A consistent trend in recent years has been for PE sponsors to expand into offering private credit funds to investors. At least part of the impetus for the growth into private credit has been the opportunities presented by the significant similarities between PE and private credit. Before deciding to launch a private credit strategy, however, a PE sponsor must understand and consider the material differences that also exist between the asset classes and be prepared for critical issues that could arise along the way. This first article in a two-part series presents various factors for a PE sponsor to consider before introducing a private credit strategy, including how the strategy will affect the sponsor’s existing PE funds, what additional personnel will be required and whether the fund should have an open- or closed-end structure. The second article will highlight key tax risks for tax-sensitive and non-U.S. investors in private credit funds, along with the pros and cons of certain common fund structures (e.g., “season and sell” and leveraged blockers) used to mitigate them. See our two-part series on direct lending funds: “Structural Approaches to Address Liquidity Considerations and Ensure Regulatory Compliance” (Dec. 3, 2019); and “Five Structures to Mitigate Tax Burdens for Various Investor Types” (Dec. 10, 2019).