LPs to increase private credit allocations in next three years
The majority (82 per cent) of global limited partners (LPs) expect to increase their allocations to private credit over the next three years, citing portfolio diversification as the primary driver, according to new research.
Of those, 42 per cent forecast “significant” growth in private credit exposure, the study by CSC, a provider of global business administration and compliance solutions, revealed.
Among the LPs surveyed, 76 per cent identified portfolio diversification as the main motive behind increased allocation, followed by attractive returns (36 per cent).
Read more: Almost half of LPs dissatisfied with current performance reporting
The research, commissioned by CSC to inform its new report, ‘Private Credit 2025: Scaling Global Strategies Through Operational Excellence’, found that private credit general partners (GPs) are also “bullish”, with 59 per cent forecasting growth in assets under management (AUM) of 6-10 per cent over a three-year horizon, and 31 per cent expecting AUM growth above 10 per cent.
Senior debt and asset-backed finance were found to be the most attractive underlying strategies, while distressed debt ranked lowest in expected growth, CSC’s study showed.
Meanwhile, 79 per cent of GPs think international activity will increase significantly, indicating that cross-border lending is another area of growth.
Read more: Private credit market predicted to grow by up to $300bn by 2030
“Private credit has exploded into the mainstream, becoming a truly global, multi-jurisdictional phenomenon that looks set to attract more and more investor capital,” said Marshall Saffer, managing director, funds and capital markets at CSC.
However, Constantinos Kleanthous, managing director, APAC at CSC, said private credit’s fast growth “presents implicit challenges” to operating models for fund managers, placing “considerable demands on them and other stakeholders, particularly when investing in multiple jurisdictions and across borders”.
The research found that 91 per cent of LPs believe GPs who outsource to specialist service providers deliver enhanced reporting.
The findings are based on the views of 300 GPs and 200 LPs in Europe, Asia Pacific and North America.
Read more: Private credit market “stronger” in 2025 than last year
