Key Takeaways
- • 64% of European fund managers plan to launch private credit funds within 12–18 months, according to Gen II Fund Services' EU Core Alternative Managers' Mood Index survey of 110 UK and European managers—the highest adoption rate among all alternative asset classes.
- • Private credit vastly outpaces competing strategies in planned fund launches, with growth capital at 45%, venture capital at 33%, and real estate at 27% of respondents planning expansion in these areas.
- • Assets under management in private credit could surge 76% by 2029, rising from $1.5 trillion in 2023 to $2.64 trillion, according to Preqin and Morgan Stanley data cited in the report.
- • Fund managers are diversifying credit strategies beyond direct lending, with planned launches spanning real estate debt (23%), mezzanine (15%), distressed debt (14%), venture debt (13%), and special situations (13%).
- • 38% of managers expect investor allocations to private credit to increase over the next year, while allocations to the asset class are expected to remain stable (31%) or decline (31%) among the remaining respondents.
Summary
Private credit is positioned to become the dominant strategy in European alternative fund launches over the next 12–18 months, driven by strong manager interest and anticipated investor demand. Gen II Fund Services conducted the EU Core Alternative Managers' Mood Index among 110 UK and European fund managers, revealing that nearly two-thirds plan private credit fund launches—substantially higher than competing strategies. This survey data underscores the strategic pivot within the alternative asset management industry toward credit-focused vehicles.
The breadth of private credit strategy expansion reflects the asset class's evolution beyond traditional direct lending. Fund managers are targeting a diversified mix of credit products, including real estate debt, mezzanine financing, distressed debt, venture debt, and special situations. This diversification suggests managers view private credit not as a monolithic strategy but as a portfolio of complementary capital solutions catering to different investor risk appetites and market opportunities.
Macro forecasts support manager optimism about private credit growth. Preqin and Morgan Stanley projections indicate private credit AUM could rise from $1.5 trillion in 2023 to $2.64 trillion by 2029—a 76% increase over six years. While investor sentiment remains cautiously optimistic, with 38% of managers expecting allocations to increase, a notable 31% anticipate allocations will remain flat, and another 31% predict decreases, indicating heterogeneous expectations about fund-raising outcomes despite strong manager conviction on launches.
Alex Di Santo, head of private equity, Europe, at Gen II Fund Services, highlighted the maturation of the asset class, noting that private credit "has performed well over the years" and that the market now encompasses "many other compelling credit products that are attractive to investors" beyond traditional lending. This sentiment reflects institutional recognition that private credit's appeal extends across multiple investor segments and liability structures, supporting continued new fund formation despite uncertain macro conditions.
The breadth of private credit strategy expansion reflects the asset class's evolution beyond traditional direct lending. Fund managers are targeting a diversified mix of credit products, including real estate debt, mezzanine financing, distressed debt, venture debt, and special situations. This diversification suggests managers view private credit not as a monolithic strategy but as a portfolio of complementary capital solutions catering to different investor risk appetites and market opportunities.
Macro forecasts support manager optimism about private credit growth. Preqin and Morgan Stanley projections indicate private credit AUM could rise from $1.5 trillion in 2023 to $2.64 trillion by 2029—a 76% increase over six years. While investor sentiment remains cautiously optimistic, with 38% of managers expecting allocations to increase, a notable 31% anticipate allocations will remain flat, and another 31% predict decreases, indicating heterogeneous expectations about fund-raising outcomes despite strong manager conviction on launches.
Alex Di Santo, head of private equity, Europe, at Gen II Fund Services, highlighted the maturation of the asset class, noting that private credit "has performed well over the years" and that the market now encompasses "many other compelling credit products that are attractive to investors" beyond traditional lending. This sentiment reflects institutional recognition that private credit's appeal extends across multiple investor segments and liability structures, supporting continued new fund formation despite uncertain macro conditions.
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