‘Tilt’ towards Europe as private credit fundraising surges
Investor sentiment towards Europe is strengthening, with fundraising for direct lending rising sharply in 2025 and deal volumes on track to hit fresh records, driven by fears the US market is becoming saturated, Pemberton has said.
Direct lending volumes reached €84.9bn (£74.3bn) in the first nine months alone compared with €74.4bn in the first three quarters of 2024, showing that investor sentiment is swinging towards Europe, the $28.8bn (£21.8bn) manager said in a report.
Alongside this, direct lending fundraising in the first three quarters of 2025 has already surpassed the total for the whole of 2024, putting Europe on track to lift annual totals above the recent $35bn–$40bn range, it said.
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PitchBook data shows that in 2024, Europe accounted for just 20.4 per cent of global private capital raised, compared with 75.4 per cent in the US. But in the first half of 2025, Europe’s share climbed to 32.4 per cent, while the US has slipped slightly to 69.9 per cent.
Pemberton also highlighted that the ratio of private equity to private credit dry powder in Europe now stands at 2.85 times as of the third quarter.
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The manager said the combination of fundraising momentum, rising deployment and ample dry powder suggests the “early stages of a longer-term tilt towards Europe are under way”.
It attributed the shift partly to “warming” investor sentiment towards Europe in response to more assertive US trade policy. At the same time, European governments have also indicated that they will increase defence investment.
Germany’s new €500bn fiscal package, supported by a €150bn ‘Security Action for Europe’ loan programme, reflects that shift, while the European Investment Bank has also placed defence at the top of its agenda.
Pemberton added that some allocators now view the US as less attractive after several years of heavy fundraising across private credit strategies, with signs that parts of the market, particularly mid-market direct lending, may be approaching saturation.
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