Private credit’s role in unlocking mid-market Private Equity
Viewpoint by Jon Petty, Investment Director at TDC
In today’s competitive, fast-paced world of private equity (PE), speed and flexibility are vital when it comes to completing deals. In what has been a more subdued deals market since the post-COVID boom in activity, PE firms are increasingly turning to private credit investors to provide the flexibility needed to act quickly in a more competitive mid-market. According to Dechert’s 2025 Global Private Equity Outlook, 63% of PE firms now use private credit to support acquisition financing in their portfolios, highlighting this growing trend of PE utilising such funds.
The debt markets have evolved significantly for PE over the last 10 years. High street banks remain active in funding transactions, but there has been strong growth in private credit providers that can offer more flexibility on structure, higher leverage and often with less constraints in relation to hold size.
TDC entered into a transformational capital partnership with KKR in early 2023. The vision was to combine access to deep pools of capital through this partnership with the agility of remaining a founder-led business. We identified that there is a significant market opportunity in the UK mid-market to become the leading provider of consistent private loan capital to PE. Our strong access to capital puts us in a unique position to support PE throughout their investment cycle and through to exit, avoiding the distraction and cost that comes with a refinance mid-investment, which can be necessary in situations in which the original lender “taps out”.
We are the only Manchester-headquartered private credit fund which we are proud of, however we serve the market across the UK. Our sole-focus on the UK, in contrast to other private credit providers that must balance deployment across multiple geographies, coupled with our source of capital, which isn’t vulnerable to fundraising cycles, means we can be “always on” for our PE partners. While TDC funds UK-based companies, we can support international expansion whether that is organic or via M&A.
At TDC, we have a flat structure which enables us to react rapidly when required. This is absolutely critical for our PE partners in a competitive deals market in which certainty of deal execution is paramount. Private credit has an important role to play as the deals market recovers. With stable and falling interest rates, debt market conditions continue to improve, however organic growth in UK companies remains subdued which remains a challenge to equity investors. To generate their returns, PE are increasingly turning to inorganic “buy and build” strategies. In these circumstances, picking the right lending partner has never been more important.
TDC is excited and optimistic about 2025 and the role we can play in enabling PE to grow value in its portfolios.
