Good morning,

The golden age of private credit is upon us, but does anyone really know how big it is? For all the talk, there’s very little reliable data out there.

We asked alternative markets data wizards Preqin to estimate the size of Australia’s private credit market and a week later they came back with some rough figures.

On the closed-end fund size, they reckon there’s $2 billion ($US1.3 billion) in Australia-focused private debt assets under management, up from $US900 million 3.5 years ago, making it sizeable but much smaller than its cooler private equity cousin at $41.7 billion or VC at $17.9 billion.

But this doesn’t tell the full story. Preqin estimates there’s over $18 billion of open-end private debt in Australia (as of May 2023). Metrics Credit Partners, for example, has a staggering $15 billion in AUM, though not all of this is in private debt.

Part of the difficulty of coming up with a number in the asset class is it’s difficult to define. It’s everything from a lawyer lending his client $100k to finish a development to global behemoth Aresswooping in on billion-dollar buyouts, or Alceon quietly writing $2.5 billion in loans to directly fund construction projects.

According to Preqin, the biggest new closed-end funds belong to IFM Investors, Revolution Asset Management, DCF Asset Management and MA Asset Management, each raising between $80 million and $235 million since 2017 for direct lending. On the venture debt side, it’s OneVentures with an $80 million fund.

Regardless of the number, we know it’s growing, or at least the amount of emails we receive about it are. Preqin put this down to tighter bank lending conditions since the global financial crisis as smaller and mid-sized companies struggle to borrow from traditional banks. Meanwhile, M&A activity is leading to growing demand for credit facilities to back leveraged buyouts.

Debt, it seems, is sexy.

Happy reading,

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