(Bloomberg) -- JPMorgan Chase & Co. has held discussions to partner with FS Investments and Octagon Credit Investors to expand its reach in the $1.7 trillion private credit market, according to people with knowledge of the matter.

Talks with FS Investments are more advanced, said the people, asking not to be identified because the conversations are private. A partnership with FS would involve the asset manager’s global credit business, which is separate from the firm’s joint venture with KKR & Co., one of the people said.

Discussions are ongoing and the terms of potential tie-ups may still change, the people added. 

The US bank has held talks with dozens of firms at is seeks to pull together a group of lenders to help fund private credit deals it originates, in an effort to be more competitive against private credit giants such as Ares Management Corp. and Blackstone Inc. 

Representatives for JPMorgan and FS Investments declined to comment. Octagon did not respond to requests for comment. 

The rapid expansion of the private credit market has cut into the profits of banks’ leveraged finance desks and prompted JPMorgan and others to set up direct lending operations of their own.

The bank has been discussing creating what would amount to a syndication group where members would take a slice of each loan, Bloomberg previously reported. It’s also targeted sovereign wealth funds, pensions and endowments.

Read more: JPMorgan Nears $3 Billion for Private Debt in Hunt for Partners

(Updates with more details about the talks throughout.)

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