Strategic View: Q2 2025 reports from KKR and Wellington Management signal a new trend: the “capital-light” club deal. As $1.7T in private credit “dry powder” chases fewer deals, lenders are forming clubs to finance asset-light companies, such as specialty finance and tech platforms, which are offloading assets to boost public valuations.
Full story: The US private credit market is navigating a complex Q2. A stunning $1.7 trillion in capital is searching for a home, but as KKR notes, deal flow hasn’t kept pace. This supply/demand imbalance is driving spread compression. Yet, sophisticated lenders are not just waiting; they are evolving. They are embracing the “capital-light” revolution.
What is this trend? Public markets are rewarding companies that shed heavy assets. This has created a massive opportunity for private credit. Large corporates and specialty finance companies are looking to offload asset portfolios, from- to equipment leases. This is where the new “private debt club deal” is shining.
Instead of a single fund providing a massive, risky loan, a club of lenders is forming to buy these asset pools directly. This move, highlighted by Wellington Management as a convergence of public and private markets, is a win-win. The company gets a cash infusion and a cleaner, “asset-light” balance sheet, often leading to a higher stock multiple.
The private credit club gets exactly what it wants: contractual, compounding income from a diversified pool of assets, secured by more than just a company’s enterprise value. This is the new frontier. It’s not just about lending to mid-market companies; it’s about becoming a strategic capital partner that finances a company’s entire balance sheet optimization.
Summary: Private credit is crowded, but the smart money is forming club deals to finance the “capital-light” trend. This matters because it shows how private credit is evolving from simple direct lending into a sophisticated tool for corporate-scale asset-based finance, unlocking trillions in new, undercapitalized markets.
Source: KKR
