The European lower mid-market offers stability and resilience, according to research from Candriam and Kartesia, while the firms dismissed concerns about wider systemic risk in private credit markets.

In an investment note, Thomas Joret, deputy head of high yield and credit arbitrage at Candriam, and Charles-Henri Clappier, partner, head of KSO France and business development at private debt manager Kartesia, wrote that, while the European private credit market is expected to double in size to €1tn (£0.87tn) by 2030, bank retrenchment is no longer the main growth driver.

Read more: Kartesia raises €1.3bn for credit opportunities fund

Instead, demand is shifting toward bespoke capital solutions in the deep lower mid-market, “from both private equity sponsors and non-sponsored, as family-owned businesses seek customised, non-dilutive financing”, according to Joret and Clappier.

They see large-cap sponsored leveraged buyouts as facing significant pricing and term pressure as a result of “intense competition” driven by “abundant private debt capital, steady bank participation, and subdued M&A activity”.

By contrast, small- to mid-sized transactions face lower competitive pressure, particularly the sponsorless ones, Joret and Clappier said, thereby providing “satisfactory” deal flow and quality, with terms that support premium returns and strong risk control.

They suggested that the most attractive deals tend to be in companies that are too large for local banks or regional funds, but that remain below the threshold of major mid-market players.

Read more: Candriam and Kartesia launch private debt ELTIF

“Lower mid-market portfolios and deal flow across Europe remain highly diversified by sector and profile, and granularity provides resilience through cycles,” Joret and Clappier said.

They also addressed the recent high-profile collapse of both First Brands and Tricolor in the US, which had “renewed scrutiny of valuations, transparency, and systemic exposure across the riskier parts of the credit spectrum”.

However, they concluded that these “pockets of stress” do not point to evidence of wider systemic risk, and that the two failures are “tied to specific fraud or isolated business practices”.

“Moreover, they are not linked to debt but primarily to bank-arranged structures, with private credit exposure limited to small secondary positions,” Joret and Clappier said.

Read more: “Lender control” not product complexity behind First Brands failure

In December 2020, Candriam acquired a 33 per cent stake in Kartesia, allowing it to expand its alternatives platform to include European private credit.

HSBC Asset Management (HSBC AM) has launched a credit income fund which will invest in a mix of traditional fixed income and alternative credit investments, open to retail investors in Hong Kong. 

The HSBC Global Funds ICAV – Credit Income Advance fund will invest across securitised credit, listed private credit and broadly syndicated loans (BSLs) in the alternatives space, and in investment grade bonds, non-investment grade bonds and emerging market debt in the traditional fixed income space.

Read more: HSBC AM unveils trade and working capital solutions strategy

The fund launched on 15 December, with a 47.5 per cent allocation to alternatives, comprising 27.5 per cent in private credit and loans, and 20 per cent in securitised credit.

According to official documents, the fund will participate in the private credit market through listed business development companies and will gain indirect exposure to the performance of BSLs through the use of total return swaps.

HSBC AM said that, with longer-term interest rates in Western markets expected to remain elevated due to persistent inflation uncertainty and concerns over government debt sustainability, this “may create opportunities for higher yields across both traditional and alternative credit markets”.

Read more: HSBC AM closes infra debt fund with $612m

With a targeted duration range of around two to 3.5 years, the portfolio “is designed to remain agile in shifting economic landscapes” and aims to generate fixed monthly payouts of eight per cent.

The fund will be managed by Ricky Liu, senior portfolio manager for global and US credit at HSBC AM, according to reports.

“By integrating private credit and securitised assets alongside traditional bonds, this multi-layer investment strategy allows us to access specialised sources of income that are less correlated to public markets,” Liu told Fund Selector Asia.

Read more: HSBC AM names global head of real assets

Blackstone has unveiled a strategic partnership with Phoenix Financial, whereby the Israeli asset manager and insurer will invest up to $5bn (£3.7bn) across its credit strategies.

The deal will leverage Blackstone’s global credit origination capabilities and additional co-investment opportunities for the benefit of Phoenix’s clients, Blackstone said.

Read more: Blackstone inks $1bn forward-flow deal with small business lender

The two firms will collaborate across a range of credit strategies, including corporate, real estate and asset-based credit.

“We’re thrilled to further support Phoenix and its clients through this partnership,” said Jon Gray, Blackstone president and chief operating officer.

“We continue to see compelling opportunities to invest across the rapidly expanding private credit universe, leveraging Blackstone’s scale, origination capabilities and insights from across the firm.”

Read more: Blackstone agrees €2bn SRT with Dutch bank 

Phoenix is the largest asset manager in Israel, with more than $180bn in assets under management.

“We are proud to broaden our global alternatives platform by partnering with Blackstone, a world-class leader in private credit and origination,” said Eyal Ben Simon, chief executive of Phoenix Holdings.

“This collaboration enhances the range of high-quality opportunities we bring to Israeli investors and reflects Phoenix’s strategy of working with the strongest partners globally. Blackstone’s exceptional capabilities represent another important step in delivering diversified, institutional-grade solutions to our clients.”

Read more: Blackstone appoints new European vice chairman 

Blackstone is the world’s largest alternative asset manager with over $1.2tn in assets under management. This includes $508bn in credit assets, across private corporate credit, liquid corporate credit, infrastructure and asset based credit, and real estate debt, as well as a team dedicated to serving the firm’s insurance clients.

Arena Investors has promoted Bryan Gross to managing director of the firm, from his position in the US real estate private investments team.

Gross joined Arena from real estate lender Be-Aviv Group, where he led debt financing and capital markets activities.

Read more: Arena Investors launches equipment finance subsidiary with $100m

Prior to this, he was a vice president at H/2 Capital, with responsibility for sourcing, underwriting and structuring commercial real estate credit and, before that, he served as an associate at CW Capital, where he worked on the resolution of distressed commercial mortgage loans and the disposition of real estate-owned properties aggregating in excess of $2bn (£1.5bn).

Gross has also worked at IBUS Management and Development, a Netherlands-based private equity firm that focused on multi-family and commercial acquisitions and, early in his career, he focused on commercial mortgage-backed securities and corporate fixed income securities at the Securities Industry and Financial Markets Association.

Read more: Most US advisers allocating to private credit

In a LinkedIn post, Arena Investors wrote: “Bryan brings nearly 20 years of experience in real estate finance to this position of leadership, including expertise in sourcing and underwriting private real estate investments and overseeing debt financing and capital markets activities.

“This promotion demonstrates Arena’s commitment to supporting its team and senior leaders as the firm continues to expand its multi-strategy alternative asset management business and insurance platform.”

In May this year, Arena, which is a global multi-strategy investment firm, announced the final close of its Special Opportunities Partners Fund III with over $1bn of commitments.

Sustainable private credit firm Colesco Capital has taken over the management of an impact credit fund from Polestar Capital.

Colesco has agreed with Polestar Capital and its investors to manage the Polestar Capital Circular Debt fund, which has been renamed the Colesco Circular and Climate Credit Impact fund (C⁴IF), effective 1 January 2026.

Read more: Colesco Capital raises over €800m in first close

The Article 9 fund will continue its strategy to invest in companies targeting measurable outcomes across environmental and circular economy themes, with the aim to advance the climate transition and pursue “additional impact through private credit”.

The entire investment team will transfer to Colesco, which the firm said will ensure “uninterrupted management, greater scale, a strengthened origination network and access to Colesco’s extensive resources”.

It is part of Colesco’s long-term growth strategy to broaden access to sustainable investments and create a multi-credit strategy platform.

Read more: Colesco Capital appoints co-head of origination

Colesco will oversee more than €1bn (£879.2m) in capital commitments across its platform, as of 1 January 2026.

“We took on the management of this strategy because it aligns closely with our long-term strategic growth objectives and brings complementary capabilities to our existing investment proposition, enabling us to offer a more diversified, resilient investment solution,” said Danny Vroegop, co-founder and chief executive of Colesco.

“The Colesco Circular and Climate Credit Impact Fund strengthens our ability to align capital with measurable sustainability outcomes while targeting strong financial returns. This marks a pivotal moment in our journey towards becoming a leading responsible investment manager and we plan to expand investor access and scale our presence in new markets and sectors.”

Read more: Eiffel raises €1.2bn for third European energy transition fund

Eiffel Investment Group’s direct lending fund, a unitranche private debt fund dedicated to European SMEs, has exceeded 40 per cent deployment with a new €10.5m (£9.2m) investment in Italy.

Launched in 2024, Eiffel Impact Direct Lending (EIDL) has committed nearly €60m through seven transactions in sectors including climate engineering, healthcare, industrial goods, services and software.

Nearly half of the amounts invested have been deployed outside France, mainly in Italy, with the latest investment made in an Italian banking software publisher.

Read more: Eiffel raises €1.2bn for third European energy transition fund

“This seventh investment perfectly illustrates EIDL’s mission: to support European SMEs in their growth and transition projects, while integrating measurable impact objectives,” Antoine Maspétiol, head of private credit at Eiffel Investment Group, said.

“After France, Italy is becoming a major hub for our European strategy.”

The Benelux countries represent the fund’s third target geography.

In its first year, EIDL delivered an annual performance in line with its target of more than 10 per cent, with the firm attributing this to portfolio quality and “disciplined transaction selectivity”.

Eiffel has also made two appointments to the EIDL management team, hiring Paris-based Mayeul Rebaudet, who has more than 10 years of experience in private markets and strategy consulting, having structured around 15 private debt transactions at BlackRock in Paris and London.

Read more: Eiffel raises €220m for new green private debt fund

Fabio Rodrigues Dos Santos, who is based in Amsterdam, joins the team with responsibility for developing the firm’s private credit business in the Benelux region.

Prior to Eiffel, he spent nearly nine years at HSBC in Amsterdam and London, where he developed expertise in leveraged finance and private credit.

“The current environment offers an exceptional window of opportunity for unitranche financing of European SMEs and mid-cap companies, amid a relative pullback in traditional bank financing,” added François Serot Alméras, fund manager at Eiffel.

“Companies are seeking long-term partners capable of combining flexibility, performance and impact. This is precisely EIDL’s mission.”

Read more: Eiffel names Caroline Steil as general counsel

King Street Capital Management has promoted Kris Mastronardi, the firm’s chief operating officer and global head of strategy, to partner.

Mastronardi joined King Street in 2022 from alternative asset manager Blackstone, where he served as managing director and head of global business strategy.

Since joining King Street, he has played a key role in shaping global business initiatives and product development in close collaboration with the investment, marketing and operations teams, the company said.

Read more: King Street closes European real estate special sits fund with $950m

In May 2024, he took on the position of chief operating officer, tasked with leading and enhancing King Street’s operations platform while continuing to oversee global strategy.

“Kris is an exceptional leader whose strategic insight and operational rigor have made a meaningful impact across our organisation,” said Brian Higgins, founder and managing partner of King Street. “His promotion to partner reflects the trust and confidence we have in him and the critical role he plays in helping position the firm for long-term growth.”

Read more: King Street and Lumyna launch credit strategy

King Street is a global alternative investment firm founded in 1995 that manages more than $30bn (£22.3bn) in assets across public and private markets.

Read more: Managers pivot to private debt and real assets

Europe-focused funds’ share of private credit fundraising increased in 2025, as North America lost ground, according to the latest data from BlackRock and Preqin.

Having predicted last year that North America’s “grip” on the private credit industry would tighten, Preqin reported that Europe’s share of fundraising increased from 23 per cent in 2024 to 46 per cent in 2025, while North America’s share decreased.

North America-focused funds’ share of fundraising fell from 72 per cent to 51 per cent over the same period, as investors seek “greater geographical diversification to mitigate country-specific political risk”.

However, Preqin’s long-term forecasts for growth in assets under management (AUM) continue to favour North America.

Read more: BlackRock: Europe’s private credit market to double by 2030

The Preqin Private Credit Global report revealed that by the end of the third quarter, overall private credit fundraising reached $134.7bn (£100.4bn), compared with $197.1bn for full-year 2024, which means private credit is tracking at 68 per cent of last year’s full-year fundraising.

Preqin expects some “acceleration” towards the end of the year, given that aggregate private credit fundraising in the final quarter tends to be “larger than average”.

Its forecasts suggest that private credit fundraising will pick up in 2026, with capital raised over the year expected to exceed the 2025 full-year total by 20 per cent.

Read more: Fitch warns of “transmission risks” as European private credit market scales

According to Preqin, 61.5 per cent of capital raised in the first three quarters of 2025 is attributable to direct lending.

The latest figures showed distressed debt has gained share year on year, with 2025 its best year for fundraising since 2021, while special situations has overtaken distressed debt as the second-largest private credit strategy by AUM.

“This suggests a broadening of investor appetite, with many seeking to round out their private credit exposure in favour of an all-weather approach,” said RJ Joshua, head of private debt, research insights at Preqin.

The majority (81 per cent) of investors intend to maintain or increase their private credit allocations in the next 12 months, and 91 per cent over the long term, according to Preqin.

It found that investor appetite is shifting toward higher-yield strategies, as 54 per cent of investors see asset-backed lending as the most attractive emerging strategy.

“Overall, 2025 has been a year of consolidation and strategic evolution for private credit,” Joshua said. 

“Looking ahead to 2026, private credit fundraising is expected to stabilise and resume growth, supported by ongoing structural shifts in the market and broader investor access,” he added.

Read more: Global alts AUM to hit $32tn by 2030

The high-profile collapse of First Brands and Tricolor was due to “lender control”, not the asset class, a new white paper has argued. 

US auto parts supplier First Brands and US car dealership Tricolor fell into bankruptcy this year, leaving an array of lenders out of pocket. The company failures ignited questions around the health of the credit space and whether private credit is exposed to systemic risk. 

Rithm Capital’s latest white paper, ‘Collateral Control Failures: What First Brands and Tricolor Reveal about ABF Oversight’, found that the failures highlighted a “structural vulnerability” in credit, which is that asset-backed facilities can behave like unsecured risk when lenders rely on borrower data and fragmented infrastructure “rather than real control of collateral and cash flows”.

Read more: Private credit bigwigs hit back at “misinformation” over First brands collapse

The authors of the white paper found that, in both cases, lenders relied upon borrower-produced borrowing base reports, instead of independent, bank-controlled data, and on “imperfect or fragmented” registry systems that do not operate “at the asset-ID level”.

They were also reliant on structures in which the borrower acted as its own servicer and gatekeeper of collections.

Rithm Capital pointed out that both First Brands and Tricolor sat in sectors long considered “understandable” for asset-based lenders.

“The weak point was not complexity of product, but the absence of a consistent control slack around ownership evidence, cash flow control, servicing oversight and continuous verification,” wrote Rithm Capital’s Charles Sorrentino, managing director, head of investments, Satish Mansukhani, managing director, investment strategist and Alan Wynne, senior associate, investment strategist.

“A more resilient approach centers on clear proof of ownership, direct influence over how and where payments are made, independent oversight of servicing, and continuous, asset-level verification of what is actually owned and being paid,” the authors stated.

Read more: Fitch: First Brands’ collapse has ‘limited implications’ for direct lending

First Brands Group started the year with over $10bn (£7.4bn) of total debt and approximately $900m each year in interest obligations and, by late September, had defaulted on a $1.9bn inventory financing facility.

The company filed for Chapter 11 bankruptcy on 29 September.

Tricolor specialised in selling and financing vehicles for borrowers with limited or no credit history, extending retail instalment contracts via its captive lending arm, with lenders including Fifth Third Bank and JPMorgan Chase.

The company filed directly for Chapter 7 liquidation on 10 September, having bypassed a restructuring path.

According to Rithm Capital, First Brands and Tricolor were not “failures of exotic instruments”, given that both involved “familiar” asset types and credit structures. 

“The core lesson is that legal form – secured, self-liquidating, asset-based – does not guarantee outcome if lenders do not build and maintain operational control over the ownership, cash flows and verification of their collateral,” the authors concluded. 

“Embedding a portable control stack across facilities, and tailoring it to the mechanics of each asset class, can materially reduce the risk that the same cash flow is financed twice or that pledged collateral is missing when stress hits. The operational effort required is significant, but the alternative – relying on trust where control is feasible – carries its own, now very visible, cost.”

Read more: SEC targets private credit amid market concerns

Partners Group has formed a strategic partnership with Erste Asset Management to offer a private markets solution for Erste Group’s private and institutional clients in Central and Eastern Europe.

It will provide access to private markets opportunities across private equity, private credit, infrastructure, and real estate, and will invest in Partners Group’s direct investments through the firm’s suite of evergreen strategies.

It will be structured under the European Long-Term Investment Fund (ELTIF) 2.0 regulation.

Read more: Investors shift portfolios towards private markets amid uncertainty

“We are pleased to join forces with Erste Asset Management to offer both their private and institutional clients access to a flexible, core private markets allocation,” said Markus Pimpl, managing director, client solutions at Partners Group.

“This solution combines the market-leading strengths of both firms to the benefit of Erste’s client base. We look forward to a fruitful collaboration in the coming years.”

Erste AM, the asset management unit of Erste Group, has more than €100bn (£87.6bn) in assets under management.

“This partnership aligns closely with our strategy to broaden our investment offering with innovative private markets solutions that create long-term value for our clients,” added Heinz Bednar, chief executive of Erste Asset Management.

“Partners Group is a global leader in the evergreen space, and by combining their expertise with our deep regional client understanding, we can provide unique access to high-quality private markets investments across Central and Eastern Europe.”

In November, Partners Group, which manages $52bn across its private wealth product suite globally, partnered with Mediobanca Private Banking to launch the first private markets royalties evergreen fund for Italian investors.

The group has signed a series of strategic agreements with financial institutions globally to provide tailored private markets access, including BBVA and Lincoln Financial.