The attributes needed to serve a broader, more liquidity-focused investor base
As private credit expands across institutional and private wealth channels, managers should prioritize liquidity management, diversification, and transparency, according to Victory Park Capital partners Tom Welch and Gordon Watson.
Private credit has grown into a core component of institutional portfolios over the past decade, expanding rapidly as investors sought higher yields and diversification relative to traditional fixed income. The global market is now estimated at roughly US$2.3 trillion in assets under management, and projected to reach US$4.5 trillion by 2030[1], supported by strong demand from institutional investors and increasing participation from global private wealth channels. With this growth has come a notable shift in investor preferences and sentiment, with liquidity emerging as a central concern.
Closer alignment between asset liquidity and investor liquidity expectations is becoming essential
A key theme across private markets is the growing mismatch between investor liquidity expectations and the inherently illiquid nature of the underlying assets. Over the past two years, exit activity across private equity and venture capital has slowed materially due to higher interest rates, weaker initial public offering (IPO) markets, and reduced merger and acquisition (M&A) activity. As a result, distributions to limited partners have declined significantly[2], leaving many investors overallocated to private markets relative to target levels and reducing their ability to recycle capital. In response, investors are increasingly seeking liquidity through secondary markets[3] or redemption features in semi-liquid, “evergreen” vehicles.
These dynamics are beginning to surface within private credit structures, particularly business development companies (BDCs) and other perpetual fund vehicles that offer periodic liquidity to investors. While the underlying assets – primarily senior secured middle-market loans – continue to perform, in most cases, the liquidity profile of these portfolios is intended to be limited, creating pressure when redemption requests accelerate.
1 Preqin (as cited by S&P Global Market Intelligence, November 2025): private credit assets under management (AUM) estimated at circa US$2.28 trillion in 2025, projected to reach US$4.5 trillion by 2030.
2 McKinsey & Co. Global Private Markets Report; Private equity distributions fell to roughly 6% of AUM in 2025 vs. circa14% long-term average, contributing to limited partner (LP) liquidity constraints.
3 Jefferies; February 2026 Global Secondary Market Review; Global secondary transaction volume reached circa US$240 billion in 2025, reflecting increased demand for liquidity.
