Private Credit Takes Center Stage as Alternative Asset Growth Accelerates

In Brief: McKinsey partner Brian Vickery explores private credit's evolution with Antares Capital president Vivek Mathew, dissecting current market dynamics and future opportunities in this rapidly growing asset class. The interview reveals how private credit managers are adapting to higher rates while preparing for potential market shifts, with particular focus on risk management and geographic expansion opportunities.

Big Picture Drivers:

• Market Timing: Goldilocks period of optimal rates driving strong returns without widespread distress

• Global Appetite: Emerging demand from Asia and Middle East investors seeking portfolio diversification

• Growth Potential: Significant headroom with private equity owning just 15% of middle-market companies

Key Topics Covered:

• Market Evolution: From niche financing option to mainstream investment vehicle

• Risk Landscape: Portfolio performance and workout capabilities becoming critical differentiators

• Competitive Dynamics: Traditional banking channels reemerging alongside private credit growth

By The Numbers:

• Historical Context: 2008-09 crisis peak losses hit 1%, setting benchmark for risk assessment

• Portfolio Scale: Antares manages approximately 500 company relationships

• Market Penetration: 15% private equity ownership in middle market signals room for expansion

Key Players:

• Vivek Mathew: Antares Capital president bringing 30-year industry perspective

• Brian Vickery: McKinsey partner specializing in private markets analysis

Memorable Quotes:

• "We're in a bit of a 'Goldilocks zone,' where rates have been high enough that we can lend and make decent money, but aren't high enough to have caused widespread issues." - Vivek Mathew

• "When the market picks up, given the amount of capital that's been raised, there could be a real deluge of M&A for a lengthy period." - Vivek Mathew

The Wrap: As private credit matures from alternative investment to mainstream asset class, the industry faces a pivotal moment. Growing institutional adoption, expanding global demand, and evolving market dynamics suggest sustained growth ahead, while raising new questions about risk management and competitive dynamics.