The Rise of Private Credit in 2025 Evan Vitale on Why Institutional Investors Are Betting Big on Debt

1. Presentation by Evan Vitale

2. In 2025, private credit has catapulted from the fringes of Wall Street into the mainstream of institutional investment portfolios. Once seen as a niche alternative, this asset class is now a cornerstone of capital allocation, offering yield, flexibility, and resilience in an increasingly complex global economy. Evan Vitale, a CPA with extensive experience working with hedge funds, private equity firms, and venture capital firms, offers expert insight into why private credit is experiencing explosive growth — and what this shift means for fund managers, investors, and the broader financial ecosystem.

3. What Is Private Credit — and Why Now? Private credit refers to non-bank lending where institutions such as private equity firms, hedge funds, or private credit funds provide debt financing directly to borrowers. These deals are typically outside traditional capital markets, allowing for customized terms, higher yields, and greater lender control. So why is this market accelerating in 2025? 1. Rising Interest Rates: Central banks around the world have maintained elevated interest rates in response to persistent inflation. While this has tightened public credit markets, private credit offers attractive returns even in a high-rate environment. 2. Bank Lending Pullback: Regulatory pressures and risk aversion have led banks to reduce corporate lending, particularly to middle-market borrowers. Private lenders are stepping in to fill the gap.

4. 3. Investor Demand for Yield: Institutional investors — such as pension funds, endowments, and sovereign wealth funds — are allocating more capital to private credit to meet return targets in a low-growth world. According to Evan Vitale, “Private credit is no longer just a diversifier. It’s now viewed as a core income strategy, offering compelling risk-adjusted returns with strong downside protection, especially for long-term institutional investors.”

5. The Institutional Gold Rush: Who’s Leading the Charge? Large institutional investors are rapidly increasing their private credit exposure: Pension funds are allocating up to 10–15% of their portfolios to private credit. Private equity firms are launching internal credit arms to finance deals in- house. Asset managers are creating bespoke credit funds focused on real estate, infrastructure, and distressed opportunities. For these investors, the appeal lies in the predictability of cash flows, low correlation to public markets, and protection against volatility. Many private credit instruments are floating rate, meaning yields rise in tandem with interest rates — something fixed income investors find particularly valuable today.

6. The CPA’s Perspective: Risk Management and Structuring As a CPA who provides finance and accounting services to alternative investment funds, Evan Vitale emphasizes the importance of rigorous due diligence and deal structuring in the private credit space. “While private credit offers attractive returns, it also carries unique risks that must be carefully managed — from borrower creditworthiness to covenant enforcement and liquidity risk,” says Vitale. “This is where the role of a CPA becomes critical — not just in reporting, but in actively supporting underwriting, risk modeling, and compliance.”

7. Key considerations for fund managers include: Proper valuation of illiquid assets Monitoring of financial covenants and triggers Tax structuring of cross-border or hybrid credit deals Transparent and GAAP-compliant reporting to LPs

8. Popular Strategies Gaining Momentum in 2025 Private credit is far from one-size-fits-all. Several strategies are emerging as leaders in the space: 1. Direct Lending: Loans to middle-market companies, often with senior secured status and floating rates. 2. Distressed Debt: Buying or restructuring the debt of financially troubled companies, often in anticipation of recovery or equity conversion. 3. Real Estate Credit: Lending against income-producing property assets, often as part of bridge or mezzanine structures. 4. Special Situations: Flexible lending for companies undergoing transformation, mergers, or restructuring. 5. Asset-Based Lending: Loans secured by specific company assets such as receivables, inventory, or equipment. Each of these approaches requires tailored analysis, credit modeling, and ongoing monitoring — areas where CPAs like Evan Vitale add value beyond bookkeeping or compliance.

9. Technology and AI in Private Credit Operations In a landscape characterized by complexity and volume, automation and artificial intelligence are becoming indispensable tools in credit fund management. Advanced platforms are being used to: · Streamline Borrower Onboarding: Simplifying document management and due diligence processes. · Use AI Models: Assessing credit risk and forecasting macroeconomic impact. · Monitor Covenant Compliance: Tracking adherence to financial covenants in real time. · Automate Reporting: Generating NAV calculations, waterfall distributions, and LP reporting more efficiently. Vitale observes: “Technology accelerates decision-making and reduces human error. But it also requires careful oversight. CPAs now need fluency not just in financials, but in how those financials are processed and analyzed through digital systems.”

10. What’s Next for Private Credit? Looking ahead, several trends are expected to shape the next phase of private credit: Retail Investor Access: Platforms are emerging to give high-net-worth individuals access to private credit, democratizing the space. Securitization 2.0: Fund managers are exploring ways to package private loans into structured products for broader investor distribution. Global Expansion: Emerging markets and cross-border lending are growing, though they bring added complexity and regulatory challenges. Tighter Regulation: As the market grows, so does the likelihood of increased oversight by financial regulators. According to Evan Vitale, “Private credit will continue evolving — but those who prioritize transparency, robust reporting, and risk discipline will remain ahead of the curve.”

11. Final Thoughts from Evan Vitale The private credit boom is more than a temporary trend — it represents a structural shift in how capital is deployed and returns are generated in the modern economy. For institutional investors, the opportunity is real — but so are the risks. Whether you’re a fund manager, institutional allocator, or advisor, collaboration with qualified CPAs who understand the nuances of private capital markets is key to success. With the right guidance, systems, and structure, private credit in 2025 offers a powerful path forward for portfolio diversification, income generation, and long-term growth.

12. THANK YOU