Private credit gains ground among top private equity managers

Private credit is increasingly becoming a larger share of total assets under management for major private equity firms.

The AUM of private credit assets is expected to nearly double to $4.504 trillion in 2030 from an estimated $2.280 trillion in 2025, according to a report by Preqin.

Blackstone Inc.'s credit and insurance segment grew 18% to $375.50 billion in 2024 from $318.9 billion in 2023. As of the third quarter of 2025, this segment's AUM stood at $432.30 billion.

Credit and insurance grew to comprise 33% of the firm's total AUM in 2024 from 31% in 2023. The firm's private equity segment, on the other hand, comprised 31% of total AUM in 2024, up from 29% in 2023.

"Private credit markets are expanding from their origins in non-investment-grade corporate credit and direct lending to become a key mechanism for financing the real economy, including commercial finance, consumer and residential finance, fund finance and of course, infrastructure," Blackstone President and COO Jonathan Gray said during the company's third-quarter earnings call on Oct. 23.

Apollo Global Management Inc. also reported growth in its private credit AUM, which stood at $723 billion as of Sept. 30. The asset class grew 19% year over year in 2024 to $616 billion, comprising about 82% of Apollo's total AUM, compared with 79% of its total AUM in 2023.

Apollo's private equity assets totaled $135 billion in 2024, unchanged from 2023. Private equity assets comprised 18% of Apollo's total assets in 2024, down from 21% in 2023.

Ares Management Corp. reported private credit AUM of $391.50 billion as of the third quarter, which already exceeds the segment's AUM of $348.80 billion in 2024. The 2024 total was up 22% from $284.80 billion in 2023. The asset class comprised 72% of total assets in 2024, from 68% in 2023.

The firm's private equity assets declined to $24 billion in 2024 from $39.10 billion a year earlier. As a result, private equity comprised 5% of Ares' total AUM in 2024, down from 9% in 2023.

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Private credit risk

Amid expectations for substantial private credit growth, recent bankruptcies involving Tricolor Holdings and First Brands Group have sparked discussions regarding the overall health of the private credit market.

The large listed private equity firms have been quick to downplay concerns.

"These events have been erroneously linked to the traditional private credit market as a result of misunderstandings and misinformation," said Blackstone CEO Stephen Schwarzman during the firm's recent earnings call.

Apollo CEO Marc Rowan cited "late cycle behavior and bad actors," while Scott Nuttall, co-CEO and director of KKR, said "from everything we are seeing, there's nothing alarming going on, just the beginning of a return to a more normal default environment."

Limited partner allocation to private credit

Optimism is growing for a rebound in private credit fundraising in 2025, as more limited partners are expected to increase their allocations to the asset class.

Private credit fundraising has faced difficulties in recent years due to liquidity constraints, according to an S&P Global Market Intelligence report. However, increased exit activity in private equity is anticipated to boost institutional investors' cash flow, prompting a significant portion of them to allocate more capital to private credit.

Private credit is attractive because it offers diversification opportunities, enabling investors to access a wider range of borrowers and structures, which can lead to tailored investment criteria, said Dennis Stone, commercial director at CSC, a global fund administration services provider.

Private credit's flexibility and nimbleness allow it to fill gaps left by traditional banks, Stone said.