Direct lending continues to demonstrate strong resilience and growth despite ongoing macroeconomic volatility, according to new academic research from Saïd Business School at the University of Oxford, produced in partnership with Pemberton Asset Management (“Pemberton”), one of Europe’s leading private credit managers.
 
Building on the findings of the inaugural 2021 report - European Direct Lending – Review and Outlook 2025 - reveals continued investor confidence in private debt, with global assets under management (AUM) reaching US$1.6 trillion in June 2024 and projected to reach US$2.6 trillion by 2029. This trend is expected to persist, as 37% of limited partners indicate plans to increase private debt allocations, encouraged by the high-interest-rate environment relative to the last decade.

Direct lending remains the largest component, comprising over 50% of AUM in 2024 and achieving much faster growth than other private debt strategies, cementing its dominance of the private debt asset class.

The report highlights the continued strategic importance of European direct lending in the global investment landscape, with European AUM at a record US$380bn in June 2024, over 70% higher than the pre-pandemic average.

Symon Drake-Brockman, Managing Partner at Pemberton, commented: "The second edition of Pemberton’s European Direct Lending Report offers timely insights into the market’s evolution. Amid shifting US policies and tariffs, investor focus is returning to Europe. Trump’s agenda has prompted a pivot from austerity to fiscal stimulus across European governments, which we believe will drive growth.

“Europe’s mid-market, typically characterized by asset-light, highly agile companies, which have less exposure to US tariffs, and strong performance creates a compelling investment opportunity and reinforces direct lending as a cornerstone of private debt strategies.”

Tim Jenkinson, Professor of Finance at Oxford Saïd Business School, added: “Private debt has rapidly evolved into a vital component of global finance. In this second edition, we explore how direct lending continues to grow in importance—shaped by macroeconomic shifts, investor demand, and an increasing focus on regulation.”

The report also benefits from valuable guest contributions from:

• Latham & Watkins, offering a comprehensive review from a legal perspective on developments and emerging trends in the direct lending space;
• AXA Group, presenting the insurer’s perspective on private debt’s appeal as a growing asset class, underscoring its stable cash flows, downside protection, and diversification benefits;
• Lincoln International, providing analysis of the European private credit landscape through insights from its European Senior Debt Index (ESDI) which reveals that Europe currently delivers more attractive returns compared to North America.

The full report and summary can be accessed at: https://pembertonam.com/insights/european-direct-lending-report-2025/