The Growth of Private BDCs

Since 2003, bank lenders’ involvement in sponsored middle market transactions has fallen from approximately 70 percent to 20 percent of the market. This has created an attractive opportunity for alternative, non-bank lenders to step into the gap and provide private financing to these companies at attractive interest rates. The private credit/direct lending business has grown rapidly since the financial crisis. As of December 31, 2017, private credit had more than $420 billion of committed capital, with an additional $246 billion of investible cash available. This represents a massive growth in private credit from 2007 in which only $107.1 billion of capital had been committed, with only $99.7 billion in available cash for investment.