Octus on Credit: Private credit ready to go on the offensive as investors look for diversification

Direct lending has become the dominant segment of private credit. That much is obvious from this week’s panel discussions in Berlin as the global private capital industry descends on the city’s Intercontinental Hotel for Superreturn 2025.

This position is well deserved. Direct lenders have now weathered their share of macroeconomic shocks and come out the other side and there is still more growth in store. Especially as the larger managers figure out how to tap private wealth and retail channels, an investor base which one panellist said is currently just 5% of private credit AUM but could be 20% by 2029. 

But for those investors that were early adopters of direct lending, they are now on the hunt for higher risk strategies. Both to achieve a bit of additional yield and to diversify away from a part of the market which is beginning to show a lot of overlap as club deals become the norm. 

Newer and emerging areas of private credit such as ABL, secondaries, NAV finance, fund sub lines, litigation finance and others have all been hot topics of conversation in Berlin this week, and could well enjoy their own periods of growth in coming years.

In shores further afar, Octus Americas is launching its inaugural Deal Origination Pipeline Weekly this Friday, available only to Americas Private Credit and Deal Origination Insights subscribers. To request access, click here.