BlackRock projects that private credit assets under management (AUM) will soar to $4.5 trillion by 2030, as corporate borrowers increasingly turn to alternative financing sources. This expansion is driven by growing accessibility and strategic partnerships between banks and private lenders.
In a March 7 report titled “Private Credit: Further Confirmation of Its Staying Power”, BlackRock highlights several key trends fueling this rapid growth. One major factor is the rise of AI-related infrastructure, which demands significant capital expenditures that exceed the capabilities of traditional lenders.
The report also points to the evolving relationship between banks and direct lenders, once considered competitors but now increasingly collaborating on major transactions. A prime example of this shift is the Walgreens Boots Alliance buyout, where both banks and private credit lenders worked together on financing a $23.7 billion leveraged buyout (LBO).
The Four Key Models of Bank Private-Credit Partnerships
BlackRock’s report outlines four major types of partnerships emerging between banks and private credit lenders:
- Direct Lending by Banks – Banks making loans directly from their balance sheets, such as JPMorgan’s $50 billion lending commitment, a portion of which was disclosed in February 2024.
- Origination Partnerships – Collaborations where banks partner with private lenders to originate loans, like Apollo’s $25 billion partnership with Citigroup.
- Direct Lending via Asset Management Arms – Banks using LP capital through their asset management divisions, such as Goldman Sachs Asset Management.
- Loan Sales to Private-Credit Lenders – Banks selling loan portfolios to private credit firms, including PacWest Bancorp’s sale of a specialty finance loan portfolio to Ares and synthetic risk transfers (SRTs).
LCD reports that bank-private credit partnerships have surged, tracking 17 new collaborations in 2024, compared to just three in 2023.
Beyond direct partnerships, banks are also providing fund financing to private credit firms, further integrating into the alternative lending ecosystem. This approach allows banks to offer a diverse range of financing solutions to clients, making their lending approach product-agnostic.
BlackRock identifies three main borrowing categories where banks are broadening their involvement:
- Commercial and Industrial Loans – Serving small and mid-sized businesses.
- Syndicated Financing – Supporting larger corporate borrowers through investment-grade bonds, high-yield bonds, and leveraged loans.
- Private-Credit Financing – Catering to both sponsored and non-sponsored issuers, including junior debt, asset-based lending (ABL), and other sub-strategies.
Even in cases where banks lack in-house lending capabilities, they are procuring loans from private lenders to maintain long-term client relationships.
The Future of Private Credit
As banks increasingly adopt hybrid financing structures and collaborate with private credit firms, the market for alternative lending continues to expand. This shift means direct lenders will have greater access to new investors and corporate borrowers, driving further growth in the private credit sector.
With BlackRock’s $4.5 trillion forecast, it’s clear that private credit is not just an alternative financing tool—it is becoming a dominant force in global capital markets.
