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Highlights

Private markets are transforming global financial markets through private equity and private credit. The key to unlocking the next stage of growth lies in advancing transparency and data-driven insights.

Credit assets under management of the five largest private credit managers more than doubled between 2020 and 2025, reaching $2.0 trillion. S&P Global Market Intelligence’s Quantitative Research & Solutions group projects that the credit AUM of these firms will top $3.3 trillion by the third quarter of 2029.

Asset-based finance (ABF) has emerged in recent years as one of the fastest-growing credit strategies within private credit portfolios. We expect ABF to surpass $1 trillion in AUM in the portfolios of the five largest private credit managers in 2029.

Private equity and, more recently, private credit have transformed both investor portfolios and global financial markets. The ever-evolving offerings from the asset classes have attracted more investors, while the valuation of private companies has grown exponentially. Further growth hinges on efforts to improve transparency for investors, to provide standardized performance benchmarks to ensure private market allocations meet long-term objectives and risk budgets.

The growth and evolution of private markets

“It is not the strongest of the species that survives, nor the most intelligent, but the most adaptable to change,” goes the famous saying by Charles Darwin.

Markets are constantly evolving. One of the most significant and transformative developments in the global financial system since the Global Financial Crisis has been the rapid growth and evolution of private markets.

Private markets have reshaped the way investors think about diversification and portfolio construction. Private credit, private equity, secondaries, venture capital and real assets have become integral components of multi-asset portfolios for a broadening investor base, from global pension funds and sovereign institutions to insurance companies, wealth managers and retail savers. These assets present new challenges for sound risk management practices as private assets are less liquid, more opaque and frequently complex.

These private allocations are transforming capital markets. In equities, more companies are staying private for longer, even as they grow. Some of the largest private companies, such as SpaceX, OpenAI, Databricks and Anthropic, have achieved valuations in the hundreds of billions and are still growing. The valuation of private companies as measured by the S&P U.S. Private Stock Top 10 Index (USD) gained 81% in 2025 through November, outpacing the 16% gain for the S&P 500 over the same period.

While private equity laid the foundation for investors stepping into private assets, it is private credit that has seen the biggest increase in allocations and investment flows since the beginning of 2020. It achieved annual returns of almost 10% without having any full years of negative returns. Although private equity achieved a higher internal rate of return (IRR) over this period, this came with higher volatility.

In the third quarter of 2020, the five largest private credit managers — Apollo Global Management Inc., Blackstone Inc., Ares Management Corp., KKR & Co. Inc. and The Carlyle Group Inc. — had almost $750 billion in credit AUM. This had grown by 174% to more than $2.0 trillion by the third quarter of 2025. We believe the AUM of the five largest managers represents a sizable portion of the private credit market that some estimate already exceeds $3 trillion.

S&P Global Market Intelligence’s Quantitative Research & Solutions group projects that the credit AUM of the five largest private credit firms alone will top $3.3 trillion by the third quarter of 2029, based on the analysis of sell-side analyst models for each of the firms individually using Visible Alpha estimates.

This projects a compound adjusted growth rate of 15% for private credit between 2023 and 2029. In earnings calls, many alternative asset managers are citing even higher expectations for growth of asset-based finance (ABF) within their credit portfolios.

ABF is a key driver of future private credit growth

Private credit is expanding beyond its traditional beat of middle-market corporate direct lending. Alternative asset managers have grown in size and scale, becoming more vertically integrated, with platforms that span from origination to distribution. This expansion includes ABF deals involving portfolios of loans or assets that provide contractual cash flows traditionally associated with the public asset-backed securities (ABS) market. These assets range broadly, from royalties (both entertainment and pharmaceutical) to asset leasing and loans (such as aircraft, containers and time shares) and beyond. Even as these ABF deals include complex assets and/or structures, the transparency provided to investors varies and can be limited.

ABF has been part of credit investment strategies for over a decade, but mentions of “asset-based finance” surged sevenfold between 2021 and 2025, according to S&P Global Market Intelligence data from the earnings calls of more than 50 private equity firms.

This reflects the growing momentum of ABF and its increasing importance as a diversified credit strategy for asset managers and their investors.

Private credit investors double down on ABF AUM

Considering the five largest private credit managers again, we see that ABF is poised for growth within the broader credit portfolios. ABF AUM for the top private credit investors surged 25% year over year as of the third quarter of 2025, nearing $500 billion. S&P Global Market Intelligence’s projections indicate credit ABF AUM growing at a 21% compound adjusted growth rate, increasing its share in the overall credit portfolio of these firms to 29% in the third quarter of 2029 from 24% in the third quarter of 2025, as ABF AUM potentially approaches $1 trillion in 2029.

Innovation is a hallmark of private credit’s evolution

Once synonymous with middle-market direct lending, private credit has become a pillar of debt capital markets. Borrowers from diverse sectors have found that private credit, with its agility and speed of execution, can meet the bespoke needs of increasingly complex transactions in sectors such as fund finance, digital infrastructure and energy transition, as well as provide a source of funding for esoteric assets.

Adaptation is a signature feature of private credit, and its expansion into ABF is just one example of its adaptability.

Through such rapid innovation, private credit has continuously reinvented itself, expanding its traditional footprint beyond direct lending to mid- and lower-market corporates into securitizations, fund finance and infrastructure. As the variety of private credit assets proliferates, alternative asset managers launching new multi-strategy funds have a broad mandate to seek opportunities from across the spectrum.

Yet the expanded size and scale of private markets introduce more opacity and illiquidity into global capital markets. Risks related to the growing leverage and complexity in private credit transactions pose a challenge, as does the lack of regulation, disclosure and systemic transparency in the market. The growing interdependence between alternative asset managers and traditional players in the insurance and banking sectors was flagged by the International Monetary Fund as an area that could amplify shocks to the financial system.

Transparency is key to unlocking future growth

Investors have been willing to accept illiquidity, new complexities and limited transparency in exchange for the expectation of higher risk-adjusted returns and diversification benefits. This has made the comparison of performance within and between asset classes challenging, with access to information dependent on what the general partner is willing to provide.

This is quickly changing. Investors are increasingly seeking objective benchmarks, standardized reporting and tools that support clear and consistent analysis, attributes long associated with public markets and sound risk management practices. The market growth also highlights the need for a standardized language to define exposures, determine allocation sizes and evaluate performance relative to public and private alternatives. Each is critical for ensuring that private market allocations align with long-term objectives and risk budgets.

There is a push for private markets to strengthen the infrastructure required to expand access responsibly by supporting clearer reporting, better governance and more transparent communication of risks.

Private markets appear to be the next frontier for investors. The evolution of private credit, including its expansion in ABF, is especially notable. As private markets generally, and private credit specifically, continue to mature, adapt and innovate, we expect more transparent, rules-based, data-driven insights will serve as the foundation of a more accessible, comparable and well-understood private market ecosystem.

And finally: While the outlook for private equity is generally positive, there is no guarantee such investments will outperform their public market peers. We examine how the optimal combination of manager selection, diversification and discipline can contribute to a successful investment strategy.

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This article was authored by a cross-section of representatives from S&P Global and in certain circumstances external guest authors. The views expressed are those of the authors and do not necessarily reflect the views or positions of any entities they represent and are not necessarily reflected in the products and services those entities offer. This research is a publication of S&P Global and does not comment on current or future credit ratings or credit rating methodologies.

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