Institutional investors, including pension funds, insurers, and family offices, are increasingly allocating resources to private debt. They are attracted by its return-for-risk profile, the breadth of market opportunities, and the improving regulatory oversight of the sector.
Key findings from Alvarez & Marsal's 2025 Australian Private Debt Market Review include:
- A$224 billion in assets under management, comprising A$132 billion in corporate lending and A$92 billion in commercial real estate lending.
- Evolving capital-raising channels, with insurance companies and pension funds drawn to the alignment of investment-grade private debt with their long-term liabilities, and the re-emergence of the listed investment trust market.
- Direct lending and specialist finance mandates gaining momentum, offering speed, flexibility, and more tailored capital solutions.
- Market consolidation intensifying, with top-tier domestic multi-asset managers now holding a 27% market share, supporting the heightened focus on stronger governance and transparency.
Despite the Australian Securities and Investments Commission's (ASIC) recent review highlighting concerns around valuation inconsistencies and mixed liquidity practices within private credit funds, the asset class continues to demonstrate robust growth. This resilience underscores the market's adaptability and the confidence investors place in private debt as a viable investment avenue.
For borrowers, particularly those considering debt consolidation, the expansion of the private debt market may present new opportunities. Enhanced competition among lenders could lead to more favorable loan terms and innovative financial products tailored to individual needs. However, it's essential for borrowers to conduct thorough research and seek professional advice to navigate this evolving landscape effectively.
