Private credit — also called “private lending” or “direct lending” or “private debt” — refers to a type of financing where investors lend money directly to businesses, without going through a traditional bank or public market.

Unlike bank loans, which are funded using customer deposits, private credit is funded by private investors, such as asset managers, institutional funds, or high-net-worth individuals. These loans are not listed or traded on public exchanges — they are private agreements between the lender and the borrower.

Because of this direct, non-public nature, the terms of private credit deals can often be more flexible. Lenders and companies can negotiate terms that suit both parties, including customised repayment schedules, interest rates, and collateral requirements. This makes private credit a valuable option for businesses that need capital but may not meet the strict criteria of banks, or that prefer alternative funding to issuing equity.

For investors, private credit offers an alternative asset class that may provide higher yields than traditional fixed-income investments, though it typically involves longer holding periods and less liquidity. As a result, private credit is playing a growing role in portfolios that seek diversification, income, and exposure to real-economy lending opportunities.

On Altify, we list private credit investments that target a 9% to 14% annual yield, after all fees, with interest distributions made quarterly to provide investors with recurring income.

The minimum investment amount we target for all private credit offerings is the equivalent of 100 USDC (≈$100).

Yes — we’re regulated through local subsidiaries in every region where we operate. Altify holds the following licenses, authorisations, registrations and approvals:

‍Europe
‍Altify EU DAS Sp z o.o. (KRS number: 0001030633) is authorised by the Ministry of Finance and the Tax Administration Chamber of Poland in Katowice to operate as a Virtual Asset Service Provider (VASP), with virtual currency registration number RDWW-724.

‍South Africa
‍Altify has two regulated subsidiaries in South Africa, including:Altify SA Capital (Pty) Ltd (Registration number: 2022/869848/07).

• A registered and authorised Financial Services Provider (FSP) and Crypto Asset Service Provider (CASP) with the Financial Sector Conduct Authority (FSCA). (FSP number: 52727)
• Registered as an Accountable Institution with the Financial Intelligence Centre (FIC), under Organisation ID: 60056.
• Certified as a registered Third Party Payment Processor (TPPP) with the Payment Association of South Africa.

Altify SA DAS (Pty) Ltd (Registration number: 2018/352788/07).

• A registered and authorised FSP and CASP with the FSCA. FSP number: 53289.
• Registered as an Accountable Institution with the Financial Intelligence Centre, under Organisation ID: 54051.

Private credit investments provide many benefits, some include:

1. Higher Potential Returns: Private credit investments often provide higher yields compared to traditional fixed-income investments like bonds or money market funds. This is due to the higher risk associated with private credit and the illiquidity premium investors receive.
2. Diversification: Private credit investments can diversify a portfolio beyond traditional stocks and bonds. They offer exposure to different sectors and types of borrowers, reducing overall portfolio risk.
3. Income Generation: Many private credit investments generate regular income through interest payments. These payments can be structured to provide a steady cash flow, making them attractive for income-focused investors.
4. Less Market Volatility: Private credit investments are less sensitive to market fluctuations compared to stocks, as their returns are primarily driven by contractual interest payments and borrower performance rather than market sentiment.
5. Potential for Capital Preservation: Some private credit investments, particularly those secured by collateral or with strong borrower credit profiles, offer a measure of capital preservation relative to higher-risk assets like equities.
6. Access to Niche Markets: Private credit allows investors to access niche markets and sectors that may not be easily accessible through public markets. This can provide opportunities to capitalise on specialised knowledge or market inefficiencies.

Private credit investments are subject to several risks, some include:

1. Credit Risk: The investment involves loans that are subject to the risk of loss if a creditor fails to repay. Lending to third parties always carries inherent uncertainties. The value of these loans is also subject to fluctuations based on broader credit market pricing.
2. Liquidity Risk: There is a risk that loans may decrease in value due to the absence of willing buyers, regardless of the underlying credit quality.
3. Redemption Risk: Should there be a high volume of simultaneous redemption requests, some investors may need to defer their withdrawals to subsequent quarters. Additionally, our private credit partners reserve the right to suspend withdrawals if necessary.
4. Interest Rate Risk: Private credit usually holds floating rate loans, which adjust in response to changes in interest rates, unlike fixed-rate bonds. This approach aims to protect against interest rate volatility.
5. Currency Risk: Fluctuations in exchange rates can significantly impact the returns, as the value of the foreign investment may decrease when converted back to US dollars. This risk is inherent in cross-border financial activities and is not covered by protective measures, potentially affecting the overall investment performance.
6. Concentration Risk: Investing a large portion of funds in a single economic sector or geographic region can lead to higher volatility and greater risk of loss if that sector or region faces economic downturns.
7. Regulatory Risk: Changes in regulations can affect the viability and profitability of investments in private credit. For example, new financial or tax regulations could alter the landscape dramatically, impacting returns and operational conditions.
8. Operational Risk: This includes risks associated with inadequate or failed internal processes, people, and systems, or from external events. This can range from simple administrative errors to major disruptions caused by system failures or other operational issues.
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9. Credit Spread Risk: This risk arises from an increase in the credit spread of the issuer, independent of the general movement of interest rates. An increase in perceived risk of the issuer can widen the credit spread, impacting returns.
10. Reinvestment Risk: For private credit instruments generating regular income, there is the risk that the returns from these investments cannot be reinvested at an equally profitable rate due to fluctuating interest rates or changes in market conditions.
11. Counterparty Risk: This is the risk that the counterparty to a transaction (such as a derivative or hedging contract) may default on its obligations, impacting the returns of the investment.

These risks highlight the critical need for investors to carry out comprehensive due diligence, invest only within their financial capacity, choose reputable and trustworthy private credit partners, and continually monitor their investment landscape.

Altify mitigates the risks associated with its private credit investment opportunities by partnering with established, market-leading private credit specialists.

‍Key Risk Mitigation Strategies

• Senior Secured Credit Focus: Our partners prioritise senior secured credit, which provides the highest priority claim on borrower assets in the event of financial distress. This strategy significantly reduces risk compared to subordinate debt or equity, which are repaid only after senior obligations are met.
• Rigorous Due Diligence and Expertise: Altify's partners conduct in-depth due diligence, leveraging their specialised expertise in specific sectors. While robust credit agreements and financial covenants are essential for enforcing financial health, we acknowledge that lending inherently involves risk.