Private Credit is Booming. Technology Due Diligence Hasn't Caught Up..
As private credit expands rapidly across Europe and the UK, credit funds face a growing tail risk of asset ownership they're not yet equipped to evaluate. Here's how we're closing the gap.
Last week I was at the Private Equity Wire European Summit with our co-founder Roja Buck, and one conversation from the day stood out because it pointed to something shifting in how credit funds think about technology risk and value creation.
The private credit workshop, featuring Paolo Marrone from Tikehau Capital and Rafael Calvo from Clearlake Credit, covered plenty of ground on deal flow and underwriting in a higher-rate environment. The point that resonated most was one that sits underneath all of it: at some stage in the committee process, private credit funds face a non-zero risk that as the lender they might end up owning the actual asset.
Many moons ago I was a young credit structurer at HSBC and I sat in plenty of credit committees. I wrote plenty of credit papers and thought deeply about the risks surrounding the transactions I was structuring. But I must be honest — we never really thought too deeply about actually running the underlying asset.
By design, credit funds sit higher up the waterfall. They have a coupon and a principal and they structure deals to protect their risk accordingly. That's the model, and it works. But with the pullback of traditional bank lending and the explosive growth in private credit — particularly in the US where private credit now dominates — the tail risk of actual asset ownership is real and growing.
That's a fundamentally different risk position for credit committees from simply pricing a loan. Yet in our experience as technology auditors, technology due diligence is far less embedded in private credit processes than it is in equity investing.
If you might end up holding the keys to a technology-enabled business, understanding the quality, scalability, and risk profile of that technology feels like an important conversation to have.
The European and UK Picture
Europe still lags the US significantly in penetration, which is precisely why the growth opportunity is so compelling. Non-bank lending market share in Europe and the UK currently sits at around 12%, compared to 75% in the US. Bank lending still accounts for roughly 50% of corporate credit in Europe versus around 25% in the US. That gap is the opportunity.
The European shift is accelerating markedly. European and UK-focused fundraising grew nearly 40% year-on-year in 2025, while North American fundraising actually declined. In Q1 2025, Europe-focused private credit funds raised $25.7 billion, nearly tripling the $9.3 billion raised by US-focused counterparts. BlackRock projects European private credit AUM to exceed €450 billion by end of 2025 and to double by 2030.
In the UK specifically, UK-focused funds raised £15.2 billion in 2024, a 14% increase from the previous year. The UK, France, and Germany remain the most mature European markets, while Italy and Spain together recorded more than 80 transactions in 2024, double the volume from 2023.
Introducing Our Private Credit Technology Audit
We have performed hundreds of due diligence reports for PE and VC firms over the five years that Rational Partners has been operating. Our core methodology is built around the 5Ps: Product, Process, Platform, People, and Protection — designed to give investors a complete picture of technology risk and opportunity inside a business.
However, private credit is different. Credit committees aren't underwriting for equity upside. They're stress-testing whether the technology estate could threaten cash flows, trigger covenant breaches, or create unforeseen capital demands that compete with debt service. The questions are different. The lens is different.
So we've adapted our 5P framework specifically for credit. Each pillar retains the structure our equity clients know, but the focus areas beneath them are calibrated for the risks that matter most to lenders.
Product — How resilient is the technology that drives revenue? Is the business exposed to competitive displacement from AI or digital disruption? Are there IP ownership or licensing issues that could create downstream liability? And critically, can the technology scale in line with the growth assumptions underpinning the credit case?
Process — What does the operational resilience picture look like? How dependent is the business on its ERP and core systems, and what condition are they in? Is the technology cost base stable and predictable, or are there step changes ahead that could pressure margins and debt service capacity?
Platform — What is the state of the underlying infrastructure? Is the business running a modern, scalable cloud environment, or is it carrying legacy systems with mounting technical debt? If remediation is needed, how material is that investment and when does it hit?
People — Is there key person risk in the technology function? Does the team have the depth to maintain and evolve the estate without over-reliance on one or two individuals? And how concentrated is the vendor landscape? Dependency on a single critical supplier is a risk that credit committees should be sizing.
Protection — What is the cybersecurity posture, and how does it sit against regulatory expectations? Are there compliance technology gaps that could expose the business to enforcement risk? In a world where data breaches and regulatory fines can materially impact cash flow, this is no longer a secondary concern.
The depth of focus across these five pillars will naturally vary depending on how technology is used in the business. Where technology is an enabler supporting operations, a lighter-touch assessment may be appropriate. Where top-line revenue is directly linked to a core technology product, the audit needs to go deeper. Our approach is calibrated accordingly.
Ready to close the technology gap in your credit process?
We're now offering our Private Credit Technology Audit to credit managers who want a clear, independent view of the technology risk sitting underneath their book.