What Increased Competition in the Private Credit Space Means for ABL
How Leading Firms Can Differentiate Themselves in a Crowded Market
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Private credit has experienced significant growth in recent years, and asset-based lending (ABL) has become a primary vehicle fueling this growth. Driven by changing bank regulations and a need to fund more diverse asset pools, it’s clear that the growing momentum of the ABL market will continue as new entrants flood into the space. Despite recent concerns, ABL capabilities also perform well during periods of market uncertainty, driving additional interest in a sector under scrutiny.
The private credit market is a large and diverse industry with many strong players, and continues to expand as the number of companies with unique needs seeking financing grows. The private credit market is set to cross the $2 trillion AUM mark in 2026, and accelerated growth is expected.1
Seeing this opportunity, financial services companies, alternative asset managers, hedge funds and others have entered the ABL and private credit space, promising greater access to financing. Firms are now competing up and down the capital stack, working to win deals against other private credit asset-based lenders, as well as both partnering with and competing on the periphery against banks and others in the space.
As a result, the ABL space has moved from a once niche market to mainstream, with five of the top 30 private credit managers launching dedicated ABL funds in the U.S. in 2024 alone. The larger private capital arena has become so crowded that the number of U.S. private equity funds now outpaces that of U.S. fast-food outlets, about 19,000 to 14,000.2
“As the market becomes increasingly crowded, asset-based lenders need to be adaptive and diligent in ‘blocking and tackling’ to establish strong and collaborative processes that provide the foundation for successful transactions. Providing a holistic approach to client needs and risk evaluation allows Gordon Brothers to stay ahead of changing industry dynamics.”
—MARK BOHNTINSKY, GLOBAL HEAD OF CREDIT
As the number of new players in the market increases, both competition within the industry and the potential for greater lending risks are expected to grow. Deepening ties and interconnectivity within the space and among new entrants could further heighten risks. Sector-specific knowledge and strong sourcing channels will help firms stand out in a sea of generalists. Additionally, firms able to prioritize collaboration over competition with new entrants to the market will be better poised to benefit.
Perspectives: Navigating A Frothy Lending Marketplace
The fallout from the bankruptcies of multiple companies in late 2025 raised concerns across the entire asset-based lending (ABL) industry. Ensuring the market remains resilient during expected periods of greater risk can be achieved through a comprehensive, hands-on approach to asset-based lending that’s driven by a solid structure rather than relying solely on pricing to drive deals forward.
Similarly, the increased interest in the space, combined with the potential for higher yields, also presents risks as increased competition and dry powder could lead to relaxed standards and a race to the bottom for firms lacking differentiation. Low industry experience, high concentrations of business in risk-prone sectors and a lack of diversification in terms of assets, services and types of financing can all lead to challenges for lenders and their clients, especially those new to ABL.
Competition in ABL and private credit more broadly will not abate anytime soon. Participants should understand the growing need to differentiate in order to maximize value, as this innovative financing tool remains a popular, reliable and expanding choice for both firms looking to develop their capabilities and clients seeking liquidity.
Asset-based finance expected to gain share in private credit portfolios
Source: S&P Global Market Intelligence, Quantitative Research & Solutions, as of November 28, 2025. Asset-based finance assets under management actuals and estimates for KKR & Co. Inc., The Carlyle Group Inc., Ares Management Corp., Apollo Global Management Inc. and Blackstone Inc., based on QRS research.
Want to read more insights like this? This article is featured in our 2026 Global Asset Insights Report. Access the full report to get insights across sectors on the outlook for 2026 and themes impacting the ways companies do business. Read the report >
1. Pitchbook, Private credit market to hit $2T this year, with declining defaults.
2. CNBC, More private equity funds than McDonald’s; PE giants forecast industry consolidation.