Private credit is poised to become the fastest-growing strategy in European alternative investments over the next 12 – 18 months, according to findings of  the Gen II Fund Services' EU Core Alternative Managers’ Mood Index (CAMMI).

The research, based on a survey of 110 UK and European fund managers suggests that 64% of respondents plan to launch private credit funds within the next 12 to 18 months – the highest rate of any alternative asset class. By comparison, 45% of respondents indicated plans to launch growth capital funds, 33% plan to expand into venture capital and 27% into real estate, over the next 12 months.

Additionally, on the demand side the research finds 38% of fund managers anticipate that LPs will increase their allocations to private credit over the next year, while the remainder are evenly split between those expecting allocations to remain stable (31%) and predicting a decrease (31%).

Respondents noted that they are also targeting a broader mix of strategies within the asset class - with planned launches spanning real estate debt (23%), mezzanine (15%), distressed debt (14%) and both venture debt and special situations (13%).

Data cited from Preqin and Morgan Stanley are projecting as much as a 76% surge in private credit assets under management, rising from $1.5trn in 2023 to $2.64trn by 2029. Returns are expected to climb as well, reaching an average IRR of 12.0.

Alex Di Santo, Head of Private Equity, Europe, at Gen II Fund Services said: "Private credit has performed well over the years and we expect to see continued growth in the space from established credit funds as well as newer players. Private credit today is a lot more than direct lending – there are many other compelling credit products that are attractive to LPs."

Private credit recorded an EU CAMMI Index score of 53.7 this quarter, indicating moderate optimism for increased LP allocations over the next 12 months. Any score above 50 reflects an expectation of growth among fund managers. While this score trails growth capital (62.8) and venture capital (60.5) but remains well above secondaries and fund of funds (40.2), signalling continued relative strength.

Fund managers reported that they remain mindful of broader macroeconomic risks. Political uncertainty was cited by 33% of respondents as the most significant obstacle to growth, while 25% pointed to the risk of recession, reflecting a note of cautious optimism amid ongoing global economic headwinds.

Di Santo added: "These concerns have not dampened conviction. If anything, managers are positioning themselves to take advantage of potential dislocation. Private Credit has proven to be a very resilient asset class in a challenging macroeconomic environment.”"

Click here to download the full report: CAMMI - Q2 2025