Private Credit is Booming. Technology Due Diligence Hasn't Caught Up..
Last week I was at the Private Equity Wire European Summit with our co-founder Roja Buck, and one conversation stood out — it pointed to something shifting in how credit funds think about technology risk.
The private credit workshop, featuring senior leaders from Tikehau Capital and Clearlake Credit, covered deal flow and underwriting in a higher-rate environment. The point that resonated most sits underneath all of it: at some stage in the committee process, private credit funds face a real risk that as the lender they end up owning the actual asset.
Earlier in my career I was a credit structurer at HSBC, sitting in credit committees and writing credit papers. I thought deeply about the risks surrounding the transactions I was structuring. But honestly — we never really thought 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.
“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.”
But with the pullback of traditional bank lending and the rapid expansion of 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 from simply pricing a loan. Yet 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. Non-bank lending market share in Europe and the UK 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 where the growth is heading.
The shift is accelerating. European and UK-focused fundraising grew nearly 40% year-on-year in 2025, while North American fundraising 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.
“Technology due diligence is far less embedded in private credit processes than it is in equity investing.”
Introducing Our Private Credit Technology Audit
Our methodology — the 5Ps: Product, Process, Platform, People, and Protection — was built through years of technology assessments for PE and VC investors. It gives a structured view of technology risk and opportunity inside a business.
But 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 capital demands that compete with debt service.
So we've adapted the framework for credit. Each pillar retains the structure our equity clients know, but the focus areas are calibrated for the risks that matter to lenders.
Product — How resilient is the technology that drives revenue? Is the business exposed to displacement from AI or digital disruption? Are there IP ownership or licensing issues that could create downstream liability? Can the technology scale in line with the growth assumptions underpinning the credit case?
Process — How dependent is the business on its ERP and core systems, and what condition are they in? Is the technology cost base stable, or are there step changes ahead that could pressure margins and debt service capacity?
Platform — Is the business running a modern, scalable cloud environment, or 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? 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 gaps that could expose the business to enforcement risk? Data breaches and regulatory fines can materially impact cash flow — this warrants direct attention.
The depth of focus across these five pillars varies depending on how technology is used in the business. Where technology supports operations, a lighter-touch assessment may be appropriate. Where top-line revenue depends on a core technology product, the audit goes deeper.
Related Reading
- Technology Audit — our 5P technology assessment framework
- For Private Equity — technology leadership across the investment lifecycle
- The Proactivity Playbook — how proactive technology audits reshape deal preparation
Frequently Asked Questions
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.