A new, fast-growing segment is the middle-market CLO, which securitizes directly originated private credit loans instead of broadly syndicated ones. This structure represents a powerful convergence of liquid and private credit, growing from near-zero to 20% of total new CLO issuance and offering investors a new way to access private credit.

Bain Capital sees Asia as a highly fruitful market because it is still dominated by banks and lacks a developed private credit or hybrid capital ecosystem. This creates a significant opportunity for firms to provide structured, value-add financing solutions to founders and public companies in the region.

Corporations are increasingly shifting from asset-heavy to capital-light models, often through complex transactions like sale-leasebacks. This strategic trend creates bespoke financing needs that are better served by the flexible solutions of private credit providers than by rigid public markets.

To source proprietary hybrid capital deals, avoid the capital markets teams at PE firms, as their job is to minimize cost of capital. Instead, build relationships directly with individual deal partners in specific industries. This allows you to become a trusted, go-to provider for complex, time-sensitive situations where speed and certainty are valued over price.

In uncertain markets, a hybrid private equity model offering both debt and equity is a key fundraising differentiator. This structure appeals to LPs by providing current income and J-curve mitigation, while also expanding the firm's deal sourcing pipeline to companies needing capital but not ready for a sale.

Public markets favor asset-light models, creating a void for capital-intensive businesses. Private credit fills this gap with an "asset capture" model where they either receive high returns or seize valuable underlying assets upon default, securing a win either way.

The venture growth market will see significant innovation in credit products. VC firms themselves will increasingly offer debt, not just equity, creating hybrid vehicles that can use yield from a debt sleeve to fund LP redemptions and offer more stable returns.

The current pressure on direct lending is creating opportunities in other, previously quiet corners of private credit. Strategies like special situations, opportunistic funds, and mezzanine financing will see increased activity as companies needing to refinance or secure more capital find traditional avenues less accommodating.

Large European banks are not absent from lending, but they prefer the simplicity and regulatory ease of large, portfolio-level financing over complex, single-company underwriting. This strategic focus leaves a significant funding gap in the €100-€400M facility size range for private credit funds to fill.