Our Investment in LendOS: The Next Generation of Private Credit Infrastructure

Illuminate is excited to announce our investment in LendOS’s Series A round alongside Blackstone. Here we outline the reasons we believe LendOS is best-positioned to become the infrastructure layer for private credit and why now is the time to back LendOS.

What is happening in Private Credit?

Private credit has continued its explosive growth since we first published our views on the space earlier this year. Private credit volumes are now estimated to have surpassed $2.5T driven by regulatory shifts that have constrained traditional bank lending. To date, growth within private credit has been primarily driven by direct lending, though we are beginning to see some green shoots in the larger category of asset-backed financing.

Demand for private credit is accelerating on all sides: banks want to offload balance sheet risk and prioritize ROE-accretive activities, investors want higher interest rates and increased stability in volatile markets, and borrowers want broader, more streamlined access to credit.

The rapid growth of private credit is putting strain on existing infrastructure. Thus far, there is no infrastructure purpose-built for private credit, so most private credit players have retrofitted solutions from other asset classes (e.g. syndicated loan market, private equity), many of which are point solutions. Adopting point solutions may appear cheaper upfront, but often increases risk of data silos, limited scalability, and vendor management issues. Stitching together disparate tools leaves data distributed across multiple applications, so there is no single source of truth for private credit data within these institutions.
‍This leaves a massive opportunity in the market to define and lead a new category — private credit infrastructure.

Why does Private Credit need an infrastructure layer?

The private credit lifecycle remains fragmented and reliant on manual processes. While we have seen some adoption and retrofitting of existing credit and private markets solutions, none of these solutions offer the ability to consolidate private credit workflows onto a single, integrated platform. We believe a unified platform that can serve as a single source of truth throughout the loan lifecycle and alleviate the majority of issues stemming from manual processing and siloed data.

What is the LendOS solution?

LendOS has built an infrastructure for commercial lending suitable for agency, servicing and settlement. The platform stands in sharp contrast to the array of “competing” point solutions — LendOS has automated trade events and settlements into a single application, with role-specific interfaces for the lender and agent. LendOS books transfers, distributes positions across funds, , and automates document generation, including calculations and signing. Post-close, loans can be managed in LendOS’s servicing platform.

Our Thesis: Private credit infrastructure represents a massive untapped opportunity. Illuminate’s investment in LendOS is a bet on continued momentum within private credit.

We have followed John’s journey since his time at IHS Markit and have been continuously impressed with his innovative thinking and vision to overhaul and reinvent traditional lending models. We believe the combination of John’s vision and expertise at IHS Markit alongside Josh’s experience building lending infrastructure for Tier-1 institutions makes them the team to back within credit infrastructure.

We believe LendOS is the only player currently capable of solving secondary transfers in private credit. Today, LendOS can allocate, transfer, and settle loans, meaningfully reducing settlement times, which can be significantly higher than those seen in the broadly syndicated market. Streamlining settlements and creating a single source of truth will reduce the cost to maintain positions and drive significant operational cost savings.

Looking ahead, we believe LendOS is uniquely positioned to become the end-to-end private credit platform spanning transfer, settlement and servicing of loans. LendOS has fully developed both transfer and servicing functionality for lenders and agents, as well as a separate portal for document execution. Building a full-stack solution will enable LendOS to become the single-source of truth for lenders and the primary interface between lenders and agents.

We are excited to support LendOS as they partner with Blackstone to build the first end-to-end platform for private credit — providing lenders, agents, and ultimately borrowers efficiency and transparency throughout the private credit loan cycle.