Shares of several major European private market firms tumbled on Friday as fears over risky lending in the United States rattled investor confidence across the Atlantic.
In London, Intermediate Capital Group (ICG) fell 5.5%, while Jersey-based CVC Capital Partners dropped about 6.6%. Switzerland’s Partners Group declined 3.4%, and Swedish investment firm EQT slid 4.6%. The sell-off mirrored sharp declines among U.S. regional banks earlier this week, driven by mounting concerns that weaknesses in private credit markets could spill into the broader financial system.
ICG oversees more than $30 billion in private debt, accounting for roughly a quarter of its total assets under management as of June. Partners Group manages $38 billion in private credit, while CVC controls about 17 billion euros ($19.9 billion) in its direct lending division. Analysts say the firms’ exposure to private debt has made them particularly sensitive to worries about credit quality.
The renewed anxiety follows the collapse of U.S. auto parts manufacturer First Brands and the bankruptcy of subprime lender Tricolor, both of which shook confidence in corporate lending standards. Investment bank Jefferies, which had exposure to First Brands, saw its stock plunge 11% on Thursday before recovering slightly on Friday.
First Brands’ failure, linked to its heavy reliance on supply-chain financing and invoice receivables, has drawn attention to broader risks from high leverage and loose lending conditions. Some investors fear similar vulnerabilities could emerge among private credit funds that have grown rapidly in recent years.
J.P. Morgan CEO Jamie Dimon warned that more hidden stress may surface within the system. “When you see one cockroach, there’s probably more,” Dimon said during the bank’s third-quarter earnings call Wednesday. “Everybody should be forewarned on this.”
European regulators have echoed those concerns. Joachim Nagel, president of Germany’s Bundesbank and a member of the European Central Bank’s governing council, told CNBC that private credit growth poses “regulatory risk.” Speaking at the IMF and World Bank annual meetings in Washington, he said, “I’m concerned when it comes to private credit, private lending. This market is really big now — as far as I know it’s more than $1 trillion, and we know there are some spillovers from the less-regulated market participants to the more regulated market participants. We as regulators, we have to take a close look at it.”
The International Monetary Fund is also watching the sector closely. Tobias Adrian, director of the IMF’s Monetary and Capital Markets Department, said the organization is monitoring leverage and credit practices among non-bank lenders. “This leverage is probably resilient, but of course, we are watching underwriting standards very closely,” Adrian said.
The recent sell-off highlights the growing unease surrounding private credit, a once-niche corner of finance that has ballooned into a trillion-dollar market. With interest rates staying high and defaults creeping upward, both regulators and investors are questioning whether the rapid expansion of private lending could expose deeper cracks in the global financial system.
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