Private credit has become one of the fastest-growing corners of finance, and many Australians are exposed to it through their super. Here’s what it is, and why the corporate regulator is concerned.
When most people think of borrowing money, they think of banks. But a growing amount of lending now comes from investment funds instead. That’s private credit.
Private credit funds pool money from investors, such as super funds, insurers, wealthy individuals and increasingly everyday investors, and lend it to businesses, property developers and other borrowers. The investors earn the interest those borrowers pay.
The market has boomed. Estimates put Australia’s private credit market at between $200 billion and $250 billion, up from around $35 billion a decade ago. Globally, it is worth trillions of dollars.
Why it has grown
After the global financial crisis, banks faced tougher rules on how much capital they must hold, especially for riskier loans such as property development. Private lenders stepped in to fill the gap.
Borrowers like private credit because it can be faster and more flexible than a bank loan, even though it usually costs more. Investors like it because it can pay higher returns than term deposits or bonds, often with regular income.
In Australia, property development and construction make up roughly half of private credit lending.
The risks
ASIC reviewed the sector in 2025 and found a market growing quickly but with serious weaknesses in some areas.
It found some fund managers keep large fees paid by borrowers without clearly disclosing them to investors. Some funds don’t regularly get independent valuations of their loans, so investors may not know if loans are in trouble. And some funds promise investors they can withdraw their money at short notice, even though the loans they have made last for years.
That last issue matters if conditions turn. If many investors ask for their money back at once, funds may freeze withdrawals, as some private credit funds overseas have done in 2026.
Rising interest rates and falling property prices also increase the risk that borrowers, especially developers, can’t repay. ASIC has said private credit hasn’t yet been tested by a full downturn, and in 2026 it began investigating some operators.
ASIC points out that most working Australians have some exposure through their super funds. Anyone investing directly should read the product disclosure statement carefully, check what fees are charged, how loans are valued and how easily they can withdraw their money.
