Carne Group: Private debt leaders prepare for market reshaping
New research from Carne Group (Carne), Europe's largest third-party management company (ManCo) and leading provider of fund regulation and governance solutions for the asset management industry, reveals consolidation is firmly on the horizon for the private debt sector. Nearly all (96%) private debt managers surveyed globally by Carne anticipate industry-wide consolidation over the next five years, with 72% expecting it to be significant, set against a backdrop of increasing regulatory demands.
These findings are a part of Carne’s four-part private markets report series, which surveyed 100 C-suite executives from global private market fund managers, including 25 private debt specialists collectively overseeing $196 billion in assets under management. The research captures the perspectives of industry experts on how they view market growth over the coming years, the key challenges shaping their strategies, and the solutions they’re deploying to navigate an increasingly complex regulatory and operational landscape.
Des Fullam, Chief Regulatory and Client Solutions Officer at Carne Group, said:
'Consolidation is already in swing 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.'
Underlying market dynamics driving shift
Carne’s survey findings indicate that changes in deal sizes and fundraising are prompting managers to recalibrate their strategies with greater caution. 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.
Des Fullam added: '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.'
Other key findings from Carne’s private debt report include:
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80% of managers plan to cross into new jurisdictions to raise new capital
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Nearly half (48%) plan to significantly increase outsourcing in the next year
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Regulatory pressures are a key factor in driving 72% of private debt managers to outsource distribution
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96% of managers already use AI to support investment strategies
Des Fullam finished by stating: 'Private debt like all private markets has gone mainstream, with the expansion of private assets to retail and high net worth investors. As a consequence many managers are still playing catch-up operationally, a dynamic that’s driven consolidation across the industry. As regulation intensifies and talent thins, outsourcing has become a strategic must. Our survey shows reporting and transparency are now the top drivers, followed closely by compliance and staffing challenges. Manual processes won’t cut it; having the right partner brings the tech and regulatory depth necessary to keep managers focused on performance.'