INTRODUCTION Contributed by: Stelios Saffos, Dan Seale, Peter Sluka and Alfred Xue, Latham & Watkins
Navigating Opportunities and Challenges in the Global Private Credit Market The private credit market has emerged as a for - midable force in the global financial landscape, offering a compelling alternative to traditional syndicated bank lending. The Private Credit Guide provides a broad overview of trends and developments in the private credit market in the most active jurisdictions around the world, including the US, the UK and beyond, and a detailed look at the full life cycle of a private credit transaction. A Global Perspective on Private Credit Private credit, characterised by non-bank lend - ing to public and private companies, has grown exponentially over the last decade. This expan - sion is driven by a confluence of factors, includ - ing regulatory changes, investors searching for better terms and higher yields and the increasing sophistication of private credit providers. As of 2024, the global private credit market is valued at approximately USD1.8 trillion, with projec - tions suggesting it could more than double in the coming decade. The market’s growth is not confined to any single region but is instead a global phenomenon. In the United States, private credit has become a cornerstone of corporate finance, offering flex - ible and tailored solutions to borrowers. In the UK and Europe, the market is gaining traction as companies seek alternatives to traditional bank financing amidst a challenging regulatory environment. In Asia and Latin America, where the market remains dominated by traditional bank lending, we have nevertheless seen steady growth in the private credit market. Meanwhile, in emerging markets, private credit is playing a pivotal role in bridging the financing gap for mid-sized enterprises. We see this global trend continuing as established asset managers seek
increased opportunities in emerging markets, and as the best asset managers continue to outperform on their fundraising targets. Key Themes and Trends Several themes and trends that are both influ - encing market dynamics and are a result of mar - ket dynamics have emerged. Market consolidation and strategic partnerships The private credit market is witnessing a wave of consolidation, with larger firms acquiring smaller players to enhance their market pres - ence. For instance, BlackRock’s USD12 billion acquisition of HPS and Clearlake’s purchase of MV Credit are indicative of this trend. Addition - ally, strategic partnerships between banks and private credit funds are becoming increasingly common, allowing both parties to leverage their respective strengths. Citigroup’s USD25 billion partnership with Apollo and Wells Fargo’s USD5 billion collaboration with Centerbridge Partners exemplify this “co-opetition” model, which ena - bles banks to offload risk while maintaining client relationships and provides private credit funds with access to a broader range of investment opportunities. Regulatory developments As the private credit market matures, it faces increased scrutiny from regulators. In the United States, the Securities and Exchange Commis - sion (SEC) and other regulatory bodies have expressed concerns about the lack of transpar - ency in private credit valuations and potential systemic risks. In Europe, the European Central Bank (ECB) has been proactive in seeking more information on private credit exposures from banks. These regulatory developments under - score the need for private credit providers to
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