Gravis has warned investors against treating private credit as a single risk bucket, saying recent scrutiny of the asset class has made selectivity, transparency and liquidity discipline more important.
The comments follow a period of heightened concern around private credit, including gated semi-liquid funds, high-profile corporate failures and questions over non-bank underwriting standards. Goldman Sachs recently estimated the market at around US$3 trillion, with forecasts suggesting it could grow to about US$4.5 trillion by 2030.
Philip Kent, chief executive of Gravis, said recent events had “understandably unsettled investors”, particularly where open-ended vehicles had promised more liquidity than their assets could deliver.
“But that doesn’t mean private credit has failed as an asset class,” Kent said. “It means three fundamentals matter more than ever: knowing exactly which part of private credit you own, recognising the structural protections debt offers versus equity, and making sure fund liquidity is genuinely aligned with the underlying assets.”
Kent said risk in private credit ultimately depends on “the loans, the borrowers and the collateral”, with direct lending to companies, real estate debt and infrastructure debt behaving differently through the cycle.
He also cautioned against drawing broad conclusions from a small number of fraud-linked distress cases, saying both bank and non-bank lenders had been caught out.
Gravis said recent gating events showed the importance of matching fund-level liquidity with the liquidity of the underlying assets. Kent said private credit is “inherently illiquid”, as loans are often bespoke, complex and supported by limited secondary markets.
Semi-liquid funds can face pressure when redemption requests exceed available cash and liquid assets, potentially forcing managers to sell otherwise sound loans at depressed prices. Kent said such structures were better suited to institutional investors who understand liquidity as an option rather than a certainty.
Closed-ended vehicles, he argued, are structurally better aligned with most private credit assets because investors can buy and sell shares on the stock market without reducing the pool of capital available to managers.
Gravis said the industry also needs clearer disclosure, more frequent and transparent valuations, and robust independent oversight of private-market marks. Kent pointed to Gravis’s proprietary Carapace system as one example of the reporting and portfolio monitoring tools that can give investors greater visibility into underlying exposures.
