Trends in Private Credit Fund Structuring 2025
Private credit managers are adapting fund structures and investment terms as institutional investors seek more customized risk and return profiles and managers seek to tap the retail investor market. Find out more about the fund structuring trends shaping the industry.
Key findings
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Despite most AUM staying in commingled flagships, demand for tailored solutions is growing — expanding use of SMAs, side letters, and co-investments — while sub-US$50 million bespoke SMAs are waning.
Leverage remains moderate and stable (~two-thirds use it), with slightly more levered sleeves and a persistent U.S. – Europe divide that nudges leverage up in European funds courting U.S. LPs.
Rated note feeders can channel insurance capital but face uneven adoption, complexity, cost and scale/rating uncertainties, so many insurers still prefer traditional equity fund units or simpler feeder structures.
Insurers are becoming key private credit investors due to asset – liability matching, but their regulatory and reporting needs (e.g., unlevered, Solvency II – compatible structures in Europe) drive customized, case‑by‑case structuring and sometimes indirect exposure as lenders.
Winning retail capital requires retail-grade infrastructure, leading managers to build suitable products (feeder funds, wealth-platform/private-bank partnerships, regulated vehicles) and invest in operations, marketing and client education.
Non-institutional capital is gaining importance, with more than half of managers already serving HNW/retail LPs and about two-thirds targeting retail for new funds. The strongest growth is in HNW/semi-professional segments, with rising interest in mass retail.
To manage U.S. ECI risk, managers increasingly use treaty-based and blocked structures (often via Ireland or Luxembourg) and sometimes “season-and-sell,” recognizing trade-offs between certainty and tax efficiency with no one-size-fits-all solution.
Private credit funds favor established domiciles (Luxembourg, Cayman Islands, Delaware, Ireland). Luxembourg RAIFs are the most commonly used EU vehicle. Managers are also experimenting with new fund structures like ELTIFs.
At a glance
of insurance companies have considered setting up rated note feeders.
63%
of survey participants report increasing demand for liquidity, up from 49% two years ago.
64%
92%
of managers report an increase in investor demand for co-investment (up from 70% in 2023).
Luxembourg and the Cayman Islands remain the top choices for fund domiciles globally, with Delaware being the standard for U.S.-centric funds.
The rise of retail
Product design
Fund formation and structure
Serving the needs of insurance clients
Rising investor demand is prompting GPs to modestly enhance fund liquidity — using evergreen/hybrid structures and other tools — to offer limited liquidity while managing asset-liability mismatches.
of managers now have HNW/semi-professional investors in their client base, up from 43% in 2023.
57%
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