Gravis head of private credit Albane Poulin has cited “transformative trends and an improving credit environment” as reasons for expecting significant growth in private credit this year.
She said: “Decarbonisation, decentralisation, and digitalisation should provide significant opportunities for private lenders” with private credit “well-positioned to play a pivotal role in global economic transformation, offering stability, income, and opportunities in the evolving landscape of 2025.”
Poulin highlighted that lower interest rates and easing liquidity pressures are likely to boost M&A activity, creating new opportunities for private lenders. “After a spike in default rates during 2024, we anticipate a decline in 2025, particularly in the US in sectors like healthcare, telecom, and business services,” she said.
Inflation is also moderating and borrowing costs falling, refinancing risks are diminishing, especially for cyclical sectors.
Secondly, Poulin said that allocations to private credit are set to rise. “Private equity investors, grappling with challenges in exiting investments, are expected to embrace private credit for its predictability and certainty of returns,” she said, with pension funds tipped to do the same.
Finally, decarbonisation and energy transition efforts are driving demand for new financing solutions, requiring strong technical expertise and a proven track record from managers.
Read more: Impact credit funds tipped for resurgence in 2025
The outlook for UK listed property is brighter in 2025 too, according to Matthew Norris, manager of the VT Gravis UK Listed Property Fund.
He said key drivers include continued M&A activity, robust equity issuance to fund future growth, and thriving sectors like purpose-built student accommodation and build-to-rent, which are expected to lead rental growth.
“The sector promises a potent mix of yield, growth, and upside,” Norris said. “With a forecasted five per cent dividend yield, five per cent growth, and potential 20 per cent capital upside, UK listed property is well-positioned for the year ahead.
“Despite rising debt costs, moderate supply and robust rental demand provide resilience. Investor sentiment is also improving. In late 2024, we saw material fund inflows underscoring growing confidence, a trend likely to persist as Bank of England rate cuts ease financial pressures.”
Read more: The top private credit M&A deals of 2024
Meanwhile, infrastructure and renewables are also going to be an important theme this year, albeit targets will not be easy to hit, according to Phil Kent, adviser to GCP Infrastructure Investments Limited.
“Some call it an infrastructure super-cycle,” Kent said, “whatever the term, it signals major opportunities for investors.”
Pointing to Labour’s accelerated target to decarbonise the electricity grid by 2030, alongside broader net zero goals, Kent said there is a need for rapid action and collaboration between public and private sectors.
“Enabling factors such as regulatory reform and revenue support models are critical to unlocking private investment. The establishment of the National Wealth Fund and GB Energy will play a vital role in mobilising capital, but execution must match ambition,” he explained.
“The challenges are immense. Decarbonising hard-to-abate sectors like transport, heat, and industry requires scaling up solutions at unprecedented rates. Yet, for investors, these challenges also signal vast opportunities. As infrastructure adapts to meet sustainability goals, the sector could usher in transformative economic growth.
Read more: Decarbonisation poses big opportunity for private markets
