The private credit market is offering a lifeline for businesses and strong returns for investors, according to a new report.
The American Investment Council says that small and middle market businesses are increasingly leveraging private credit for M&A transactions without private equity sponsors and are outpacing the broadly syndicated loan market. For businesses unable to secure traditional bank lending at all or of the size required, private credit is providing another route.
“Private credit is playing a crucial role in supporting businesses and delivering impressive returns for investors, especially in uncertain times,” said Drew Maloney, President & CEO of the American Investment Council. “The industry’s resilience and flexibility are filling market gaps and providing customized financing solutions. Private credit has become indispensable for businesses seeking financing and is increasingly becoming their preferred option.”
The AIC report, using Pitchbook data, says North American private credit vintages from 2017 and 2018 are showing distributed/paid-in multiples exceeding 0.5x, that is they have already distributed half their total value to investors. In 2022, private credit funds had an internal rate of return of 7.59% compared to a return of -3.24% for the Morningstar US high yield index.
The AIC’s research suggests that growth will continue with investors committing almost $1.3 trillion over the past decade including almost $138 billion in 2023 alone. Funds have almost $341 billion of dry powder available to lend currently.
But as popular as private market investments are, particularly in the institutional space, nobody should expect them to become a staple fixture in people’s retirement plans anytime soon, according to new research from Cerulli.
Futures indicate stocks will build on Tuesday's rally.
Cost of living still tops concerns about negative impacts on personal finances
Financial advisors remain vital allies even as DIY investing grows
A trade deal would mean significant cut in tariffs but 'it wont be zero'.
Inflation, economic risk is greater than previously thought.
RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.
As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.