Citi and LuminArx Team to Issue Private Credit

Citi and LuminArx have introduced a financing tool for the private lending market.

Cinergy, launched Thursday (Jan. 18) by the banking giant and the investment manager, will offer a wide range of private credit solutions to companies, including Citi’s client base, the companies said in a news release.

“The private lending market is experiencing transformative growth, and we are pleased that Cinergy will enhance our ability to meet the capital needs of our clients,” said Mitali Sohoni, head of asset-backed financing at Citi. “Powered by LuminArx’s execution capabilities and the significant industry experience of its team, I believe Cinergy represents a truly differentiated offering.”

According to the release, Cinergy will invest across multiple asset classes, among them asset-backed credit (commercial, consumer and residential) and corporate debt across the capital structure.

LuminArx and its global institutional partners intend to commit more than $2 billion of capital to support the program, with Citi’s Spread Products franchise providing leverage solutions to expand Cinergy’s investment capacity, per the release.

“The launch of Cinergy reflects our commitment to introducing innovative investment solutions and our focus on providing creative and bespoke financing opportunities to our partners,” said Gideon Berger, LuminArx’s co-founder and CEO.

“We are increasingly hearing from investors looking to capitalize on the growth of private credit in new and differentiated ways, and Cinergy provides a vehicle for achieving this that will be unique in the market,” Berger added.

As PYMNTS wrote earlier this week, private credit, or private debt, has become a way for businesses, particularly smaller Main Street businesses, to get the capital they need, while giving lenders an opportunity to access a market worth trillions of dollars.

“As has been noted through the past year, and as has been a trend, traditional lending channels — read: banks — have become more stringent in their underwriting and lending activities,” the report said.

“The Federal Reserve estimated last month that small business lending waned in the third quarter (the latest period for which stats are available) as ‘new lending’ slipped 18.1% from the same period in 2022 and 16.4% from the previous quarter,” PYMNTS added.

To take advantage of this trend, Goldman Sachs is reportedly aiming to double the size of its $110 billion private credit business, with other Wall Street banks showing interest in trading the loans themselves via secondary markets.