The European Direct Lending Opportunity

Over the past fifteen years, the growth of Direct Lending has been one of the most significant developments in global finance. Direct Lending has evolved from a niche financing solution into one of the most attractive segments of global private markets. Assets under management in European Direct Lending have grown more than tenfold over the past decade, rising from approximately $26bn in 2013 to more than $292bn in 2023. The asset class has grown faster than all other areas of Private Debt, and now make up almost half of the European Private Debt market.

Structural forces continue to accelerate the shift towards Private Credit. Basel IV regulations are increasing the cost of lending for banks. European governments face substantial financing needs related to infrastructure, energy security and defence spending. Borrowers increasingly value the certainty, flexibility and speed offered by direct lenders. At the same time, international investors are seeking greater geographic diversification within Private Credit portfolios.