… Let's Talk Lower Middle Market Direct Lending

… Let's Talk Lower Middle Market Direct Lending

Author: PGIM May 20, 2026 Duration: 26:04

Lower middle market direct lending remains one of the most structurally underserved segments in private credit. As traditional banks have stepped back, specialist lenders are playing an increasingly important role in providing capital to established, sponsor-backed businesses.

In this episode, Keshav Rajagopalan is joined by Tas Hasan, Managing Partner and Chief Operating Officer at Deerpath Capital, PGIM's lower middle market direct lending platform.

Together, they explore the concept of the "missing middle" in private markets, how Deerpath sources and underwrites opportunities at scale, and why discipline, consistency and relationships remain central to success in this segment. Tas also shares perspectives on today's opportunity set, the role of covenants in credit investing, and how lenders are thinking about emerging themes such as AI through the lens of cash flow durability.

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Key Takeaways:

● What Lower Middle Market Direct Lending Is and Why It Matters – [03:00]

● The "Missing Middle" Opportunity in Private Credit – [04:00]

● Why Structural Inefficiencies Continue to Support the Opportunity Set – [07:00]

● Understanding AI Risk Through Cash Flow Durability – [10:00]

● The Importance of Covenants as a Tool for Active Risk Management – [17:00]

● How Sponsors Influence Outcomes in Lower Middle Market Lending – [21:00]

*The views expressed are those of the speakers at the time of recording and may not reflect their current opinions. This content is not investment advice.*

Learn More:

• @PGIM on X: https://twitter.com/pgim

• @PGIM on Instagram: https://www.instagram.com/pgim/

• PGIM on LinkedIn: https://www.linkedin.com/company/pgim

Shareables:

"Lower middle market lending is not a niche — it's a large part of the market that has simply been under-served." — Tas Hasan

"As a lender, our job isn't to predict the future — it's to protect against what can go wrong." — Tas Hasan

"In direct lending, covenants are not about control, they're about early engagement." — Tas Hasan

"Lower middle market lending is not a niche — it's a large part of the market that has simply been under-served." — Tas Hasan


PGIM's Speaking of Alternatives offers a clear-eyed conversation about a part of the financial world that often feels shrouded in complexity. This isn't about dry lectures or sales pitches; instead, each episode sits down with seasoned practitioners and thinkers who operate in the trenches of private equity, real assets, hedge funds, and other non-traditional avenues. The dialogue focuses on the practical realities and long-term shifts within these markets, moving far beyond the fleeting news cycle. You'll hear how allocators are actually navigating current economic crosswinds, which structural trends are creating genuine opportunity, and how the very definition of "alternative" continues to evolve. The perspective is intentionally global, acknowledging that compelling strategies and risks can emerge anywhere. By demystifying the jargon and focusing on tangible insights, this podcast serves as a valuable resource for anyone looking to understand the forces shaping portfolio construction today. It’s a monthly dose of nuanced analysis for investors, advisors, and the intellectually curious who recognize that the conventional playbook is rarely sufficient. Tune in for straightforward discussions that respect the sophistication of the topic without losing the listener in unnecessary abstraction.
Author: Language: English Episodes: 26

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