Reverence Capital’s $500–600M Structured Credit Fund: Targeting Asset-Based Returns

In early 2020, Reverence Capital announced its expansion into structured credit via a new credit fund, with former Goldman Sachs trader Jeff Verschleiser set to run it. The firm targeted raising $500–600 million, appealing to institutional investors seeking exposure to the non-equity side of financial services credit. [1] The fund distinguishes itself in focusing on asset-based lending and purchasing claimable or real-estate secured assets rather than acting as a full direct lender to middle-market equity transactions. [1]

This move complements Reverence’s established Private Equity Funds I and II, which raised $500 million (plus co-investments expanding it to $2.5 billion) and $1.2 billion hard cap respectively. Notably, Fund I delivered roughly a 45% IRR through mid-2019-2020, largely total returns via equity exits and co-investment profits. Fund II, at its final close in early 2020, had already invested about 40% of its capital. [1]

Strategically, the credit fund adds diversification into the capital stack for Reverence: credit originations can fill deal flow gaps where equity investment is less feasible, offer downside protection, and allow capitalizing on distressed or dislocated credit opportunities. Their internal resources—leadership with deep structured finance pedigree (e.g. Peter Aberg, Steven Herrup), credit team specialists, and proprietary sourcing—should enable effective underwriting.

However, there are open risks and questions. Fundraising in 2020 occurred just before market volatility caused by the COVID-19 crisis—timing could impact deployment and asset pricing. Credit risk is significant: workout of purchased or real‐estate debt, asset valuation, and liquidity could strain returns under stress. Also, while the strategy rejects equity upside in credits, it must be balanced by strong yield, structuring, and covenant protections to generate competitive IRRs versus private equity or distressed debt peers.

For LPs, the move reflects an opportunity to access credit-oriented returns tied to financial services, which Reverence knows well, with strong alignment via leadership capital commitments and rigorous sourcing. For the firm, success in credit could broaden fundraising base, enable more resilient cash flow, and allow flexible deployment in downturns where equity deal activity slows.