Key Takeaways
- • Private credit assets under management have grown from approximately $500 billion in 2015 to over $2 trillion by May 2026, with projections of $3.4 trillion by 2030, according to Mayer Brown.
- • Capital solutions, a hybrid strategy spanning debt and equity, targets 15–25% gross IRR versus 8–12% for conventional lending products.
- • Private credit fundraising exceeded $240 billion in 2025, and the largest platforms now manage more than $100 billion in credit assets each.
- • Regulatory capital constraints under Basel III/IV have structurally reduced bank lending capacity for sub-investment-grade credits, driving demand for alternative capital providers.
- • The FCA and PRA are increasing scrutiny of non-bank financial intermediation, focusing on systemic risk, interconnectedness, valuation practices and stress testing.
Summary
A Mayer Brown article examines the structural shift of credit risk from regulated bank balance sheets to alternative capital providers. Private credit assets under management have grown from approximately $500 billion in 2015 to over $2 trillion by May 2026, with projections suggesting they could reach $3.4 trillion by 2030. The article attributes this growth to structural rather than cyclical drivers: on the demand side, borrowers value execution speed, flexible terms and confidentiality; on the supply side, post-Basel III/IV capital constraints have reduced bank capacity for sub-investment-grade lending while pension funds, insurers and sovereign wealth funds seek yield premium and diversification.
Capital solutions is presented as one of the most dynamic sub-strategies. It encompasses instruments including stretched senior debt, holdco PIK, mezzanine and second lien, preferred equity, convertibles, structured equity and GP-led continuation vehicle financing. Typical deployment scenarios include M&A financing where senior capacity is exhausted, growth capital without full dilution, dividend recapitalisations and minority stake acquisitions. Mayer Brown notes that these deals target 15–25% gross IRR, rising to 20% or more in stressed contexts, and rely on governance and information rights alongside bespoke covenants.
For borrowers, the article advises engaging providers early, preparing a detailed data room, and running a limited competitive process of two to four providers. It also highlights overlap with special situations investing, including rescue financing, DIP-style financing and liability management exercises, which have expanded through 2024–2026 alongside rising European restructuring activity.
On market outlook, the article cites robust fundraising, growth in European and Asia-Pacific activity, and Middle Eastern sovereign wealth funds acting as allocators and co-investors. Structural trends include insurance balance sheet convergence, evergreen vehicles, semi-liquid products for high-net-worth investors, and fund finance leverage. Mayer Brown flags intensifying FCA and PRA scrutiny of non-bank intermediation, which it expects to raise compliance costs and favour larger platforms while being unlikely to constrain near-term growth.
Capital solutions is presented as one of the most dynamic sub-strategies. It encompasses instruments including stretched senior debt, holdco PIK, mezzanine and second lien, preferred equity, convertibles, structured equity and GP-led continuation vehicle financing. Typical deployment scenarios include M&A financing where senior capacity is exhausted, growth capital without full dilution, dividend recapitalisations and minority stake acquisitions. Mayer Brown notes that these deals target 15–25% gross IRR, rising to 20% or more in stressed contexts, and rely on governance and information rights alongside bespoke covenants.
For borrowers, the article advises engaging providers early, preparing a detailed data room, and running a limited competitive process of two to four providers. It also highlights overlap with special situations investing, including rescue financing, DIP-style financing and liability management exercises, which have expanded through 2024–2026 alongside rising European restructuring activity.
On market outlook, the article cites robust fundraising, growth in European and Asia-Pacific activity, and Middle Eastern sovereign wealth funds acting as allocators and co-investors. Structural trends include insurance balance sheet convergence, evergreen vehicles, semi-liquid products for high-net-worth investors, and fund finance leverage. Mayer Brown flags intensifying FCA and PRA scrutiny of non-bank intermediation, which it expects to raise compliance costs and favour larger platforms while being unlikely to constrain near-term growth.
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