Private Credit’s Weak Spots Are Starting to Show

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Good morning, ! This week we're covering private credit biggest vulnerabilities, IPO cycle becoming dependent on three main companies, private capital market AUM, and the recurrent PE liquidity stress. 

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DATA DIVE

Private Credit’s Evolution from Alternative to Essential

Private credit has spent the last decade disrupting traditional lending. Now, its biggest challenge may be managing its own success.

Our latest PE150 microsurvey found that 30% of respondents view overcrowding and excess capital as private credit’s biggest vulnerability, ahead of illiquidity in a downturn (27%) and weak underwriting standards (25%). Consultants were particularly concerned, with 35% citing overcrowding as the asset class’s top risk.

The concerns come as private credit continues its remarkable growth. Global AUM reached $2.28 trillion in 2025 and is projected to nearly double to $4.5 trillion by 2030, fueled by increasing institutional allocations and demand for flexible financing solutions.

The takeaway? Investors are no longer debating whether private credit can grow. They're increasingly focused on whether underwriting discipline can keep pace with the flood of capital entering the market. (More)

TREND TO WATCH

The IPO Window Is Waiting for Three Companies

The modern venture market has a concentration problem. Since 2015, US VC backed IPOs have generated roughly $1.22 trillion in exit value, yet the next cycle may depend disproportionately on just three names: SpaceX, OpenAI, and Anthropic.

The chart tells the story. 2021 produced 361 VC backed IPOs and more than $660 billion in valuation creation during an era of zero rates, aggressive growth investing, and public markets willing to pay venture style multiples. Today, the pipeline is thin. Outside of a handful of filings and rumors, the market is effectively waiting for mega cap AI and infrastructure companies to test investor appetite.

That creates a strange dynamic for private markets. Strong debuts could reopen the IPO machine, revive LP distributions, and stabilize late stage valuations. Weak performance could do the opposite by sucking liquidity toward a few trillion dollar names while leaving the broader unicorn ecosystem stranded.

The risk for GPs is not just whether these IPOs happen. It is whether public markets decide only the giants deserve liquidity. (More)

PRESENTED BY MODE MOBILE

One Shark Missed Billions… Another Saw This Coming

Imagine turning down Uber at a valuation of $10 million, only to watch it go public at over $80 billion.

That’s exactly what happened to Mark Cuban… a 799,900% return, gone.

But original Shark Tank investor Kevin Harrington built his career doing the opposite: spotting asymmetric opportunities before they go mainstream.

Like Uber turned vehicles into income-generating assets, Mode Mobile is turning smartphones into income streams.

They were named the #1 fastest-growing software company by Deloitte and have already helped their users earn and save over $1B.

Kevin Harrington invested early.

And at just $0.52/share, you can still get in before their potential IPO.

Secure shares at $0.52 while the pre-IPO window is still open.

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Potential Uber return for Marc Cuban does not take into account dilution.

The Deloitte rankings are based on submitted applications and public company database research, with winners selected based on their fiscal-year revenue growth percentage over a three-year period in 2023.

Please read the offering circular at invest.modemobile.com. This is a paid advertisement for Mode Mobile’s Regulation A Offering.

DILIGENCE CORNER BY 150 DILIGENCE

The Wrapper Is Becoming the Strategy

McKinsey estimates total private capital AUM could approach $24T by 2025, but the more important shift sits beneath the headline number. Alternative structures like semiliquid vehicles, higher liquidity products, and permanent capital are expected to represent 33% to 35% of total AUM, up from 27% to 29% in 2020.

That changes the diligence equation.

For years, underwriting focused primarily on asset quality. Now, investors also need to underwrite the capital wrapper itself. Redemption mechanics, liquidity mismatches, valuation methodologies, and retail distribution risk are becoming just as important as EBITDA growth.

The fastest growing pools are no longer traditional closed end funds. LP demand is shifting toward products that promise private market exposure with public market convenience. That creates opportunity, but also a structural stress test during volatility.

Strategic takeaway: the next generation of diligence is not just about what firms own. It is about how capital can leave. In private markets, liquidity terms are quietly becoming a source of both alpha and risk. (More)

LIQUIDITY CORNER

When Evergreen Stops Feeling Evergreen

Private equity’s liquidity stress test just moved from theory to headlines. After redemption requests in one of Partners Group’s evergreen vehicles surged to 9.8%, the firm triggered a 5% withdrawal cap and warned similar restrictions could spread across additional funds.

The deeper signal is not the gate itself. It is where the pressure is coming from. Private credit redemption stress is now bleeding into private equity vehicles, exposing the tension between illiquid assets and increasingly liquid promises.

For years, democratization expanded the buyer base for private markets. Now the industry is confronting the reality of matching retail style liquidity expectations with assets designed for multi year hold periods. (More)

MACROVIEW

AI Might Finally Break the Productivity Trap

The most important AI story is not automation. It is productivity. In the Solow Growth Model, long run economic growth ultimately comes from improvements in Total Factor Productivity: the elusive A in the production function. Labor growth is slowing structurally. Capital accumulation alone faces diminishing returns. That leaves productivity doing the heavy lifting.

The early evidence is becoming harder to ignore. Federal Reserve Bank of St. Louis data shows workers using Generative AI are already saving roughly 5.4% of working time on average, with the strongest gains concentrated in Information Services, Professional Services, and Finance. Those are not random sectors. They are information dense industries where marginal productivity gains scale quickly across labor.

The macro significance is straightforward. If AI persistently raises output per worker, even modestly, the impact compounds across the entire economy. Some projections now estimate productivity growth could rise from roughly 1.4% historically toward 2.1% through 2030.

That may sound incremental. Economically, it is enormous. In a mature economy with weak labor force growth, higher productivity alters the trajectory of real GDP, corporate profitability, and potentially even fiscal sustainability itself.

For private equity, this reframes the AI conversation entirely. The real opportunity is not buying “AI companies.” It is identifying businesses where AI meaningfully raises output without proportional labor expansion.

In Solow terms, the firms that successfully raise A may end up owning the next decade of multiple expansion. (More)

"Don’t be distracted by criticism. Remember, the only taste of success some people get is to take a bite out of you."

Zig Ziglar