Private credit has grown exponentially over the past decade, with its industry’s global assets under management (AUM) reaching $2 trillion and expected to reach $2.8 trillion by 2028. The sector is dominated by private equity (PE) firms such as Apollo, Ares, and KKR, which are pioneering a new strategy of extending credit independently, often backed by high-earning assets.
Unlike traditional banking, the PE leaders have funds that specialize in distress debt offering high yields but substantial risks. However, they also receive big, steady flows of money from super-long-term investors, including insurers and endowments. These firms use this money to invest in high-grade corporate bonds and private credit deals that they originate in-house.
As a result, the PE firms’ funds that hold these loans and their captive insurers typically garner between 150 and 200 basis points more than on corporate bonds of the same duration. This new template has proven successful, with the surging stocks, revenues, and AUM showing the growth of Big PE’s private credit business.
Jamie Dimon’s warning about a potential financial crisis is valid, but it primarily relates to the lack of regulation in non-bank lending. However, for the largest part of the burgeoning private credit market, the industry’s focus on extending credit to borrowers with long horizons and willing to pay extra for the privilege has helped mitigate some of the risks.
In contrast to Dimon’s concerns, the majority of the private debt revolution is focused on matching investors seeking safety with borrowers needing capital tied up in assets for a long time. This new market segment has proven attractive, with PE firms like Apollo and KKR developing innovative strategies to extend credit and generate high returns.
Source: https://fortune.com/2025/07/17/jpmorgan-private-credit-private-equity-funds-companies-explainer