The Pacing of Cash Flows: A Deliberate Approach to Private Credit
In private credit, success isn’t just about finding great opportunities—it’s about having the liquidity and discipline to execute when they arise. At Garrington, we’ve built our investment philosophy around a fundamental principle, and here we discuss the fourth pillar of our investment philosophy series: the pacing of cash flows.
Garrington Investment Philosophy – Garrington Four Pillars of Strength
Private lending to SME businesses in North America, primarily in loan sizes under USD $30 million can provide excellent risk adjusted returns relative to other asset classes WHEN MANAGED APPROPRIATELY.
This balance between origination, disciplined deployment, and prudent liquidity management allows us to consistently deliver on our stated purpose: 8-12% returns with minimal drawdowns:
Origination & Execution: The Foundation of Trust
Private credit is a relationship-driven business, and reputation is built on execution, not just opportunity. Over the years, we have cultivated a robust pipeline of deals across North America, supported by a network of trusted referral sources. But origination alone isn’t enough—what sets us apart is our ability to follow through and close.
When a deal fits our criteria, our partners need to know we have the capital, credit facilities, and operational readiness to execute. Our commitment to closing what we propose ensures confidence at every stage of the transaction. This reliability strengthens our relationships, reinforcing a cycle where strong origination meets seamless execution—creating value for both our investors and our borrowers.
Liquidity Without Over-Leverage: The Key to Consistency
Many private credit funds rely on excessive leverage to enhance returns, exposing themselves to liquidity risks. We take a measured approach, maintaining a healthy mix of availability within our credit facilities so we can deploy capital strategically rather than reactively.
This balance allows us to:
Be opportunistic and act swiftly when strong opportunities emerge.
Be patient—not allow ourselves to be forced into transactions due to capital pressures.
Be disciplined—ensuring every investment aligns with our risk-adjusted return expectations.
Our success isn’t just about finding great opportunities—it’s about avoiding bad ones. That’s why cash pacing is central to our investment strategy.
Rather than forcing capital into loans that don’t meet our standards, we are comfortable returning capital to investors when the right opportunities aren’t available. This discipline is why we have never had a down year and continue to deliver stable, risk-adjusted returns in the 8-12% range.
Private credit isn’t about rapid deployment—it’s about steady, compounding success over time.
Why Pacing Matters: Flexibility for Investors and Borrowers
The ability to manage liquidity well is a competitive advantage—not just for us, but for our investors.
- For our borrowers, it means they can trust we have the capital ready to fund deals when needed.
- For our investors, it means they benefit from a strategy that prioritizes the preservation of capital and steady cash flow over aggressive, high-risk lending.
By maintaining a revolving pool of capital and carefully pacing our deployments, we give ourselves and our investors the luxury of choice—a large advantage in the private credit space.
Conclusion: A Strategy Built for Long-Term Success
Private credit investing is as much about what you don’t do as what you do. At Garrington, we have built a philosophy that prioritizes:
- Reliable execution—closing deals when we commit.
- Disciplined capital management—ensuring we never overextend.
- Investors and capital preservation first—returning capital when conditions don’t justify deployment.
This approach allows us to maintain consistent returns, robust deal flow, and the trust of both investors and borrowers.
Ultimately, we win by not losing—and that’s why our investors continue to choose us.
April Fund Commentary