(16 May 2025 – Global) The multitrillion-dollar financial machine that is Private Credit has become the hottest thing on Wall Street, transforming who lends money in the global economy and where the capital is derived from.
Miriam Gottfried reports for WSJ that Private Equity (PE) heavy weights such as Blackstone, Apollo Global Management and KKR, best known for buying and selling companies, have emerged as major lenders to businesses and are competing head-on with traditional banks while operating mostly outside the reach of regulators.
Private Credit firms are increasingly lending to large corporates, as highlighted in recent East & Partners and Capital Brief research, and moving deeper into asset-backed finance which funds much of the real economy including mortgages, credit-card loans and auto loans. This lower-risk lending makes up a significant majority of a potential US$40 trillion private-credit market, Apollo estimates, though the returns are also lower than in direct lending.
“Apollo has made inroads lending to big companies, with multibillion-dollar financings for Intel, Anheuser-Busch InBev and AT&T. To help generate a wider variety of loans, Apollo owns 16 lenders that finance vehicle fleets and aircraft, and offer home improvement loans, among other things” stated WSJ Reporter Miriam Gottfried.
Tie-ups with insurance companies are helping private credit firms draw in the huge volumes of funds needed to make the business work. Private Credit firms are constantly scouring for lending deals, often with borrowers that want something banks won’t offer.
A highly polarising topic, supporters of Private Credit maintain the asset class enables investors to generate higher long-term returns than bonds without being concerned about wild fluctuations in public markets. Some executives caution that the system hasn’t been truly tested. “We never had that come-to-Jesus moment on private credit” commented Pretium CEO Don Mullen.
The industry is also now reaching deeper into the pockets of retail investors to manage money more directly for individual investors. Blackstone has partnered Wellington Management and Vanguard to offer portfolios with a mix of public and private assets while KKR and Capital Group recently launched funds that blend public and private credit.