Private credit grows 9% YOY

Despite ASIC’s scathing review of private credit funds, including concerns around valuation inconsistencies and mixed liquidity practices, the asset class grew 9 per cent in the last 12 months.

In the same week the corporate watchdog released its long-awaited surveillance review of 28 private credit funds, global consultancy Alvarez & Marsal (A&M) reported that the asset class remains on a strong growth trajectory.

As outlined in the firm’s latest Australian Private Debt Market Review 2025, assets under management for private credit in Australia has reached $224 billion - marking a 9 per cent increase from last year.

Commenting on the findings, Sebastian Paphitis, managing director of corporate finance at the firm’s Australian arm, said the results show that the nation’s private debt market is not only expanding but “evolving with purpose”.

“At A$224 billion and rising, private capital is reshaping the future of finance and funding key drivers of economic growth,” Paphitis said.

Breaking down the figures, of the $224 billion total, $132 billion was in corporate lending and $92 billion in commercial real estate (CRE) lending, reflecting recent commentary from Metrics surrounding private credit stepping in to fill the funding gap left by banks.

The report explained that as competition increases and traditional funding channels recalibrate, private debt has emerged to become a core segment of the lending market, addressing a wider range of funding needs for Australian businesses.

John Nestel, managing director of corporate finance at A&M Australia, added that the amount of money in private credit now represents a “fundamental shift” in the landscape.

“With private capital now delivering the speed, scale, and flexibility of solutions that today’s market demands,” Nestel said.

At the same time, as noted by A&M, institutional investors - including pension funds, insurers, and family offices - have been increasing their private debt allocations.

According to the firm, these groups have been drawn by its attractive risk-adjusted returns, wide market opportunities, and improving regulatory oversight.

A&M pointed to intensifying market consolidation, with top-tier domestic multi-asset managers now holding 27 per cent market share, as supporting the heightened focus on stronger governance and transparency.

At the same time, after existing under the microscope for some time, last week’s surveillance report still pointed to issues such as the standardisation of valuation practices - with some firms having absent or incomplete practices in the area.

Meanwhile, while it noted that liquidity practices have generally improved, the report acknowledged that the frequency of liquidity testing still ranges widely - from weekly to annual checks.