16 Apr 2026
Direct Lending Annual Report 2025
A record year of capital raising and deployment
Over €2bn
€1.1bn
2025 was a year of significant milestones for our business
Over the course of the year, we attracted more than €2 billion of capital partnerships and commitments across our European direct lending platform. We held the final close of our second Private Debt Fund (PDF II) and launched our inaugural Senior Debt Fund (SDF I).
Capital was raised across our direct lending strategies, spanning senior to stretched senior and unitranche, broadening our capital depth and enhancing our capabilities to structure financing solutions across the borrower lifecycle.
The support from both existing investors and new LPs reflects continued confidence in our differentiated, lower mid-market focus, our track record, and our disciplined approach to deployment. We believe delivering investment consistency through the cycle and strong risk-adjusted returns over the long term underpin the continued growth in investor and fundraising commitments.
Our fundraising activity in 2025 was undertaken with a clear objective: to ensure we can continue to support high-quality, lower mid-market borrowers with debt facilities to support growth.
Direct Lending Annual Report 2025
~€600m
~€1.4bn
~€400m
A consistent year of investing
We committed a record €1.1 billion across 54 new investments during the year. This reflects the strength of our sourcing network, the trust of our sponsor partners, and our ability to identify attractive opportunities through varying market conditions.
Our direct lending activity in 2025
Lending themes
Market backdrop: volumes strong, intensifying competition
The European Direct Lending mid-market continued to build positive momentum in 2025. Market transactions increased 17% to 570, up from 489 in the previous year, pushing 2025 into record-breaking territory.1
This strong performance comes despite a more modest growth in European private equity M&A activity, which was up 3%2, with direct lending volumes increasingly driven by refinancings and add-ons.
1 Source Houlihan Lokey, MidCapMonitor 2025
2 Pitchbook: Geography: Europe: As of 16 January 2026
Private equity activity by quarter
Source: Pitchbook; Geography: Europe; As of 16 January 2026
At the same time, the broadly syndicated loan (BSL) market remained active, intensifying competition within direct lending particularly in the upper mid and large cap segments of the market. As a result, there is evidence of lenders traditionally focused on larger transactions increasingly moving down into the mid-market in search of deployment. That shift intensified pricing pressure.
European direct-lending deals by purpose (€bn)
Source: PitchBook | LCD - Data through Dec. 31, 2025 - direct lending data is based on transactions covered by LCD News.
Across the market, average direct lending spreads compressed by approximately 100 basis points compared with 2021.
The spread differential between BSL and direct lending leveraged buyout transactions also narrowed to a ~125 basis points differential, as a result of increased dual-track processes for larger assets.
Spread of LBOs financed for all BSL borrowers vs direct lending (bps)
Source: Pitchbook | LCD – Data through Dec.31, 2025 – direct lending spread data reflects senior secured first-lien
By contrast, the lower mid-market, where Investec is focused, remains more insulated. For many larger funds, a €25-100 million financing package is subscale, limiting their ability to operate efficiently in our segment.
Within our own portfolio, spread compression has been more measured – approximately 50 basis points – which we attribute to our continued focus on the less competitive lower mid-market and our deep sourcing capabilities.
We continue to find the lower mid-market delivers the best risk-adjusted returns, where our disciplined structuring resulted in average net leverage remaining conservative at 3.5x in 2025, versus a market average net leverage of 4.9x3 for 2025.
3 Source: “Debtwire 2025 – European Direct Lender Rankings”
Our strategy: selective and consistent growth
Our fundraising activity in 2025 was undertaken with a clear objective: to ensure we can continue supporting high-quality, lower mid-market borrowers as they scale. This additional capital has strengthened our ability to provide larger bilateral solutions, enabling us to offer debt facilities of up to €100 million to well-performing companies within our core segment.
Across the year, we reviewed approximately 550 investment opportunities, in line with 2024 and ahead of 2023. Deployment remained disciplined with €1.1 billion lent across 54 investments. In 2025, 57% of capital supported existing borrowers, compared with 65% in 2024. This reflects continued portfolio support alongside selective new investment origination.
We also continued to deepen our relationships with lower mid-market sponsors across Europe. These partnerships generate repeatable deal flow aligned with our underwriting philosophy and provide us with a competitive edge to secure investments in comparison to more transactional competitors.
2025 was a pivotal year for our alternatives platform and our team. In a challenging fundraising environment, we significantly over-indexed as the compelling attributes of the lower mid-market became clearer compared with other competitive direct lending segments. As we attract new clients and capital partnerships, we are proud of our market leadership in this exciting space.
Contact Callum to unlock insights on the lower mid-market’s potential
Callum Bell
Head of Private Markets & Alternatives
Looking ahead to 2026
Lower mid-market – our dedicated focus.
M&A activity will continue to shape deal flow. While sponsor confidence is improving, we expect transaction volumes to remain at broadly similar levels and potentially increase in 2026, as private equity faces increasing pressure to return capital from older vintage funds. There are already encouraging signals visible within our portfolio and external networks.
In parallel, refinancing activity, portfolio optimisation and selective growth capital are likely to continue underpinning direct lending demand.
The geopolitical backdrop remains highly volatile, creating potential risks to M&A activity and growth, which we continue to monitor closely within our underwriting. Guided by our core principle of capital preservation, we apply our credit fundamentals with consistency and discipline across all opportunities.
The lower mid-market continues to offer substantial deal flow, allowing us to remain focused and highly selective in how we deploy capital. This selectivity becomes even more important in periods of heightened geopolitical uncertainty, where the lower mid market has historically demonstrated greater resilience and continued appeal for long-term lenders.
Within Europe, we expect competition to remain most intense in the upper mid-market, where dual-track processes across BSL and private credit solutions are increasingly common. By contrast, the lower mid-market continues to offer a more protected combination of pricing, structure and selectivity, supported by relationship-driven origination and higher barriers to entry.
With intensifying competition in the industry, the virtues of the lower mid-market became much clearer in 2025 in comparison to more competitive direct lending segments – deal volumes remain strong with leverage and documentation significantly more conservative than the wider market, evidenced by our average leverage of 3.5x across our investment activities in 2025.
With a long-standing team executing more than one investment per week, we are the scale player in the lower mid-market. This leadership position provides significant franchise value to borrowers looking for a committed, long-term finance partner and provides a significant and enduring competitive advantage for sourcing investment as well as the ability to underwrite the highest-quality investments.
Regulatory developments
Regulatory developments - including Basel 3.1 implementation, Solvency II recalibration and broader EU reforms - are likely to accelerate banks’ continued retrenchment from certain lending activities. In our view, this further reinforces the long-term role of direct lending as a core financing partner for European businesses.
Conclusion
As direct lending moves through 2026, the market is increasingly defined not by expansion, but by selection quality - of investments, structures and partners.
We believe this environment favours lenders with scale, discipline and deep sourcing networks. Our approach remains unchanged: to support high-quality, lower mid-market businesses, protect capital through cycles, and deliver attractive risk-adjusted returns for our investors.
We thank you for your continued trust and partnership and look forward to the opportunities ahead.
Reach out to Greg to discuss your borrowing needs
Greg Betz
Head of Direct lending
2025 milestones
Direct Lending European Small-Cap Manager of the Year - 2025
Debtwire’s recognition was an endorsement of the sustained hard work of our people and the high-quality partnerships we have cultivated since 2010.
Amundi Alpha Associates
Amundi Alpha Associates named us "Lower Mid-Market Lender of the Year 2025" at its Annual Investor Day in Frankfurt.
Direct Lending European Small-Cap Manager of the Year - 2025
Debtwire’s recognition was an endorsement of the sustained hard work of our people and the high-quality partnerships we have cultivated since 2010.
Amundi Alpha Associates
Amundi Alpha Associates named us "Lower Mid-Market Lender of the Year 2025" at its Annual Investor Day in Frankfurt.
Direct Lending Lender Rankings
9fin identified Investec as one of the most active direct lenders by deal count in our core geographic regions in 2025. Investec achieved a top three ranking in the UK & Ireland, DACH and Benelux regions - underpinning our leadership in our core markets.
Investing in our platform
We continue to invest in our platform and implemented 73 Strings, an AI-driven tool for enhancing portfolio monitoring as we continued to invest in and build out our private credit management team.
Direct Lending Lender Rankings
9fin identified Investec as one of the most active direct lenders by deal count in our core geographic regions in 2025. Investec achieved a top three ranking in the UK & Ireland, DACH and Benelux regions - underpinning our leadership in our core markets.
Investing in our platform
We continue to invest in our platform and implemented 73 Strings, an AI-driven tool for enhancing portfolio monitoring as we continued to invest in and build out our private credit management team.
Sustainability, impact and people
We continued to embed sustainability considerations across our activities by broadening the quality of data informing our decisions. We also:
Strengthened the robustness of sustainability-linked lending structures by enhancing the rigour applied to ESG margin ratchets and implementing a cost-effective external KPI verification process. This increases confidence in the design and operation of performance-linked mechanisms and ensures outcomes remain measurable and credible. Companies with loans below €15 million can now access independent KPI verification, extending robust ESG margin ratchets more widely than previously considered feasible.
Provided six training sessions to the Direct Lending team on a range of sustainability topics to build capability and support consistent implementation.
Expanded the annual ESG survey coverage to 40% of our loan portfolio, achieving a 76% positive response rate.
Advanced disclosure and risk-management capabilities including publishing our first Direct Lending Sustainability Report and an entity-level Task Force on Climate-Related Financial Disclosures (TCFD) report for Investec Alternative Investment Management.
Developed an enhanced cybersecurity risk assessment process to manage digital and operational resilience risks.
View our 2024 Sustainability Report
Impact
The team supported The Felix Project, the UK's largest food redistribution charity, with 42 colleagues giving time to help fight food poverty.
Our flagship charity cyclathon raised over £20,000 for breast cancer charity, Future Dreams. A team of 59 collectively cycled 3,308km in 24 hours on stationary bikes.
We hosted a Breast Health Masterclass with Future Dreams, attended by around 50 colleagues, reinforcing our focus on awareness and wellbeing.
Two team fitness challenges and a bake sale raised £3,200 for charity partners.
From our Direct Lending team
Laura's story
“Hi, I’m Laura, and I’m a member of the Direct Lending team at Investec. In 2023, I was diagnosed with breast cancer. It came as a complete shock being in my twenties, with no family history of the disease, and so it felt like something that simply shouldn’t happen to me.
Early on in my journey, I was introduced to Future Dreams, a charity that supported me from the very beginning and throughout my treatment. The breadth of their services is remarkable. They offer educational workshops covering topics such as surgery, nutrition, physiotherapy and massage, all delivered from a welcoming and accessible centre near King’s Cross.
My treatment journey was intensive and all-encompassing, including chemotherapy, surgery and radiotherapy. Thankfully, in 2024, I was given the all-clear. Now, almost two years on, I’m back at work and looking forward to the future.
I remain closely connected with Future Dreams, which is why fundraising for them is particularly meaningful to me and the wider team. As a smaller charity, it relies heavily on individual support, and every contribution truly makes a difference. Being able to raise awareness and give back to an organisation that supported me through such a challenging time is incredibly important.”
Contact Alicia to learn how we can support your ESG goals
Alicia Forry
Head of ESG
People
As our key asset, our people, and how we make decisions, are fundamental to our direct lending offering which is why we have built one of the largest and most experienced teams in the European lower mid-market.
During 2025
We added 14 new colleagues to our team, bringing our team to 71, spreads across our key geographies and product specialisms making this a platform of tangible scale.
We continued to build our Private Credit Management (PCM) team to drive growth and enhanced oversight and restructuring capabilities and help scale the platform. The PCM team is now fully staffed, with seven people in London and five in Mumbai.
Grew our Benelux presence five fold over the last three years, recently moving into our larger office in Amsterdam Zuid.
We also prioritise diversity of talent and strive to ensure all our colleagues feel valued, respected and supported.
The team is now 37% female and represents 13 nationalities.
Across the globe
Our direct lending business in numbers
at 31 December 2025
€3.8bn
87
145
3.3X
* Direct Lending AUM is the total invested and committed capital contractually committed to borrower counterparties and managed by the Investec Direct Lending team.
Direct Lending team in numbers
71
37%
13
Select investments made in 2025
Investec Alternative Investment Management
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