Private credit (also called private debt) refers to lending by non-bank institutions — such as private debt funds, BDCs, and direct lending platforms — to companies, real estate projects, or other borrowers. Unlike public bonds or bank loans, private credit transactions are negotiated directly between the lender and borrower, are typically illiquid, and are held to maturity. The global private credit market exceeded $1.7 trillion in AUM as of 2024 (Preqin), making it one of the fastest-growing segments of alternative investments.
Private Credit Strategies
Direct lending: Senior secured loans to middle-market companies. Mezzanine: Subordinated debt with equity-like upside (warrants or conversion features). Distressed debt: Purchasing debt of financially troubled companies at a discount. Specialty finance: Asset-backed lending, real estate debt, venture lending, and other niche strategies.
Private Credit Fund Operations
Private credit funds require specialized operational capabilities: loan origination workflows, interest calculation engines, covenant compliance monitoring, borrower reporting, payment processing, and portfolio surveillance. Unlike equity-focused PE funds, debt funds must track amortization schedules, interest rate adjustments, covenant headroom, and credit risk metrics across every position in the portfolio.