In recent years, the island has also seen a significant rise in interest from private credit fund managers. This shift is not incidental, it reflects both global market dynamics and Guernsey’s deliberate strategic positioning.
31 July 2025 Private credit in 2025: Why Guernsey is becoming a global hub
Guernsey has long been recognised as a premier jurisdiction for alternative investment structures, particularly in private equity and real estate.
What is driving the growth of private credit funds?
Several factors have contributed to the rise of private credit funds.
One of the primary drivers is the tightening of regulations on traditional banks, which has limited their ability to lend to certain sectors and companies. Amid high interest rates, a slowdown in private equity deal activity and tightened lending from traditional banks, the private credit market grew to reach almost US$2 trillion in assets under management (AUM) in 2024. While interest rates may not rise further in 2025, they are expected to remain elevated, creating a challenging environment for traditional bank lending.
Impact on the private equity market
The rise in private credit funds has had a profound impact on the private equity market and particularly in later years, where exits have become locked up. These funds have provided private equity firms with an additional source of capital, enabling them to finance leveraged buyouts and exit routes where returns of capital have been delayed.
With real estate property valuations in a general decline, credit funds in the real estate space can negotiate better terms while taking advantage of the tailwinds in the market. In addition, regulations that have driven traditional banks toward more conservative behaviour has further driven demand.
Global momentum meets local agility
Private credit has emerged as one of the fastest-growing asset classes globally. AUM in this space continues to grow with Preqin forecasting AUM to reach $2.64 trillion by 2029; driven by investor appetite for yield, diversification and the retreat of traditional bank lending. Guernsey is leveraging this momentum by offering a compelling value proposition: a stable environment, a flexible regulatory framework and deep expertise in the administration of such structures.
Guernsey’s revised Private Investment Fund (PIF) Regime further strengthens this flexibility with the PIF offering:
- No limit on the number of investors
- A broader range of qualifying investors
- No requirement for an audit
- No requirement for a prospectus
- One day approval process
Looking to the future
Private credit is set for further growth as the asset class solidifies its standing as a crucial component of the global financial system. As traditional banks face ever-tightening regulations and risk management constraints, private credit will continue to evolve, offering tailored, agile financing solutions meeting investor demand for uncorrelated/stable return. The year ahead represents an unparalleled opportunity for private credit providers, and Guernsey is primed to service, to support and drive economic expansion, build infrastructure and promote sustainability and unlock growth.
Contact our team today to explore structuring opportunities, regulatory advantages and how the PIF regime can accelerate your fund launch.
