Private credit has rapidly grown into a critical component of institutional portfolios, with global AUM reaching $2.1 trillion in 2023 and projected to hit $2.8 trillion by 2028. While much of this growth has centered on sponsored companies backed by private equity, a significant financing gap remains for family-owned, non-sponsored middle-market businesses—representing about 90% of private U.S. and European companies. Non-sponsored direct lending offers untapped opportunities for portfolio diversification, leveraging stable borrower relationships, lower risk profiles, and stronger loan covenants. For investors, accessing non-sponsored markets requires managers with deep geographic networks and expertise in detailed due diligence. With its potential to enhance returns and expand deal flow, non-sponsored direct lending is a compelling strategy for long-term diversification and resilience.
1Reserve Bank of Australia. (2024, October 17). Growth in Global Private Credit. https://www.rba.gov.au/publications/bulletin/2024/oct/growth-in-global-…. Accessed December 2024. Projection based on Preqin. (2024, April 8). Private Debt’s Rapid Growth Merits Closer Scrutiny, IMF Says. https://www.preqin.com/news/private-debts-rapid-growth-merits-closer-sc…. Accessed December 2024. Forecasts are not guaranteed and may not be a reliable indicator of future results.
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