Key Themes in Private Credit

2025 and Beyond

The robust growth of private credit has created massive opportunities for asset managers positioned to acquire and manage investments in this sector. Large private asset managers are increasingly joined by traditional, public asset focused firms seeking to diversify and gain exposure to private assets.

Private credit is an interesting asset class for several reasons. After the 2008 global financial crisis, large banks pulled back from the sector, resulting in a significant funding gap.

According to Prequin market research, this created a generational opportunity for private capital, fueling tremendous growth, with current AUM of USD 1.8 trillion and analysts projecting that to double in the next four years.

In this article, I’ll discuss key industry trends and headwinds shaping this dynamic asset class. In the next few weeks, we’ll spotlight private credit use cases showing how clients are utilizing technology to manage private credit portfolios with greater visibility and reduced operational risk.

Private credit is facing an inflection point.  Rapid growth has fueled a tremendous amount of M&A activity, most recently Black Rock’s acquisition of HPS. Other platforms are being acquired and integrated for larger asset owners growing their capabilities and expertise in the sector.

Robust growth over the past 15 years gave rise to the view that it was hard to do poorly investing in private credit.

Robust growth over the past 15 years gave rise to the view that it was hard to do poorly investing in private credit. That view is being tempered by the reality that managers increasingly have to be smart to win, picking the right investments, managing their portfolios more efficiently, and cultivating the organizational agility to stay ahead of growing competition from both large alternative and traditional public investors.

Daily headlines underscore that geopolitical uncertainty and climate risk is on the rise, forcing investors across the world to analyze the impact on their investments and associated cashflows and insurance costs.  Private credit investors and regulators are demanding greater portfolio transparency, with timelier, more complete views of their exposures and a better understanding of where their managers are investing.

The market opportunity is clear, with another trillion dollars of private credit inflows expected over the next few years.

The market opportunity is clear, with another trillion dollars of private credit inflows expected over the next few years. But the market environment is shifting, and firms must position accordingly to fully capture future investment opportunities. The questions they’re asking themselves include:

• How can they grow AUM while managing increasingly complex and potentially higher risk portfolios, and how do they support multi-jurisdictional regulatory reporting requirements?
• Where can they find the talent required to service and manage these investments, and how can they partner with trusted providers to bridge the talent gap?
• How can they modernize their operating model, specifically the people, processes and technologies that support their ability to raise, deploy and manage capital in this sector?

Key to addressing these questions are technology platforms and partnerships with trusted, experienced service providers.

In next week’s blog, we’ll dive into the first of three industry use cases, discussing how Charles River technology and services help clients streamline pipeline and deal management.