Private debt is set for significant consolidation over the next five years, according to new research from Carne Group.
A total of 96 per cent of private market executives surveyed said they expected industry-wide consolidation, with almost three-quarters (72 per cent) saying this market contraction would be significant. Those surveys said this consolidation would be driving by rising regulatory demands, operational pressures and the shift towards more mainstream investors accessing private markets.
The survey was conducted among 100 global private markets executives from fund management firms – including 25 private debt specialists overseeing $196bn of assets.
Carne Group points out that this consolidation is already happening with recent examples including BlackRock’s acquisition of HPS Investment Partners and Franklin Templeton and Clearlake expanding into the European market through their respective acquisitions of Apera and MV Credit.
Carne’s research, the first in a four-part series on private markets, shows managers are recalibrating strategies amid slowing deal activity and a tougher fundraising environment. Eight out of 10 of those surveyed said they plan to enter new jurisdictions to raise capital, while almost half (48 per cent) expect to ramp up outsourcing over the next 12 months. Again regulatory pressure is a key factor, with 72 per cent citing it as a driver for outsourcing distribution.
The survey’s findings also indicate that changes in deal sizes and fundraising are prompting managers to recalibrate their strategies with greater caution.
Carne Group says these declines reflect a broader adjustment towards risk-aware, disciplined lending in a higher interest rate, lower-growth environment, while still seizing opportunities where traditional lending has stalled.
Technology is also reshaping the sector, with 96 per cent of managers already deploying AI to support investment strategies.
Carne Group chief regulatory and client solutions officer Des Fullam says: “These shifts reflect the broader slowdown in private equity activity, where fewer new deals and re-financings are limiting capital deployment. Funds launched five to eight years ago are now facing delayed exits, which is slowing capital recycling and leaving some investors over-allocated or hesitant to re-commit before receiving distributions.”
He adds: “Private debt, like all private markets, has gone mainstream with the expansion of private assets to retail and high net worth investors. Many managers are still playing catch-up operationally — a dynamic that’s driving consolidation across the industry.”
