Insights from Kingsbury & Partners' LP Benchmarking Study

In Q2 2025, we commissioned a targeted research exercise to benchmark appetite for a credit opportunity we are actively raising capital for: a US student loan recovery strategy backed by seasoned operators and structured through our Luxembourg platform.

The strategy focuses on purchasing defaulted and severely delinquent private student loans at deep discounts—averaging 8.5 cents on the dollar. Due to the non-dischargeable nature of these loans, even in bankruptcy, the underlying credit risk is uniquely resilient. The manager restructures the loans with borrowers, and once eight months of repayments are achieved, the fund typically breaks even. The loans are then classified as performing and packaged for resale. The strategy pays a 13% annual coupon and is currently deploying $1–2 million per month. It opened formally in March 2025 and has already secured $7 million toward its $15 million raise.

We engaged a third-party adviser to benchmark institutional appetite for this niche yield strategy across a universe of 363 private credit allocators. The results show strong alignment—particularly among North American LPs and those seeking direct, high-yield, short-duration credit with defined cash flows.

What is Benchmarking and Why Does It Matter?

Benchmarking in capital raising refers to the process of evaluating investor appetite, positioning, and competitiveness of an investment strategy by comparing it against current market expectations, peer strategies, and allocation mandates across a defined investor universe.

At Kingsbury & Partners, benchmarking is a vital part of our go-to-market strategy. It provides data-driven insights into:

  • Who the relevant investors are (e.g. pension funds, insurers, family offices)
  • What return profiles, durations, and risk-adjusted metrics they target
  • Where our strategy fits within prevailing portfolio themes such as direct lending, distressed debt, or special situations
  • How to refine messaging, deal structuring, and timelines to align with real allocator behaviour

By using a third-party adviser to survey 363 allocators in our target segment, we avoid assumptions and build the capital formation plan on objective market data. It ensures that what we are offering isn’t just a well-structured product—it’s one investors actually want to buy.

Strategy Overview

The strategy focuses on purchasing defaulted and severely delinquent private student loans at deep discounts—averaging 8.5 cents on the dollar. Due to the non-dischargeable nature of these loans, even in bankruptcy, the underlying credit risk is uniquely resilient. The manager restructures the loans with borrowers, and once eight months of repayments are achieved, the fund typically breaks even. The loans are then classified as performing and packaged for resale. The strategy pays a 13% annual coupon and is currently deploying $1–2 million per month. It opened formally in March 2025 and has already secured $7 million toward its $15 million raise.

Investor Landscape: Who Is This Strategy For?

Our research shows this strategy aligns well with:

  • Private and public pension funds, making up 47% of the relevant LP group
  • Foundations (15%) and insurance companies (13.5%)
  • Family offices and mid-sized institutions focused on direct, asset-backed credit

While our firm is headquartered in Dubai, this is unequivocally a US yield opportunity, and the LP base reflects that:

  • 79% of interested allocators are North America-based
  • 14% from Europe
  • 5% from Asia

These LPs are not small players:

  • Median AUM: just under $5 billion
  • Median current debt allocations: $126 million
  • Median target allocations to credit: $377 million

The strategy's 13% coupon sits at the upper end of the return thresholds across the group. While most LPs report target minimums of 8% and maximums around 12%, this opportunity clearly stands out as a potential return enhancer.

Sector & Strategy Positioning

Student loans may not yet appear as a stand-alone category in most LP portfolios, but there is thematic overlap:

  • Education & training appear in ~4% of debt-focused LP mandates
  • Broader interest in healthtech, edtech, and socially relevant credit points to emerging awareness
  • Strategically, the opportunity aligns well with distressed, special situations, and direct lending, the three most cited areas of interest across the dataset

With a short time-to-breakeven and a clear resale path, this strategy also benefits from a strong cash flow profile and low correlation to mainstream fixed income.

Capital Formation Outlook

The capital required to complete the raise—$8 million—sits well below the typical LP ticket size.

  • Median ticket size per fund: $15–35 million
  • Median new private credit deployment expectations (12 months): $50–100 million

This makes our opportunity ideal as a test allocation, satellite yield enhancer, or impact-driven tactical deployment for allocators with liquidity.

Conclusion: A Strategy for This Market

As allocators continue to diversify away from crowded core credit strategies, Kingsbury & Partners is proud to bring this undervalued and overlooked niche to the institutional market. The structure delivers clarity:

  • Defined deployment timelines
  • A seasoned underlying operator
  • High income generation
  • Low structural default risk
  • Socially relevant, real-economy exposure

We’re selectively engaging with institutional investors, family offices, and wealth platforms interested in differentiated credit. With the final $8 million tranche now open, the opportunity is both timely and scalable for allocators seeking non-bank yield, short-duration, and visibility on exit.