Some of the same forces that shaped direct lending in the U.S.—regulatory constraints on traditional bank lending and the growth of private equity—have also supported its growth in Europe.
While European direct lending faces additional structural frictions relative to the U.S., including greater competition from banks and country-specific regulatory patchwork, it continues to grow at a faster pace.
Incorporating European direct lending alongside U.S. exposure can enhance portfolio diversification and create compelling opportunities for global allocators with distinct investment goals.
Despite several differences in market structure and approach, we believe the same ingredients for manager success still apply across both regions.
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