What is the true size of the private credit market?

The private credit market is in the midst of a boom, with new fund launches taking place on a near-weekly basis. But as the market grows, it is getting harder and harder to keep track of the total value of the private credit sector.

In Preqin’s most recent five-year private capital outlook, the investment data firm said that the private credit market is worth approximately $1.5trn (£1.19trn) at present, and is set to grow to $2.8trn by 2028. BlackRock has contested this prediction, believing that the market will be worth as much as $3.5trn within the next five years.

Meanwhile, Pitchbook valued the global private credit market at $1.75trn by the end of 2022, far higher than Preqin’s $1.5trn 2023 valuation.

All of these valuations pale in comparison to Apollo Global Management. At a conference in November, Chris Edson, Apollo’s global co-head of the financial institutions group, said that the true size of the market is closer to $40trn.

It has been suggested that the discrepancy in valuations is because industry onlookers are analysing different segments of the market.

“Those that are quoting $1.5trn or $1.7trn type numbers are only speaking about corporate direct lending,” said one private credit executive.

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“That’s why you’re getting a very different answer from Apollo, which has the breadth of looking across and would include real estate infrastructure and asset based finance.

“Once you incorporate big spaces like the consumer housing, real estate, those numbers get very big very quickly.

“It is probably not quite as large as $40trn in our view, but it’s closer to that number than $1.5trn.”