Published on 
October 2, 2023

Private Credit Emerges as Family Offices' Key Investment Strategy Amidst Traditional Lender Retreat

Aleksandra Yurchenko

As traditional lenders retreat, private credit is stepping into the spotlight. With syndicated leveraged loan issuance from banks down by a staggering 64%, private credit funds are bridging the gap.

  • Direct lenders have become key players in fuelling LBOs and refinancings, particularly within the middle market. Fast execution, flexible structures, and certainty of funding have made them increasingly popular for larger deals.
  • This shift has been triggered by a contraction in bank lending, creating an opening for private credit. Packed with dry powder and a robust risk appetite, direct lenders are capitalising on this opportunity.
  • As private credit managers gain scale, they're moving into bigger deals traditionally dominated by banks. Superior execution and relationships have made them a preferred option over banks for many PE firms and corporates.
  • While this growth of shadow banking presents both risks and rewards, private credit is currently on the ascent, rapidly becoming an essential partner enabling deal activity as traditional leveraged loan markets stall. This shifting liquidity landscape creates new opportunities for agile capital.
  • Family offices certainly haven't missed this rising star. They're recognizing the value of private credit investments, allocating meaningful contributions to alternatives such as private equity, private credit, infrastructure, and real estate.

So, why is private credit becoming such a popular choice for family offices? Allocations in fixed income can help these offices preserve and grow wealth, creating a sustainable source of income balanced with capital appreciation.

But what's next for private credit? Will it remain a capital preservation and value creation opportunity for family offices?

As private credit continues its upward climb, family offices are seizing the chance for both capital preservation and value creation. This trend looks set to continue, cementing private credit's place as a key player in family office investment strategies.

About the author

Aleksandra Yurchenko

Aleksandra is managing investor relations at KILDE, a regulated platform for alternative investments. KILDE is powering digital lending firms with debt capital to reach underbanked customers in South East Asia.


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