UK Trends and Developments Contributed by: Fergus Wheeler, Paul Yin, Tracy Liu and Medha Vikram, Latham & Watkins
Latham & Watkins 99 Bishopsgate London EC2M 3XF United Kingdom
Tel: +44 20 7710 1000 Fax: +44 20 7374 4460 Email: pr@lw.com Web: www.lw.com
Private Credit Growth in the UK and Europe The private credit market has grown rapidly in recent years and continues to evolve into a mainstream source of financing driving the global leveraged finance market. The European private credit market reached approximately EUR450 billion in assets under management by the end of 2025, with European pri - vate credit fundraising hitting a record USD65 billion in the first nine months of 2025 alone – approximately 35% of all global private debt fundraising during this period. Europe now accounts for roughly one quarter of all global private credit raised since 2008, repre - senting one of the fastest-growing markets. Whereas bank lending in Europe still accounts for approxi - mately 70–76% of corporate credit – compared with just 21–25% in the United States – non-bank lending market share in Europe and the UK currently stands at only around 12%. This figure, contrasted with 75% non-bank lending share in the US, indicates substan - tial room for continued growth, and industry projec - tions suggest that the European private credit market could exceed EUR800 billion by the end of the dec - ade. Despite the market’s geographic breadth, the UK, and specifically London, remains a principal hub for Euro - pean leveraged finance and private credit origination and structuring, with a deep ecosystem of sponsors, lenders, advisers and intermediaries. In practice, a significant proportion of cross-border deals continue to be documented using English-law forms, helping to standardise terms and market practice across juris - dictions. Against that backdrop, the trends below are particularly relevant for UK borrowers and UK-based managers operating across Europe.
Several interrelated forces are driving this growth. The aftermath of the global financial crisis saw banks retreat from middle-market lending due to stricter cap - ital and regulatory requirements creating an opportu - nity for direct lenders and alternative credit providers to fill the gap. Simultaneously, heightened regulatory pressure, policy-led investment in infrastructure and defence, and the emergence of diversified capital sources and innovative fund structures are propelling European private credit into a new phase of matu - rity and expansion. This article examines several key trends shaping the European and UK private credit market in 2026 and beyond. Increased US fund manager expansion The UK and European private credit market is attract - ing considerable attention from US-based fund man - agers seeking to diversify away from an increasingly competitive domestic market. As the US direct lend - ing market has matured and deal flow has consoli - dated around a smaller cluster of larger managers, many participants are turning to the UK and Europe for growth opportunities. Several mainstream US fund managers have cited a “substantial origination opportunity” in Europe over the coming years, driven by ramped-up infrastructure and defence spending across the continent. Major US allocators, including various US state-run pension and retirement asset managers, are building out European private debt allocations. These US allo - cators point to Europe’s more diverse credit markets as an attractive feature, with less concentrated expo - sure to the technology sector and a proliferation of smaller, specialist fund managers that fit with many allocators’ push for strategy diversification. Addition -
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