Direct Lending’s Evolution: Adapting Through a Shifting Environment

Direct lending has undergone a dramatic transformation, shifting from a bank-dominated market to one led by private capital managers. As regulatory changes have reshaped the landscape, direct lenders have rapidly expanded their role, now competing head-to-head with banks in even the largest transactions. Ron Kantowitz talks about the transformation of direct lending with the Capital Allocators podcast. Key takeaways include:

Shift away from banks to private capital managers
While providing capital to middle market companies is not new, regulatory changes after the Global Financial Crisis made it harder for banks to participate, paving the way for private credit managers to take the lead.

Rapid growth and market evolution
Direct lending has grown into a multi-trillion-dollar asset class, moving beyond the middle market as large asset managers now regularly execute multi-billion-dollar deals once reserved for banks.

Competitive advantages of direct lending
Direct lenders offer speed, certainty, flexibility, and a single counterparty — benefits that appeal to borrowers even at a premium compared to traditional syndicated bank deals.

An evolving competitive landscape
A handful of sophisticated direct lenders now dominate the upper end of the market, continually challenging banks and reshaping the dynamics of corporate lending.

Capital Allocators and Invesco are not in any way affiliated.
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Important information
Information is provided as at June 9, 2025 and sourced from Invesco Private Credit unless otherwise stated.

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