Investor types

Private credit funds and non-bank lenders

Private credit funds and other non-bank lenders originate or hold loans to companies and assets, funded with committed investor capital rather than bank deposits. The Alternative Credit Council puts the global market at US$4.1tn of assets under management at the end of 2025.

What private credit funds are

Private credit funds lend directly to companies and to asset owners, or buy and hold such loans. Loan terms are negotiated bilaterally or within a small club of lenders, the lender monitors the borrower through its own covenants and the loans are not traded on an exchange.

They differ from banks because they fund their lending with capital committed by investors for a fixed period rather than with deposits, usually hold loans to maturity and are outside the bank capital framework. They differ from structured credit investors because they hold loans directly, whereas structured credit investors buy tranches of pooled loans. Many hedge funds now also run credit and private market strategies.

Scale of private credit

Global private credit assets under management reached US$4.1tn at the end of 2025, increasing by 17% for the second year in a row, according to the Alternative Credit Council (ACC) and the Alternative Investment Management Association (AIMA) in Financing the Economy 2026, published with Houlihan Lokey (22 October 2026). The survey behind that edition covered 41 private credit managers reporting approximately US$2.4tn of private credit capital.¹ The previous edition, based on 49 managers with US$2.1tn of assets, put the market at US$3.5tn (ACC and AIMA, 9 December 2025).²

Europe accounted for close to 30% of global private credit assets under management in that previous edition.² Capital deployed in 2024 was US$592.8bn, up 78% on 2023.²

Other measures are smaller because they count different things. According to S&P Global (13 November 2025), Preqin estimated private credit assets at US$2.28tn for 2025 and forecasts US$4.504tn by 2030.³ The Financial Stability Board sizes global private credit at US$1.5tn to US$2tn at the end of 2024 on regulatory data, as summarised by Kadenwood Capital.⁴ The ACC figure includes asset-backed, real estate and infrastructure debt; Preqin counts closed-end funds; the Financial Stability Board uses regulatory data.

Strategies and sub-types

Private credit has four main strategies:

Direct lending to companies, mostly first-lien senior loans and unitranche loans, which combine senior and junior debt in a single loan at a blended interest rate.
Asset-based finance, secured on receivables, equipment, consumer loan books and other financial assets.
Real estate debt.
Infrastructure debt.

Asset-backed, real estate and infrastructure debt together account for 40% of the market, according to the ACC (21 November 2024).⁵ Alongside these sit two further strategies: junior and mezzanine lending, which may include payment-in-kind interest and warrants; and distressed and special situations lending.

Vehicles include closed-ended limited partnerships, business development companies in the United States (listed or private) and loan-originating alternative investment funds in Europe.

Source of capital and fund structures

Institutional investors hold 76% of private credit assets under management and retail and mass-affluent investors hold 24%, a share the ACC expects to grow (ACC and AIMA, 9 December 2025).² The institutional investors are chiefly pension funds, insurance companies, sovereign funds and endowments; life insurers in particular use private credit to match long-dated liabilities.

80% of private credit assets are held in closed-ended structures.² The remainder includes open-ended and semi-liquid vehicles, and listed business development companies provide permanent capital.

Leverage at fund level

The ACC estimates aggregate fund-level borrowing at US$399bn, roughly 25% of net assets under management (ACC, 22 October 2026).¹ Its previous edition gave US$398bn, about 32% of net assets under management, with levels broadly unchanged over the previous decade.² The two percentages differ because they are measured against different asset bases.

Leverage is not universal: 41% of flagship corporate lending funds surveyed by the ACC operate without investment leverage.¹

How lending decisions are made

A private credit loan passes through a staged credit process:

Screening and term sheet. The lender sets out pricing, leverage, covenants and security.
Due diligence. The lender reviews a quality of earnings report, a commercial assessment of the market, background checks on management and the collateral available.
Credit committee. The loan is approved by the manager's credit committee before documentation and closing.

Borrowers choose private credit over a bank syndication mainly for speed and certainty of execution, flexible terms and confidentiality, accepting a higher interest margin in return. Security usually comprises first-ranking charges over the borrower's assets, bank accounts and shares, supported by financial maintenance covenants.

What lenders look for and why they decline

Lenders look for predictable conversion of profit into cash, enough cash flow to service the debt comfortably, a loan that is small relative to the value of the business and, in sponsored deals, a credible private equity owner. Financings are commonly declined because of customer concentration, aggressive adjustments to reported earnings, falling margins or a borrower's insistence on documentation without maintenance covenants.

Regulation and governance

In the European Union, the revised Alternative Investment Fund Managers Directive, known as AIFMD II, came into effect on 16 April 2026 and harmonises the rules for funds that originate loans. According to Dechert (19 January 2026), a fund is a loan-originating fund where its originated loans represent at least 50% of its net asset value, and such a fund must be closed-ended unless the manager can show that its liquidity management is compatible with an open-ended structure. Leverage is capped at 175% of net asset value for open-ended loan-originating funds and 300% for closed-ended ones. A fund must retain at least 5% of the notional value of any loan it originates and then sells, and loans to a single financial undertaking, alternative investment fund or UCITS are limited to 20% of the fund's capital.⁶

In the United States, private credit managers are generally SEC-registered investment advisers, and business development companies are subject to the Investment Company Act of 1940. Because they do not take deposits, non-bank lenders sit outside the Basel capital rules that apply to banks.

Trends in 2025 and 2026

Growth continued at the same pace: assets under management rose 17% in both 2024 and 2025, to US$4.1tn. Private credit fundraising in the first half of 2026 reached its highest level for five years.¹

Credit stress drew attention in late 2025. The bankruptcies of Tricolor Holdings and First Brands Group sparked discussion about the health of the private credit market, according to S&P Global (November 2025).³ In 2026 the ACC reported that liquidity management tools had allowed managers to handle elevated redemption requests in some semi-liquid vehicles.¹ Many direct lenders have also been expanding from corporate lending into asset-based finance.

Notable private credit managers

Name	Headquarters	Size, with date
Ares Management	Los Angeles	Approximately US$691bn of assets under management across the firm, 30 September 2026⁷
Blue Owl Capital	New York	US$330bn of total assets under management, of which US$162.8bn in credit, 30 September 2026⁸
HPS Investment Partners, part of BlackRock	New York	US$197bn of assets under management across private and liquid credit, 30 June 2026⁹

How advisers work with private credit funds

Debt advisers act for borrowers or for their private equity owners. They build the financial model, prepare the credit information memorandum, run a competitive process across direct lenders, negotiate terms (including intercreditor arrangements where there is more than one lender) and manage the loan through to closing. M&A advisers often run such debt financing processes alongside sale processes. Anglo-Suisse Capital advises on capital raising, M&A and secondary transactions with professional investors.

Frequently asked questions

How large is private credit?

US$4.1tn of assets under management at the end of 2025 on the Alternative Credit Council measure¹, or US$2.28tn for 2025 on Preqin's narrower measure, according to S&P Global.³

How fast is private credit growing?

Assets under management grew 17% in each of 2024 and 2025, according to the Alternative Credit Council.¹

Who invests in private credit funds?

Institutions hold 76% of assets under management and retail and mass-affluent investors hold 24%.²

Is Europe a significant private credit market?

Yes. Europe accounted for close to 30% of global private credit assets under management in the Alternative Credit Council's December 2025 report.²

Do private credit funds use leverage?

Many do. Fund-level borrowing is estimated at US$399bn, roughly 25% of net assets under management, although 41% of flagship corporate lending funds surveyed use no investment leverage.¹

What is a unitranche loan?

A single loan that combines senior and subordinated debt at one blended interest rate, which avoids negotiating between separate lenders and can shorten the time to closing.

What is payment-in-kind interest?

Interest that is added to the loan balance instead of being paid in cash, which preserves the borrower's cash during growth or a turnaround.

How do EU rules limit leverage in loan-originating funds?

Under AIFMD II, leverage is capped at 175% of net asset value for open-ended loan-originating funds and 300% for closed-ended ones.⁶

Working with Anglo-Suisse Capital

Anglo-Suisse Capital advises companies, fund managers and shareholders on capital raising, M&A and secondary transactions with professional investors in the UK, Switzerland and internationally.

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Sources

This page is general information for professional investors and is not investment advice. Figures are taken from the sources listed, as at the dates stated.