The rise of private credit, which has grown in market share and funds raised this year, has helped stoke an M&A boom as a growing source of liquidity. But more funds raised presumably means companies, especially those backed by sponsors, have more options than ever to source financing. Just how much pressure is the liquidity boom placing on private credit providers? Not much, if you ask them.

For starters, the core middle market has yet to feel much of a shift despite the new capital. “It’s definitely grown,” says Bain Capital’s head of private credit Michael Ewald. “Even though I could rattle off 25 names that are competitors, you typically see one to four players on a given deal, which tells me the market is still distinct and diversified.”

Why the disconnect? Much of the increase in credit fundraising is coming from players who deploy capital at the higher range of the middle market, usually investing in firms generating $75 million to $150 million in earnings before interest, taxes, depreciation, and amortization, says Ewald. Bain’s core investment range in companies generating $25 million to $75 million in Ebidta remains unaffected.

Fund specialization, for another reason, has left at least some lenders in the same position as ever. Tech specialist Francisco Partners’ head of credit and structured solutions Scott Eisenberg previously told Mergers & Acquisitions his funds’ structured solutions are flexible and scalable, differentiating Francisco Partners from lenders with more standardized offerings. Recently raised Francisco Credit Partners II clocks in at nearly twice its $1.25 billion target as the latest sign of investor interest in debt.

Bain Capital Credit also stakes out the speed and certainty so coveted by financial sponsors in the current climate when differentiating its debt offering.

“You can’t do that with your average lender,” Ewald says, speaking about moving quickly to close financing in a contested auction. “You need someone like us with a reputation for standing beside our term sheet. Someone who can move fast with 20 years of experience to do diligence quickly.”

For now, size, reputation and specialization seem to suffice to carve out lanes for a growing array of private credit providers.

Brandon Zero