Private Credit: The new favorite asset class of family offices

Private Credit: The asset class with exponential growth

In our latest Family Office Investment Report, Private Credit pops up with a surprise: Private credit will be the new top asset class for family offices in 2025 with 18% – a new entry into the elite category, illustrating the massive shift in investor behavior. This is not a mere shift from existing allocations – it is a new strategic direction.

What is driving this rapid rise? The answer lies in a perfect combination of economic factors:

• Refinancing needs in the DACH region: over €600 billion need to be refinanced
• Higher interest rates make private debt more attractive than before
• Illiquidity premiums are substantial
• Predictable cash flows versus volatility-prone equity markets

Asset Allocation Shift: From Fixed Income to Private Credit

The allocations show a clear trend:

• Private debt: From 2% (2023) to 4% (2025) – trend rising to 5%
• Traditional Fixed Income: Stable at 17%
• Total debt allocation (Debt + Private Credit): Now at 18-22% of the portfolio

This marks a fundamental shift in philosophy: Family offices increasingly prefer credit risks to holding stocks, as long as the risk/return profile is right. The reason: With private loans, they receive predictable returns, mitigate volatility and take advantage of illiquidity premiums.

Debt financing documents and loan agreements

Why family offices love private credit

Private credit has characteristic advantages for family offices:

• Predictability: Unlike equity investments, credit positions have explicit cash flow profiles. Family know what they will receive monthly/quarterly.
• Volatility reduction: In a portfolio full of equity volatility, private credit offers stabilization.
• Illiquidity premium: Family offices have patience capital. This patience is compensated with an additional 2-4% annual return compared to liquid credit.
• Diversification: Private credit correlates weakly with public markets, therefore offers real portfolio advantages.
• Permanent capital model: In contrast to traditional loans with fixed terms, family offices can structure longer-term financing.

Practical implications for entrepreneurs

This is a new opening for founders seeking growth capital: While VC and private equity often focus primarily on equity valuation, family offices are increasingly willing to Negotiate hybrid structures – Equity + credit components that address different return profiles.

This opens up new financing options for companies with predictable cash flows.