Institutional investors are looking to whittle down the number of private credit managers they work with, as they streamline their strategies.

New research from secondaries investor Coller Capital found that 69 per cent of limited partners (LPs) expect to back a more concentrated group of private credit managers over the next two to three years.

Similarly, two-thirds (66 per cent) said they are likely to back a more limited number of private credit strategies over the same period.

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The latest Coller Capital Private Capital Barometer surveyed 107 private capital investors globally, who oversee a combined $1.9tn (£1.5tn) in assets under management.

“As investors continue to build larger and more sophisticated private credit programmes they are increasingly settling into a sweet spot and focusing on deploying capital into a smaller number of selective strategies,” said Michael Schad, partner and head of Coller Credit.

Industry stakeholders are similarly seeing a trend of investors opting for fewer managers.

Stephan Caron, head of global direct lending at BlackRock, said at the asset manager’s media roundtable this week that “a lot of investors are looking to do more with fewer managers”, adding that those managers “need to be able to address all of their needs”.

He cited this as a one of the benefits of BlackRock’s $12bn acquisition of credit specialist HPS Investment Partners, creating a more integrated solution for investors.

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He told Alternative Credit Investor that working with less managers is easier for investors and makes more sense financially. As a result, he sees less opportunities for smaller managers in the space unless they have a specific niche.

The $1.7tn private credit industry is booming, attracting swathes of investors and managers alike looking to capitalise on double-digit returns that are uncorrelated to the stock market.

Coller Capital’s survey found that 84 per cent of LPs expect to maintain or increase their allocation to private credit in 2025, with 37 per cent planning to increase their overall allocation to the asset class.

Investors have identified private credit as the strategy where they are most likely to increase their private markets allocation for two consecutive years of the annual survey.

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“Private credit has been one of the most dynamic areas of the alternative assets market over the last decade and it remains a leading arena for innovation in private markets,” said Jeremy Coller, chief investment officer and managing partner of Coller Capital.

“We believe these past two-years of record demand reflect an even longer-term trend and that private credit will remain a mainstay of private capital investing for decades to come. While overall allocation to private credit continues to expand, these findings reflect the wider trend that investors are concentrating and honing their GP relationships and building deeper, long-term partnerships.”