By Lindsey Stelter, Director, Funds
Last week in Berlin, I had the opportunity to attend SuperReturn International, one of the largest gatherings of LPs and GPs globally, with over 6,000 participants. The credit-focused panel hosted by PitchBook offered rich perspectives on the current state of the market. Here are some standout takeaways:
1. Liquidity is flowing, but selectively
Private credit markets remain awash with liquidity. In 2024 alone, the market saw 120 days of open fundraising windows, second only to the record-breaking year of 2021. Middle-market collateralised loan obligation (CLO) issuance in the U.S. hit an all-time high at $39 billion. Over the past five years, more than $125 billion has been raised for these structures, signalling a strong rebound from the COVID-era slowdown. Evergreen fund structures are gaining traction, offering managers and LPs a more adaptable route for long-term capital deployment.
2. Fundraising headwinds for smaller players
Despite the buoyant headlines, not all managers are feeling the lift. A staggering 84% of private debt capital in 2024 came from funds over $5 billion in size. LPs are prioritising track record, continuity and relationships, particularly those tested through prior downturns. For emerging managers and smaller shops, the fundraising environment remains highly competitive.
3. A clear shift toward larger deals
There’s a noticeable pivot toward scale. Managers are increasingly targeting $1 billion-plus transactions, with several recent deals topping $2 billion. Large sponsors are leaning into private credit to finance sizeable buyouts, drawn by the certainty and speed that private markets can offer over syndicated debt.
4. Direct lending’s steady grip on the market
Direct lenders continue to anchor the buyout landscape. In 2023, they financed 33% of all leveraged buyouts (LBOs) over $1 billion, and that momentum has carried into 2024. Appetite for broadly syndicated loans (BSLs) is resurging, especially for lower-rated credits, but nearly half of all large buyouts still rely on direct lending. The slower pace of M&A post-2021 remains a challenge, but direct lending’s resilience has been a stabilising force amid macro uncertainty.
Final thought:
The private credit ecosystem is evolving – fast. While established players scale up and flex their fundraising muscles, smaller managers face a tougher climb. Innovation, resilience and relationship capital will be the key differentiators in a market where capital is plentiful, but confidence must still be earned.
