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Private Credit’s Biggest Tailwind (And It’s Accelerating)
Today we cover the key driver behind private credit’s growth: the decline in bank lending as a share of U.S. GDP.
Good morning, ! Today we cover the key driver behind private credit’s growth: the decline in bank lending as a share of U.S. GDP. We also look at why Brazil continues to stand out as one of the region’s most attractive markets, and unpack General Atlantic’s acquisition of TEAM Services at a 10x EBITDA multiple.
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PRIVATE CREDIT CORNER
Banks Are Shrinking. Private Credit Isn’t.
Stat: US bank lending has fallen to roughly 43% of GDP, down from peaks near 60% over the past cycle.
Context: The chart tells a slow but decisive story. Traditional banks are pulling back from the real economy, constrained by capital requirements, regulation, and balance sheet risk. Even during periods of economic expansion, bank lending penetration has failed to reclaim prior highs. The post 2020 spike proved temporary, not structural. Meanwhile, demand for financing has not disappeared. It has migrated. Direct lenders, unitranche providers, and private credit funds are stepping into the gap, particularly in mid market and sponsor backed transactions where flexibility matters more than cost.
Strategic Takeaway: This is not a cyclical shift. It is a market share transfer. As banks continue to retrench, private credit is becoming the default lender rather than the alternative. For sponsors, this means more certainty of execution and bespoke structuring. For allocators, it reinforces why private credit remains one of the most durable ways to capture yield and control in a capital constrained system. (More)
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REGIONAL FOCUS
Scale Doesn’t Save You
Latin America PE is having a quiet identity crisis. Even among the region’s largest, brand-name funds, returns are all over the map—IRRs swing from -25% to ~16%, and TVPIs range from capital loss to 1.8x+. In other words, size ≠ safety.
Vintage timing is doing a lot of heavy lifting. 2010–2014 funds look comparatively healthy (read: actual DPI), while 2018–2020 vintages are still mostly paper gains with limited exits. That’s less an indictment and more a reminder: time, not talent alone, drives perception.
The kicker: strategy dispersion—Brazil buyouts vs. regional growth vs. sector bets—matters more here than in developed markets. Add in macro volatility, and manager selection becomes the strategy.
Bottom line: LPs aren’t chasing logos—they’re underwriting execution across cycles. (More)
DEAL OF THE WEEK
Care at Scale Gets a Premium Price
General Atlantic just acquired TEAM Services for $3B, valuing the home care platform at roughly 10x EBITDA.
TEAM is not a niche operator. The business spans all 50 states, employs 100,000 caregivers, and blends traditional home care with payroll, HR, and financial management services tied to consumer directed care. That hybrid model turns a fragmented, labor heavy sector into something closer to infrastructure.
The multiple is telling. 10x EBITDA for a services business signals confidence in durability, not just growth. Home care sits at the intersection of aging demographics, state funded programs, and workforce outsourcing. It is less cyclical than most services and increasingly essential.
Strategic Takeaway: This deal reflects a broader shift in private markets toward “must have” services with embedded demand. For sponsors, healthcare services is no longer just a roll up story. It is becoming a long duration cash flow play with pricing power tied to demographics, not GDP. (More)
MICROSURVEY
Where are banks most competitive vs. private credit today? |
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