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The Rise of Private Credit Highlights Need for Robust Back and Middle Offices

As strategies become more complex and burdensome on internal resources, private credit has become a victim of its own success. Barbara Martin, Head of Private Funds—Sales EMEA, Marie-Christine Bücker, Global Sales Director – Head of Sales, Germany, and Brian Campion, Commercial Director, EMEA Funds, explain how outsourcing can help meet these challenges.

The private credit market has thrived since the great financial crisis of 2008. As banks were forced to tighten lending criteria, an opportunity emerged in corporate financing that sophisticated private investors were happy to fill.

Assets in private credit funds now total $1.6 trillion, an increase of 53% over the past five years, according to our latest report on private credit

Our review of work by data analytics company Convergence Research has identified 3,967 private credit funds at the end of March 2022 – a 56% increase since 2017.

Private credit has now spread to activities ranging from aircraft leasing to litigation finance, direct loans, and supply-chain finance. The trend towards diversification has brought higher returns, as well as a heavier compliance burden.

The effects of the Great Resignation–on talent recruitment and retention, with ever increasing regulation, time pressure, and diversification strategies–mean fund managers need outside partners to navigate the complexities.

The impact of the Great Resignation on private funds

The Great Resignation is far from over. According to a global survey by PwC, one-fifth of employees say they are likely to switch jobs in the next 12 months.

While the current talent shortage has so far hit the retail and hospitality sector hardest, it’s spreading to other industries including fund management. 

Skilled back-office accountancy, tax, and operations staff are becoming scarce and cost more to hire. And as the private equity sector continues to expand, competition for good back-office staff will intensify.

Outsourcing back-office operations can sidestep the challenges of a tight job market and fill resource gaps during peak activity. And it removes the complexities of managing large teams.

The challenges of evolving regulation for private funds

In the last decade, the Alternative Investment Fund Managers Directive (AIFMD) has been the key framework for the regulation of alternative investment fund managers.

It helped create a single market for alternative investment funds in the European Union by considerably strengthening investor protection and financial stability. It has also allowed non-EU private fund managers to reach European investors without creating a European fund structure.

Recent proposals for its successor, AIFMD II, have highlighted potentially important changes with tighter checks and requirements that fund managers will have to comply with by the end of 2024 at the earliest.

If approved, the proposals will address the rapid growth of private credit by introducing a so-called product passport for European loan-originating alternative investment funds. While creating more opportunities for private credit, it will also add another layer of compliance.

The rules make it easier for investors to compare sustainable funds and prevent greenwashing. But they bring a fresh set of challenges for many investment firms, especially private funds, with increased requests for data, including non-financial information.

While fund managers need to focus on managing their investments in an increasingly more uncertain environment, they can easily be distracted by the day-to-day demands of running a fund.

Increasing complexity of the private credit market

More new funds are launched in private credit than in any other fund strategy. According to our review, private credit funds have increased assets under management by $475 billion over the past five years.

Private credit funds invest in anything from direct lending to more niche strategies like sports finance, for example. This requires specialized expertise, with increasingly complex loan agreements raising operating costs. Many strategies have relatively short lives, which can add to the difficulty and pressure on management.

This means that the instruments traditionally used for vanilla strategies–for example, robo-advisors and other automated platforms that provide financial advice based on mathematical rules or algorithms–are no longer suitable in the private capital fund space.

The complexity and growing challenges make it harder to manage a fund without many years of expertise and constant need for customization.

For example, each private debt deal is negotiated between lender and borrower to include specific, complex terms and conditions.

These essential processes must be executed by specialists who have accumulated years of expertise in the private capital sector. 

How CSC can help with private credit

The variety of data required to run a successful strategy, meet investors’ demands, and comply with regulatory requirements can be overwhelming. At the same time, the diversity of assets makes it difficult to standardize reporting and make best use of the data collected.

We have highly professional and specialized teams for this purpose, who are able to meet the global and diverse requirements. Our specialists are supported by bespoke automation systems that allow a fast and monitored process.

This means we can tailor the presentation of the enormous amount of data to meet strict regulatory and investors’ requirements with individual and customized software solutions.


CSC provides tailored administration and strategic outsourcing solutions to support the complex operations of alternative asset managers across jurisdictions and asset types while adhering to global regulations and compliance. A market leader, we work with funds of all sizes, from start-ups to the largest and most experienced fund managers in the world. Founded in 1899, CSC prides itself on being privately held and professionally managed for more than 120 years. We are the trusted partner of choice for more than 90% of the Fortune 500® and more than 70% of the PEI 300. CSC has office locations and capabilities in more than 140 jurisdictions across Europe, the Americas, Asia Pacific, and the Middle East. We are a global company capable of doing business wherever our clients are—and we accomplish that by employing experts in every business we serve. We are the business behind business®. Learn more at