What $1 trillion of private credit means for a UK borrower
The private-credit asset class kept compounding through the downturn, with surveyed managers deploying $333bn in 2022 alone. For a lower-mid-market company, what counts is less the headline AUM than how much of that capital is hunting deals at the smaller end.
- Dated
- 20 November 2023
- Desk note
- Dated to the data
- Reading
- 6 min
Managing Director
The private-credit asset class kept growing through the rate shock that froze syndicated markets in 2022 and 2023. Surveyed managers in the ACC’s Financing the Economy 2023 report deployed $333bn of fresh capital in 2022, roughly 70% more than two years earlier. For a UK borrower at the £3–15m facility level, the headline number matters chiefly for what it says about who is competing to lend.
Where did the capital come from, and is it still there?
Private credit, direct lending by funds rather than banks, grew continuously from the post-financial-crisis period as institutional investors sought alternatives to compressed public-market returns. What distinguishes the most recent phase is that the growth held through the rate tightening. Where the syndicated leveraged loan market essentially closed for new issuance in the second half of 2022, private-credit funds kept deploying.
The 56 managers in this year’s ACC survey collectively held US$914bn in assets under management, more than double the survey sample’s AUM when the series started at the opening of the decade. That is the pool. The deployment figure, $333bn actually lent in 2022, is what that pool is doing in practice.
Even through the rate shock, private-credit deployment rose roughly 70% in two years.
| Year | Deployed (US$bn) |
|---|---|
| 2020 | US$196bn |
| 2021 | US$200bn |
| 2022 | US$333bn |
- Capital deployed (surveyed managers)
Capital deployed by surveyed private-credit managers per calendar year. 2020 (US$196bn) from FTE 2021; 2021 (~US$200bn) is the FTE 2023 press-release comparator and is illustrative; 2022 (US$333bn) is FTE 2023's headline figure. Sample of 56 managers collectively managing US$914bn AUM, a large but not exhaustive share of the global market. Scale comparisons between years should account for possible sample-composition changes.
Source · ACC / AIMA, Financing the Economy 2023 (9th edition, pub. 16 Nov 2023)
Two things are worth reading in that chart. First, the 2021 point is the exception, not the rule: deployment held broadly flat as the post-Covid recovery reabsorbed some activity into the bank channel. Second, the 2022 figure is the one that matters for a borrower thinking about 2023 and beyond. Even as Bank Rate rose from near zero to 3.5% in a single year, private credit was deploying at record pace, and those managers still have capital to put to work.
US$333bn
Capital deployed in 2022 by the 56 private-credit managers surveyed by the ACC, roughly 70% more than in 2020, and at a rate that ran straight through the rate shock.
Source · ACC / AIMA, Financing the Economy 2023 (pub. 16 Nov 2023)
Why global scale is a borrower’s tailwind
The direct link between $914bn of surveyed AUM and a £7m facility for a company in Leeds is not obvious, but it is real. The managers in the survey are not a monolith; they range from large upper-mid-market specialists to smaller funds that target the sub-£20m ticket. As the asset class has grown, so has the number of funds competing at the smaller end; the logic is simple economics. In 2021, 74% of surveyed managers reported their most common loan size was below US$100m: a market structurally tilted toward the mid-market.
The pool of capital in the survey more than doubled from 2020 to 2023.
| FTE edition year | Survey AUM (US$bn) |
|---|---|
| '20 | US$431bn |
| '21 | US$600bn |
| '22 | US$800bn |
| '23 | US$914bn |
- Survey-respondent private-credit AUM (lower-bound proxy)
Total AUM under management by surveyed private-credit managers in each FTE edition. FTE 2020 (49 managers, ~US$431bn), FTE 2021 (57 managers, >US$600bn), FTE 2022 (50+ managers, ~US$800bn), FTE 2023 (56 managers, US$914bn). This is survey-sample AUM, not a global market estimate; it understates the full market. All endpoints are hard (published in press releases); the series is a lower-bound indicator of how the class has grown.
Source · ACC / AIMA, Financing the Economy 2023 (and prior editions); Solon analysis
What changes for a borrower running a process
Global private-credit scale shifts the supply-demand balance at the lower-mid-market level in a specific way: it means that a good credit story, properly presented, meets more competing lenders than it did five years ago. Each of those lenders is sitting on undeployed capital and facing pressure to put it to work. That pressure flows downstream into tighter pricing, better covenant headroom and more flexible structures for borrowers who run a competitive process.
The capital is abundant. What is scarce is the borrower who presents it with a credit story worth competing for.
The corollary is equally important. Scale at the asset-class level does not help a borrower who approaches a single lender, accepts the first term sheet, or does not know which funds are active in their sector and ticket size. The market has grown, but it has not become self-organising from the borrower’s perspective. The process, running a competitive selection across the field, is still what converts abundance into a better deal.
What the rate environment has not changed
One misconception worth clearing up: private credit is not a cheap-money story that has run out of road as rates rose. The asset class grew in a near-zero-rate environment, and it kept growing as rates climbed, because it occupies a structural gap: transactions that banks will not or cannot fund, credits too complex for the syndicated market, borrowers who need certainty of execution more than the cheapest available basis points. The rate environment changes the absolute cost of a facility; it does not change the fact that a fund may be the only willing lender for a specific credit.
The read for a lower-mid-market borrower in late 2023 is simple: more capital is chasing mid-market transactions than at any prior point in this data series, including the cheap-money years. The borrowers who capture that supply are the ones who enter the market with a prepared credit story and a structured process, not the ones who assume their bank relationship covers the ground.
Questions a CFO asks
Common questions
- Do private-credit funds actually lend to companies my size, with a facility under £15m?
- Yes, though the degree varies by fund. In 2021, 74% of surveyed managers reported their most common loan size was below US$100m, a directional indicator that the mid-market sits well within the class’s appetite. The lower-mid-market is well within scope for a growing number of funds, particularly those that raised capital specifically to target the gap left by banks retreating from sub-£20m facilities.
- If private credit is so abundant, why do I still get turned down by lenders?
- Scale at the asset-class level does not translate automatically into approval at the deal level. Each fund has its own sector appetite, leverage tolerance, minimum EBITDA and geographic mandate. A decline from one lender means that lender’s box was not the right fit, not that the market as a whole has no appetite. The practical implication is that a single-lender process routinely misses the capital that would have financed the deal.
- How does a private-credit fund differ from a bank in practice for a borrower?
- Three practical differences: speed and certainty, flexibility and price. Funds are typically faster to credit committee and can close without syndication risk. They tend to accept more bespoke structures than a bank’s standard template allows: covenant packages, PIK toggles, accordion headroom. The offset is cost: the all-in margin from a fund will generally sit above a bank’s term facility, particularly at the senior end. The right answer depends on whether the credit fits a bank’s box, and the only way to know is to run both in parallel.