Australia’s Private Credit is Booming but Flying Without Instruments.

Australia’s private credit market has exploded to roughly $200 billion, driven by institutional capital chasing yield and banks retreating from higher-risk lending since the GFC. Approximately 40-60% of that exposure is allocated to real estate, 20-40% to corporate lending, and 10-30% to ABF.

The ASIC review paints a sobering picture beneath the headline growth. At the top end, large global managers are disciplined, with independent valuations, transparent fee structures, and robust governance are the norm. Yet at the wholesale and retail levels, ASIC found widespread issues:

- Borrower fees, often 50-100% retained by managers and not disclosed.

- Funds capture net interest margins through layered SPVs and related-party loans.

- Some managers hold multiple tranches of the same capital stack.

- Distributions in certain funds are paid partly from capital, not earned cash.

- Valuations often rely on completion-based LVRs instead of cost, obscuring risk.

The structure of the investor base explains much of this divide. Private Debt Managers control 42% of the market, while Global Fund Managers account for another 32%. Together, these institutional players bring most of the governance discipline. The balance (26%) sits with Multi-Asset Managers (20%), Super Funds (5%), and Family Offices (1%) - the long tail, where regulatory oversight is thinner and structural opacity more common.

The opportunity in Australian private credit remains massive, but the message from Australia's corporate regulator is unmistakable: growth without governance isn’t sustainable.

Read more: “Private Credit in Australia" report for ASIC by Richard Timbs and Nigel Williams (9 September 2025).