocation. Through conversations with leaders in the money game, we learn how these holders of the keys to the kingdom allocate their time and their capital.

**Ted Seides** (0:25)
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**SPEAKER_4** (0:32)
All opinions expressed by Ted and podcast guests are solely their own opinions and do not reflect the opinion of Capital Allocators or their firms. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Capital Allocators or podcast guests may maintain positions and securities discussed on this podcast.

**Ted Seides** (0:51)
My guest on today's sponsored insight is Ron Kantowitz, head of private debt for Invesco's Global Senior Loan Platform, where he leads a team that manages $50 billion focused on middle market senior secured direct lending. Our conversation traces Ron's path to lending and three decades of experience alongside the evolution of the lending markets. We discussed this direct lending strategy, investment process, and perspectives on competition, the role of banks, and opportunities ahead for private credit investors. Before we get going, every now and then, a fan of the show asks me to share more of my investment views. I get it. I've been around the block a few times, and often have something interesting on my mind. But I prefer not to insert myself in the podcast every week. There's a difference between an interview and a conversation that often gets blurred on many podcasts. Capital Allocators is an interview show. So instead of talking so much, you can barely stand to hear my voice, I occasionally take a turn on the other side of the mic and share it that way. I also record my blogs on the podcast, aptly named What Ted's Thinking. I'm doing more of that with shorter pieces this year. Lastly, I've come up with a new way to share more with our premium members. We've added a musings section to our weekly emails, where I'll share brief investment ideas with a high signal to noise ratio. As examples, I've written about what's really going on with endowment secondary sales and how institutions may use interval funds in the future. If you're interested in keeping up with my thoughts from the many conversations I have with investment leaders, sign up for our premium content at capitalallocators.com/premium.
It costs far less than a cup of coffee a day, and I'm highly confident in a Michael Milken, highly confident letter kind of way that you'll return a large multiple of your investment. Thanks so much for encouraging me to share more of my investment thoughts and for supporting the show through our premium membership. Please enjoy my conversation with Ron Kantowitz.

**Ted Seides** (3:02)
Ron, thanks so much for joining me.

**Ron Kantowitz** (3:04)
Thanks for having me. I appreciate it.

**Ted Seides** (3:05)
Why don't you take me back to your very first job?

**Ron Kantowitz** (3:08)
When I graduated college, I went to work as a systems engineer for a company called Electronic Data Systems. EDS was Ross Perot's company. It was a technology company that provided IT facilities management and business process outsourcing to companies across a wide variety of industry sectors. The model was one where you co-located with your clients. When I got out of the systems engineer training program, I was positioned at a regional bank on the East Coast. By the end of three years, what I'd figured out is I was much more interested in the finance side than I was the technology side, and so I decided to try to make a change. But without the benefit of traditional finance training prior to that, it was very difficult to move into investment banking, so I decided to go back and get an MBA.
At the time, the two best schools, if you wanted to focus on finance, were Wharton and the University of Chicago. I was fortunate enough to have the opportunity between the two, and I decided to go to the University of Chicago. I absolutely loved it there. You got to study with legends in finance, guys like Merton Miller and Eugene Fommer, these were the guys who actually wrote corporate finance theory. I had a great two years there, and then when I graduated, I got a job at Chase Manhattan Bank in the leverage finance business, so I made the transition. But while I was in the training program, Chase sort of went through a little bit of a restructuring, and they combined three groups. They combined the leverage finance group, which was the traditional acquisition finance business that we all think of when we think of banks, with their mezzanine finance group and their equity investment group. And we rebranded it Chase Merchant Banking. For me, for somebody learning their skill, it was a really unique opportunity, because not only were you tasked with evaluating companies, taking them apart, figuring out if they were investible, but at the same time, you were looking at them across different types of assets where you could invest. So you had to think about relative value, risk-adjusted return, really think about these businesses, not just from a credit perspective, but from an investor perspective. It was a wonderful education process, and it's informed my investment process and methodology for the rest of my career.