Two developments this week capture the tension now shaping private credit. On 22 September, KKR announced a $350 million commitment to launch Akrapoint Commercial Capital, a new equipment-finance platform focused on vocational, industrial and specialty assets for small and mid-sized US businesses. One day later, Europe’s supervisory authorities identified private credit as a growing financial-system vulnerability, citing increasing complexity, limited transparency and deeper interconnections across banks, funds and insurers.
Those developments are not contradictory. They are two sides of the same structural shift. Private credit is moving beyond its earlier identity as an alternative source of leveraged corporate loans. Increasingly, it is financing the assets, receivables and contractual cash flows that sit inside the real economy. That expansion creates a larger and potentially more efficient financing toolkit for companies. It also demands a more deliberate approach to capital structure, collateral, data and governance.
For management teams, the implication is important: the financing question is becoming less about how much debt an enterprise can support in aggregate, and more about which parts of the business can support which forms of capital.
- Private credit is expanding beyond leveraged corporate lending into equipment, receivables, infrastructure and contractual cash flows.
- Asset-based finance can align capital more precisely with the duration, risk and cash-generation profile of productive assets.
- Dedicated asset financing may preserve equity for risks that should genuinely be borne by shareholders.
- Collateral improves downside protection but can reduce strategic flexibility when structures are poorly designed.
- Asset registers, utilisation data, receivables quality and legal ownership are becoming financing capabilities.
- Management teams should begin with a capital map of the business, not a lender list.
A Shift Hidden Inside Private Credit
Private credit’s first phase of institutional growth was built largely around direct lending. Non-bank managers offered speed, certainty and structural flexibility to private-equity-backed and mid-market borrowers, often in situations where syndicated markets were less efficient or banks were constrained.
That market is now more mature. Competition in conventional direct lending has intensified, spreads have compressed and large managers have moved further up-market. McKinsey estimates that US direct-lending volumes moderated in 2025 even as average deal sizes increased, while fundraising increasingly shifted toward strategies outside traditional corporate lending.
Asset-based finance is one of the clearest expressions of that shift. McKinsey estimates that ABF-focused closed-end funds raised approximately $27.1 billion in 2025, representing 16.4% of closed-end private-credit fundraising, up from 10.6% a year earlier. When real-estate and infrastructure credit funds are included, ABF fundraising reached roughly $70 billion.
The significance is not the fundraising number alone. It is the change in what private capital is willing to underwrite. Equipment, receivables, infrastructure, leases, royalties and other contractual cash flows are increasingly becoming institutional financing assets rather than peripheral sources of liquidity.
Why the Asset Is Becoming Central Again
Several forces are converging. Banks remain central to corporate finance, but balance-sheet economics and regulatory capital requirements make some forms of smaller-ticket, operationally intensive or asset-specific lending less attractive. At the same time, private-credit managers are looking for diversification beyond sponsor-backed corporate loans and for exposures with more explicit collateral or contractual cash-flow protection.
The real economy is also entering a capital-intensive cycle. Reshoring, electrification, infrastructure renewal, supply-chain resilience and digital investment all require equipment and physical assets before they generate their full economic return. KKR explicitly linked Akrapoint’s launch to this multi-year investment cycle and to demand for financing essential equipment across manufacturing, energy and power, construction, sanitation and logistics.
This creates a natural match between businesses that need to fund productive assets and long-duration private capital seeking financeable collateral. The Financial Stability Board has also acknowledged the benefit of private credit in providing tailored financing, even as it has warned that rapid growth, opacity and interconnectedness need closer monitoring.
From EBITDA Capacity to Asset Architecture
Traditional corporate debt analysis often begins with enterprise cash flow: EBITDA, leverage, interest coverage and the resilience of the operating model. Those measures remain fundamental. But asset-based finance adds another layer of analysis by asking what sits beneath the enterprise value.
A manufacturer may have production equipment with a measurable secondary-market value. A logistics business may operate vehicles or trailers that can be financed independently. A services company may have recurring contractual receivables. An infrastructure platform may have long-dated contracted cash flows. A technology-enabled business may own hardware, data-centre capacity or other assets that have financing characteristics distinct from the operating company itself.
Once management maps those components, the capital structure can be designed with greater precision. Some growth may be best funded through corporate debt; some through equipment leases or asset-backed facilities; some through project-level financing; and some through equity because the risk is genuinely entrepreneurial and cannot be efficiently secured.
This is not financial engineering for its own sake. It is an attempt to match the duration, risk and cash-generation profile of an asset with the form of capital that finances it.
The strategic financing question is shifting from how much debt the company can support to which assets and cash flows should finance which layer of growth.
Capital Efficiency Without Surrendering Unnecessary Equity
For founders and shareholders, the attraction is straightforward. Growth capital does not always need to be funded with equity, and corporate debt is not always the only alternative. When an asset or cash flow can support dedicated financing, the company may be able to preserve equity for the risks that should genuinely be borne by equity holders: product development, market entry, acquisitions or other initiatives whose value is less predictable.
That distinction can materially affect dilution and return on equity. A company that funds every new plant, vehicle fleet or equipment programme with common equity may be using its most expensive and permanent form of capital to finance assets that could support a more efficient instrument.
The reverse is equally important. Asset-backed debt should not be used to disguise weak economics or to over-finance assets whose residual value is uncertain. The objective is not to maximise leverage. It is to allocate capital according to the economic character of the underlying risk.
Collateral Creates Discipline, Not Free Optionality
Asset-based finance can improve capital efficiency, but it also introduces constraints. A lender financing specific equipment or receivables will typically require visibility into collateral quality, advance rates, maintenance, utilisation, concentration and recovery assumptions. Covenants may be tied not only to enterprise performance but to the condition and behaviour of the financed asset pool.
That can reduce strategic flexibility if the structure is poorly designed. Assets that have been pledged cannot be freely redeployed. Receivables facilities may impose eligibility criteria that change the economics of customer concentration. Equipment financing may include amortisation schedules that do not match the company’s actual cash-generation ramp. Cross-border asset ownership can introduce legal, tax, security-interest and enforcement questions that are materially different from those associated with a simple holding-company loan.
The recent warnings from European supervisors are therefore relevant even for companies that are not financial institutions. As private credit expands, its structures become more interconnected and more dependent on accurate valuation, reporting and risk allocation. Companies using these instruments need to treat financing architecture as an operating discipline rather than a treasury afterthought.
Governance and Data Become Financing Capabilities
The expansion of asset-based finance has another consequence: the quality of corporate data can directly influence financing capacity. A lender cannot underwrite what the borrower cannot evidence.
For mid-market companies, this often means moving beyond annual financial statements. Asset registers, maintenance histories, utilisation data, receivables ageing, customer concentration, contract duration, insurance coverage, jurisdiction of ownership and collateral valuation can all become part of the credit case.
Governance matters for the same reason. If assets sit across multiple subsidiaries, if intercompany flows are unclear, or if intellectual property, equipment and operating contracts are housed inconsistently, the theoretical financing value of the business may be difficult to convert into an executable structure.
In that sense, capital readiness is becoming operational. Better reporting, clearer legal architecture and disciplined asset ownership do not merely improve presentation to investors; they can change which financing instruments are available and at what cost.
What Management Teams Should Reconsider Now
The rise of asset-based finance should prompt a broader review of how companies think about funding growth. The starting point should not be a lender list. It should be a capital map of the business.
Management should understand which assets are strategic to own, which can be financed or leased, which cash flows are sufficiently predictable to support dedicated facilities, and which risks should remain at the corporate level. It should also consider whether project-level or subsidiary-level financing would create useful ring-fencing, or whether it would instead fragment the balance sheet and reduce future flexibility.
This analysis becomes especially important for businesses expanding internationally. Security regimes, asset ownership rules, currency exposure, tax treatment and enforceability can vary materially by jurisdiction. A structure that is efficient in one market may be impractical in another.
The broader point is that financing strategy is becoming more granular. As private capital moves closer to individual assets and cash flows, companies need an equally granular understanding of where value is created, where risk sits and which layer of capital should fund it.
Editorial Sources
- Business Wire — KKR launches Akrapoint Commercial Capital
- McKinsey & Company — Global Private Markets Report: Private Credit
- European Banking Authority — ESAs call for vigilance over private credit risks
- Financial Stability Board — Private credit vulnerabilities
- KKR — Asset-Based Finance
Related Insight
Private credit is entering a more complex phase. Its growth is no longer defined only by the migration of leveraged loans away from banks and public markets. It is increasingly extending into the operating asset base of companies and into the contractual cash flows that support the real economy.
For management teams, that creates both opportunity and responsibility. The opportunity is a broader financing toolkit that can reduce unnecessary equity dilution, diversify funding sources and better align capital with the economics of specific assets. The responsibility is to ensure that collateral, legal structure, governance and reporting are strong enough to support that architecture through different market conditions.
The companies that benefit most will not necessarily be those that borrow the most. They will be those that understand their balance sheet at a sufficiently granular level to decide what should be financed, where, by whom and for how long.
