There are some interesting numbers on private debt in the Alphaville blog of the Financial Times.
Specifically, on the US$71 billion loan portfolio lent to 713 entities by the Blackstone Private Credit Fund. The goal was to estimate what share of those loans were to private equity-backed companies. The result from the first 100 entities was something like 90%.
The blog quotes numbers from Bain & Company showing that as of 2024, 90% of leveraged buyout loans came from private credit, with only 10% from syndicated loans. It also quotes predictions from Adams Street Partners that 10%-25% of buyout portfolio companies acquired between 2016 and 2022 will be write-offs.
With private equity no longer delivering returns quite as promised, private credit has become the new poster child for institutional investment into private markets. It’s grown at a pace that puts even private equity’s hand-over-fist expansion in the shade.
In a report last December, Morgan Stanley noted that private credit had grown from $1 trillion in 2020 to $1.5 trillion in 2024, and looks on track to hit $2.6 trillion by 2029, according to Preqin numbers. Empirical Research Partners estimated in April 2025 that the asset class had an annualised growth rate of 14.5% over the past decade.
To some extent that’s understandable. In principle, private debt is lower risk than private equity, purely because it’s so subject to financial management. Predesignated loan repayments are a lot more predictable as returns than the business fortunes of a company or its readiness for an initial public offering.
But they require hands-on, granular management of loans. That’s something that many private debt firms – new to the game and probably burdened with a private equity legacy mindset – may not be used to or trained for. After all, many buyout firms traditionally put their money into a new investment, then hired Bain or some other consultant to do the hands-on dirty work of business enhancement. The expertise and human resources requirements of private debt operations are very different.
So what you have is a relatively young business that’s still well into its own learning curve. Add to that their penchant for investing in inherently higher-risk entities, as much as 25% of which could end up defaulting, and you can see how large the undigested risk potential is.
Institutions, still eager to get the extra returns that private credit can deliver, are unlikely to back off from further commitments. But they might at least take a closer look at what their money is being used to support, and at the actual hands-on competencies of their investee funds.
