The chief financial officer of JPMorgan Chase & Co.’s asset management will soon become head of private credit, a position created to help its alternatives division drive a major expansion in a popular area for investment.
Meg McClellan, CFO of J.P. Morgan Asset Management since 2016, will begin her new role in January. She will build out the unit’s $10 billion private credit business to help meet strong investor demand for such assets, said Anton Pil, head of global alternatives at J.P. Morgan Asset Management, in an interview.
JPMorgan created the new role to stitch together the various strategies within private credit, an area that has grown rapidly over the past decade to about $1 trillion of assets, according to Pil. Investors had begun asking to speak with a head of private credit at JPMorgan for help in building their allocation strategies, he explained, and in some cases, they are now treating the asset class as its own category within their portfolios.
For now, JPMorgan is taking a “barbell” approach to private credit, focusing on high-quality real assets on one end of the return spectrum and distressed investing at the other, according to Pil. He said he is mainly steering away from direct lending in corporate credit because it’s a crowded area that often lacks sufficient yield relative to larger, more liquid loans.
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As the U.S. continues to extend its longest ever economic expansion, Pil said he’s sharply focused on the quality of collateral in private credit. He is seeking to lend against “concrete assets” in transportation or real estate that his group would be glad to own should things go wrong.
Pil, who oversees a total $146 billion at JPMorgan, is comfortable owning assets as his group invests in a range of strategies, including real estate, private equity, hedge funds, and infrastructure. For example, when his division is outbid as a potential buyer of a high-quality building, he said it looks to step in as a lender to the asset instead.
On the riskier end of private credit spectrum, distressed investing may produce much higher returns in the mid-teens, according to Pil. He said that JPMorgan’s asset management unit is now seeing more distressed opportunities in Europe, and the firm is prepared to profit from a downturn.
JPMorgan announced in late October that its Lynstone Global Special Situations fund raised $1.06 billion from investors including pensions, insurers, banks, foundations, endowments, and family offices. The new pool will target distressed situations in public and private credit markets in the U.S. and Europe.
As head of private credit, McClellan will oversee J.P. Morgan Asset Management’s global special situations, infrastructure debt, and commercial mortgage loan businesses. She will also lead the development of other areas of private credit.
McClellan’s experience working in fixed income makes her the right fit for the role, Pil said, explaining that she has worked on both the sell-side and the buy-side of the business.
McClellan has been at JPMorgan for more than a decade, starting as a fixed-income trader in 2007, according to her LinkedIn bio. She moved into the bank’s asset management unit in 2010, filling senior positions such as global head of fixed income before becoming CFO. A spokesperson for JPMorgan declined to comment on her replacement as CFO.
J.P. Morgan Asset Management will be “fairly aggressive” in expanding its private debt business, according to Pil. He said the firm will consider acquisitions as part of its expansion strategy, and that with McClellan’s help, he expects private credit to be a major driver of growth for the alternative investing group.
