The highly competitive private credit market is dominated by the largest players, but it is still possible for smaller entrants to gain a foothold by identifying a niche, demonstrating agility and deploying technology, according to stakeholders.
PitchBook data released earlier this year revealed that the share of fundraising by emerging managers, defined as those with three or fewer funds, fell to just six per cent in 2024. This compares to 10.1 per cent in 2023 and 7.6 per cent in 2022.
But new entrants to the market argue that there is still scope to grow if you have the right proposition.
John Kim is chief executive of Reckoner Capital, a credit asset manager specialising in structured credit and private credit that was founded in October 2024.
“Whenever you have an asset class – and it doesn’t have to be credit – you have some players that will get extraordinarily large in that space,” he said. “The problem they run into, often, is it takes a larger individual deal to move the needle, and that leaves space for smaller firms to come in and do the deals that the larger firms can no longer do.”
Read more: Global alts AUM to hit $32tn by 2030
Meanwhile, Kirsten Hagen, partner at Brinley Partners, said the firm was founded after spying a gap “for a focused, specialised player” and provides capital solutions to sponsor-backed companies in the middle market, upper middle market and large cap space.
Founded in 2021, it now has $9.8bn (£7.2bn) of assets under management. Hagen believes that there are advantages to being a “player of scale, but not a mega manager”.
“We’re able to be very nimble, and react to the market,” she said. “We’re not trying to be everything to everybody. Our approach is to focus on the people we know, and on patient and selective deployment.”
For Zack Simkins, managing director at Miami-based Vaster, which specialises in commercial lending on residential assets, local market expertise sets smaller firms apart from their larger peers.
Read more: Global private credit fundraising jumps 60pc in Q1 2025
“You see more local players really dominating their markets because it’s relationship-based, and they understand the asset classes a bit more intricately than a larger institution, and you can get more creative,” he noted.
Not all firms are in competition – many large and small players are partnering in the private credit space.
Mike Damaso, co-chief executive of Canal Road Group, established in 2023, said partnering with Canadian bank BMO, which is also an owner in the firm, has given it access to “interesting deal flow”.
“I think you’re seeing a lot more of that,” he added. “A lot of peers are striking relationships with banks or other players in the market. It helps us differentiate in terms of the deal flow that we see.”
According to Nicolas Kipp, founder and chief executive of Credibur, an infrastructure platform for private credit facility management, smaller private credit firms are “more entrepreneurial”.
“I think that’s the main advantage, being more nimble and agile,” he said. “And sometimes taking that extra step to find an untapped market.”
Kipp points to the “out-of-the-box solutions” that small firms can leverage to run their operations more efficiently.
“When it comes to fundraising and reporting, technology allows you to do that in a much more streamlined way… And that means you can start smaller,” he added.
Brinley’s Hagen said that the firm embeds technology into its operations because “we believe it will help us to build a very scalable platform – to be efficient and nimble”.
