Blog > The rise of private credit in Europe

As economic uncertainty persists across Europe, investors are turning to alternative credit providers outside the traditional banking system. Private credit funds that provide loans directly to companies have seen record inflows of capital. With high interest rates and volatile public markets, these private lenders are filling a crucial financing gap.

“The new kings of Wall Street aren’t banks – private funds are fueling corporate America,” declares a recent Wall Street Journal headline^[1]. Analysts caution that private lenders are dominating Europe’s loan market in the same way. Asset managers and hedge funds are launching new credit strategies to meet intense investor demand.

Yet successfully investing in private debt requires deep expertise. Each loan comes with unique terms and complexities that many entrants may underestimate. From tailored reporting requirements to bespoke covenants, these are highly nuanced assets.

Firms expanding into this space must ensure operational readiness. The right systems, data models and talent are essential to capture the intricacies of these deals. With the right technology infrastructure, managers can eliminate manual processes and gain a competitive edge.

Investing in people is not solely about the volume of employees but also ensuring that they possess the requisite skills and experience. This includes an appreciation and open mind on how technology and outsourced services can enhance the operation, improving performance and efficiency, whilst lowering operational risk. How firms embrace these partnerships with software and service providers will be the differential against their peers.

As regulators rush to draft new rules for the shadow banking sector, uncertainty lies ahead. But for now, private credit continues its meteoric rise as investors seek higher yields outside the traditional banking system. With robust operations and vigilance of shifting regulatory trends, asset managers across Europe can capitalize on this alternative asset boom.

SS&C Advent’s award winning Geneva platform is the gold standard in private credit management. Learn more about how to scale up in private markets, and find out more about our solution.

[1] Matt Wirz, “The New Kings of Wall Street Aren’t Banks. Private Funds Fuel Corporate America,” Wall Street Journal. October 8, 2023: https://www.wsj.com/finance/fed-rate-hikes-lending-banks-hedge-funds-896cb20b