John Zito, a partner and deputy CIO of credit at Apollo Global Management; Joshua Easterly, co-founder, co-chief investment officer, and co-president of Sixth Street; and Stephanie Rader, global co-head of Alternatives Capital Formation within Goldman Sachs Asset Management

COURTESY OF APOLLO GLOBAL MANAGEMENT, SIXTH STREET AND GOLDMAN SACHS

Everyone in finance is talking about private credit—the term used for non-bank firms, many of them well known Wall Street names, that have created lending units that provide loans to businesses. Demand for these services has soared so much that BlackRock expects the global private debt market to hit $3.5 trillion in AUM by the end of 2028. Fortune has compiled a list of the people at the forefront of this big and fast-growing sector further below, but first it’s helpful to have some context about the evolution of private credit.

Private credit isn’t a new sector. The term refers to firms, which are not banks, that offer loans to businesses, typically small and medium-sized companies. These companies are usually too big or risky for banks and too small for the public bond markets. Non-bank firms have been providing loans to companies since at least the 1990s but have largely remained in the background.

That all changed in 2008 when banks stepped back from lending during the global financial crisis, ushering in a new class of private lenders to help finance businesses—including well-known PE firms (think Apollo, KKR and Blackstone). That year, private credit was relatively small, with about $375 billion in assets under management, according to Preqin.

As more firms stepped in to provide loans to businesses, the sector has soared. Last year, private credit assets topped $2.1 trillion globally, most of this in the U.S., the IMF said. “Today, the banks supply less than 20% of all credit to businesses,” Marc Rowan, co-founder and CEO of Apollo Global Management, told Fortune in September 2023. “The need for funding private debt switched from the big lenders to the investment marketplace.”

One argument in favor of private credit is that these types of loans are much less risky for businesses. For bank loans, deposits serve as their source of funding, which can be precarious. In 2023, three regional banks, led by Silicon Valley Bank, collapsed when consumers got spooked and pulled their money out. Meanwhile, the private credit market has become very good at the lending business.

“The debt product is good for the market because people that are investing in private credit funds are very sophisticated,” said Todd Holleman, a partner with law firm King & Spalding who has advised private credit funds since 2010.

Expectations for credit are high now. Chris Sheldon, KKR’s co-head of credit and markets, said it is still a good time to invest in the sector, although he expects interest rates will likely remain high for the foreseeable future, according to an April investor letter. Sheldon urged investors to deploy capital, calling the current environment “a golden age for credit allocations.”

A month later, in May, Blackstone led a $7.5 billion credit facility for CoreWeave, an A.I. cloud computing startup. The transaction was one of the biggest debt financings ever. Holleman, who agrees that the sector is in a golden age, said his phone has been ringing a lot. “We’ve seen not only a lot of activity from traditional clients but we are getting calls from new entrants in the market,” he told Fortune.

The recent boom is elevating a new class of power players in this market. Here are nine to watch.

Joshua Easterly, co-founder, co-chief investment officer, and co-president of Sixth Street

Joshua Easterly, co-founder, co-chief investment officer, and co-president of Sixth Street

COURTESY OF SIXTH STREET

After a stint at Wells Fargo Foothill, the commercial finance company of Wells Fargo & Co, Easterly joined Goldman Sachs in 2006. It was at Goldman, where he ran the direct lending business, that he realized the opportunity available in private credit. (Easterly worked for Alan Waxman who led AmSSG, the private credit business at Goldman.) Compared to banks, private credit has a better model because it can hold more capital for loans on its balance sheets, Easterly said during Fortune’s Future of Finance conference in May. The rise of private credit was the “intended consequence” of regulation that came out of the global financial crisis, Easterly said.

That year, in 2009, Easterly left GS to help launch Sixth Street with Waxman and several other former Goldman execs. Sixth Street started out as TPG’s dedicated global credit and credit-related investing platform, went solo in 2020 and the firm now has more than $75 billion in assets under management. Credit remains a core strategy; Easterly oversees the direct lending business, which provides loans ranging from $50 million to $2.5 billion to large-cap and middle-market companies. He also serves as chairman and CEO of Sixth Street Specialty Lending, a publicly listed business development company, and chairman and CEO of Sixth Street Lending Partners, a private BDC focused on large cap direct lending. Unlike banks, who often syndicate their loans, private credit firms typically keep the loans in their funds until maturity. “You know who your lender is. You are dealing with one counterparty,” Easterly said at the Fortune conference.

John Zito, a partner and deputy CIO of credit at Apollo Global Management

John Zito, a partner and deputy CIO of credit at Apollo Global Management

COURTESY OF APOLLO GLOBAL MANAGEMENT

No list of private credit firms is complete without Apollo Global Management, which is one of the biggest lenders. The firm had $671 billion in AUM as of March 31, with most, or $476 billion coming from credit, including $325 billion AUM in corporate credit and $151 billion AUM in asset-backed finance. After spending five years as a portfolio manager at Veritas Fund Group, and another five years at Brencourt Advisors as a PM, Zito joined Apollo in 2012. He oversees the firm’s global credit, insurance and real estate debt business and team at Apollo.

Zito said he views the private credit market as a $40 trillion, predominantly investment grade, opportunity. Apollo was an early mover in large-cap corporate direct lending and private asset-backed finance, and currently originates tens of billions of dollars at the firm, he said in an email. Notable recent deals for Apollo include provided financing to HBC, parent company of Saks Fifth Avenue, to support its buy of Neiman Marcus this month; leading an $11 billion investment in an Intel factory in Ireland in June; and as a financing partner for Hertz during the rental car company’s bankruptcy in 2021. With all this success there is more competition, Zito noted. “In a higher rate environment, you’ve seen an influx of new entrants to private credit, but few have the scale, broad capabilities, and long-dated capital to partner with companies and fund large, transformative long-duration needs in emerging areas such as infrastructure, AI and energy transition,” he said.

Gilles Dellaert, global head of Blackstone Credit and Insurance (BXCI)

Gilles Dellaert, global head of Blackstone Credit and Insurance (BXCI)

COURTESY OF BLACKSTONE CREDIT AND INSURANCE

In 2010, Blackstone made a big move in the credit space when it acquired GSO Capital Partners, the $10 billion debt investment firm that went on to become Blackstone Credit. In September, Blackstone combined its corporate credit, asset-based finance, and insurance groups into a single unit, creating BXCI. It also promoted Gilles Dellaert to head up BXCI. Blackstone, the biggest alternative asset manager, has, as usual, big goals for BXCI. In 2023, Blackstone the firm reached $1 trillion in AUM and now plans for BXCI, along with real estate credit, to hit $1 trillion AUM over the next ten years. Over the past three years, AUM for BXCI has more than doubled to $330 million, and if the real estate debt business is included, this jumps to $420 million.

Dellaert’s career in credit spans twenty years. He spent nearly 10 years at Goldman’s reinsurance group, which spun off in 2014 and became Global Atlantic. Dellaert worked for nearly seven years at Global Atlantic, most recently as co-president and chief investment officer. (After buying a majority of Global Atlantic in 2021, KKR acquired the rest of the insurance company that it didn’t own earlier this year.) In April 2020, Dellaert joined Blackstone, as global head of insurance solutions and was named global leader of credit last year. Dellaert also believes we are in the golden age of credit. “There is a huge runway ahead of us – we think it is at least a $25 trillion opportunity in the broader private credit market with most clients also recognizing they’ve been under allocated to the asset class,” he said.

Kipp deVeer, partner and head of Ares Credit Group

Kipp deVeer, partner and head of Ares Credit Group

COURTESY OF ARES CREDIT GROUP

Another big player is Ares Management, which manages about $428 billion in AUM. The firm has multiple strategies including private equity, real estate and infrastructure. But what Ares is known for is credit, its biggest unit that managed nearly $310 billion in assets as of March 31.

DeVeer, who was previously a partner at RBC Capital and also worked at J.P. Morgan’s special investment group and in their investment banking unit, joined Ares in 2004 and is now head of the credit group. Twenty years ago, Ares typically financed much smaller companies, businesses with a couple hundred million of revenue, deVeer told CNBC in November 2023. Since then, banks have grown bigger but are still heavily regulated. “With that has come just a, you know, lesser interest in dealing with the companies that we deal with that tend to be smaller, middle market companies,” deVeer said. This has benefited Ares which plays in a broader fairway now. Ares still focuses on small businesses, but it also plays in the sector of “companies that have billions of dollars of enterprise value,” he said.

Stephanie Rader, global co-head of Alternatives Capital Formation within Goldman Sachs Asset Management

Stephanie Rader, global co-head of Alternatives Capital Formation within Goldman Sachs Asset Management

COURTESY OF GOLDMAN SACHS

Goldman Sachs, the storied investment bank, has been building its private credit business since the 1990s. In fact, Goldman’s first mezzanine fund raised $1.2 billion in 1996. (Mezz funds are often used to finance the acquisition of companies or their assets.) The latest iteration of the pool, West Street Mezzanine Partners VIII, collected $11.7 billion in January 2023, with a total fund size of $15.2 billion. In May, Goldman’s latest direct lending fund, along with separately managed accounts, raised $21 billion. Goldman had $139 billion in private credit assets under management as of March 31.

Rader has spent two decades at Goldman, joining in 2004. She was promoted to managing director in 2015 and, in 2018, was named a partner. Rader has held various roles at GS, serving as global head of private credit client solutions for Goldman Sachs asset management, and she also led distressed and bank loan sales within global markets. Rader was named co-head of alternatives capital formation in December 2023. A low interest rate and low default environment means returns for private credit funds have been calm and positive for more than 10 years. Rader expects this will change with an uncertain macroeconomic environment and heightened volatility. “We believe managers with experience investing through cycles, and the resources and capabilities to actually manage through work out situations will be better positioned. It is also critical to have a wide origination funnel, allowing investors to be highly selective in their diligence and underwriting processes,” she said.

Lawrence Golub, CEO of Golub Capital

Lawrence Golub, CEO of Golub Capital

COURTESY OF GOLUB CAPITAL

Lawrence Golub, CEO, founded the firm that bears his name in 1994 after working as an investment banker for Allen & Co and Wasserstein Perella. (Golub also served as a White House fellow in the early 1990s.) New York-based Golub Capital has grown into a leading direct lender and private credit manager, with over $70 billion of capital under management as of April 1.

Golub doesn’t believe private credit is in a bubble or that it’s the golden age of capital. “Don’t believe the hype,” he told Fortune. “Private credit has grown as an asset class and will continue to grow because it serves two key stakeholders well—investors and private equity sponsors,” he said. Golub is optimistic about the asset class but predicts the winners will be those with “powerful competitive advantages like long-standing relationships, incumbencies, scale and proven credit expertise across the business cycle.”

Michael Patterson, governing partner, HPS Investment Partners

Michael Patterson, governing partner, HPS Investment Partners

COURTESY OF HPS INVESTMENT PARTNERS

Patterson joined HPS in 2007 when the firm was known as Highbridge Principal Strategies, a division of Highbridge Capital Management, within J.P. Morgan Asset Management. In 2016, HPS principals and employees acquired the firm from Highbridge and J.P. Morgan Asset Management. HPS is now a leading credit investment firm with about $114 billion of AUM.

Patterson has been HPS’s governing partner since 2016. Attractive risk adjusted returns have caused direct lending dry powder to soar, he said. In April, Pitchbook estimated that the private credit markets had about $500 billion in dry powder, with more than half in direct lending. With more capital chasing the same number of transactions, HPS has seen other lenders compromise on structural protections including the security of collateral packages, which refers to a borrower’s ability to raise incremental debt, Patterson said. “We continue to remain focused on the quality of the structure afforded by documentation and seek to avoid stretching for incremental yield at the expense of downside protection,” he said.

Craig W. Packer, co-president of Blue Owl Capital and head of the credit platform

Craig W. Packer, co-president of Blue Owl Capital

COURTESY OF BLUE OWL CAPITAL

Packer spent nearly 14 years at Credit Suisse/DLJ where he was the global head of high yield capital markets. He joined Goldman Sachs in 2006 as a managing director and head of high yield capital markets. In 2008, he was made a Goldman partner and was named co-head of leveraged finance in the Americas. He left GS in 2016 to cofound Owl Rock Capital Partners, a direct lender. In 2021, Owl Rock merged with Dyal Capital, an acquirer of PE firm stakes, through a SPAC deal. The combined firm was called Blue Owl Capital, had $53 billion in AUM, and invested in credit, real estate and in PE firms. AUM for Blue Owl has since more than tripled to over $174 billion. Packer is head of the credit platform and is CEO of each of the Blue Owl BDCs.

Packer said he’s always worried about Blue Owl’s portfolio and how its borrowers are doing. “That is the nature of our business,” he said. Private credit, however, is no longer the lender of last resort but is more often the first lender of choice, he said. “Private credit continues to grow as an asset class for one simple reason – it has worked well for both the investors and the users of capital,” Packer said.

Armen Panossian, co-CEO and head of performing credit at Oaktree Capital Management

Armen Panossian, co-CEO and head of performing credit at Oaktree Capital Management

COURTESY OF OAKTREE CAPITAL MANAGEMENT

One of the older firms on our list is Oaktree, a well-known distressed debt investor that was co-founded by Howard Marks and Bruce Karsh in 1995. Oaktree had $192 billion in AUM as of March 31. About 75% of that is in credit, according to the Oaktree website. (In 2019, Brookfield Asset Management, the real estate investor, acquired a majority of Oaktree in a nearly $5 billion deal.)

Panossian joined Oaktree’s global opportunities group in 2007 as an assistant VP and, in 2014, he moved to the U.S. senior loans team where he was co-portfolio manager, and led the development of Oaktree’s CLO business. In 2019, Panossian became head of the performing credit business, which he continues to lead. He assumed the co-CEO position at Oaktree in March. Banks over the past decade retreated from corporate direct lending, fueling the growth of private lenders, Panossian said. “There is a secular shift underway as companies that were traditionally financed in the syndicated loan market are turning to private credit,” he said.