Private credit flows into emerging markets reached a record $22.3 billion in the past year, according to data published by the Global Private Capital Association (GPCA). The figure - disclosed on Wednesday - is almost 40% above the previous high set in 2016 and reflects a notable shift of private lending toward developing countries as returns on projects in western markets compress and concerns about defaults grow.
The GPCA figures show that broader private capital activity in emerging markets climbed 33% to $150.3 billion. That aggregate total covers private credit, private equity, venture capital, and funds focused on infrastructure and natural resources. GPCA represents private investors who manage more than $2 trillion of assets across the developing world.
Within that broader mix, private credit expanded its share, rising to 14% of the total. By contrast, venture capital’s share declined for the fourth year in a row, falling to 24%.
Infrastructure accounted for nearly one-quarter of private capital deployment, with India alone receiving $8.8 billion earmarked for such projects. Jeff Schlapinski, GPCA’s managing director of research, said the growth in private credit is driven in part by gaps left by traditional banks. "There’s a number of businesses that are underserved by traditional banks. They’re looking for alternative funding sources," he told Reuters, noting broad-based interest particularly in energy and digital infrastructure.
Despite the sizable rise in total spending, the number of individual deals declined by 10%, indicating that capital was concentrated into larger projects. Part of that decline in deal count is attributable to softer venture capital activity in China and Southeast Asia.
GPCA data also shows a continued reconfiguration of capital flows in China. Private capital spending in the country fell for the fourth consecutive year, to $29.7 billion - a level that is nearly 75% below the 2021 peak. Schlapinski described China as becoming "increasingly a localized market...so government guidance, funds and local investors becoming a larger part of the ecosystem," and said Beijing is directing domestic capital toward sectors aligned with national strategic priorities, including semiconductors, hardware and electric vehicles.
Even with the surge into emerging markets, those markets still represent a minority share of the global private credit universe. The Bank for International Settlements estimates the overall global private credit market has surpassed $1.2 trillion, and emerging markets account for less than 10% of that total.
The GPCA data highlights a private credit pivot into developing countries as traditional lenders pull back and as investors pursue yield and scale in big infrastructure and energy projects. That trend is accompanied by a fall in smaller, venture-style transactions, especially in parts of Asia where local sources of capital are taking a larger role.