Private Credit investing is a form of lending capital outside of the traditional banking system, whereby lenders work with borrowers to originate and negotiate privately held loans not traded in public markets. Investor allocation to Private Credit has grown significantly in recent years, with a total market size of approximately $1.8 trillion as of the end of 2024 and forecasted to grow to $2.3 trillion by 2028. <\/p>\n
Historically, corporate borrowers have looked to banks for their lending needs. However, the number of US banks declined by 53% between 2000 and 2023. Most of that consolidation occurred in the years following the Global Financial Crisis (\u201cGFC\u201d) in 2008, as regulations and increasingly conservative lending policies among banks reduced their willingness to lend. As a result of these changes, the market opportunity for Private Credit has evolved over the last several decades as private lenders have stepped in to fill the need for capital. <\/p>\n
As lenders have sought to address the capital deployment needs of investors with different risk and return profiles, a number of Private Credit investing strategies have emerged. Direct Lending, which is discussed in detail in the following pages, now accounts for the largest share of Private Credit assets under management, making up over one-third of all Private Credit as of March 31, 2024. <\/p>\n