M&G flags overcrowded US credit market as profit stays flat
M&G reported flat 2025 profits of 838 million pounds today. CEO Andrea Rossi warned that the US private credit market is overcrowded and faces AI disruption.
The investment manager M&G plc has issued a cautionary note regarding the private credit market in the United States, describing it as overcrowded and increasingly competitive. Following the release of its full-year results, the firm contrasted the mature American landscape with the developing market in Europe, where bank lending still plays a dominant role.
Private credit has grown into a $2 trillion industry globally, but concerns over transparency and credit quality have prompted some investors to reduce their exposure to certain funds in the United States. M&G Chief Executive Andrea Rossi noted that the American market is particularly concentrated in software companies that may be vulnerable to disruption from artificial intelligence startups.
"We need to distinguish the U.S. from Europe."
Rossi emphasized that M&G maintains a conservative approach, with less than 2% exposure to software companies within its private assets division. The firm’s 27 billion pound credit portfolio is primarily focused on Europe and benefits from strong underwriting standards.
"The problems you have seen in the U.S., its mainly been driven by software exposure disrupted by AI."
In its financial report for 2025, M&G posted a flat operating profit of 838 million pounds. Despite this, the company saw a significant increase in client inflows, which reached 7.8 billion pounds. This growth was supported by a strategic partnership established last year with Dai-ichi Life Holdings, Inc., an insurance giant based in Japan.
While the firm reported strong momentum in client flows, it faces potential challenges in the United Kingdom. A proposed government cap on residential ground rents could impact certain funds within its private assets portfolio. Analysts at RBC observed that while the company is meeting financial targets, earnings were partially tempered by higher costs and lower performance fees.
In a related development, Deutsche Bank AG reported that its own private credit portfolio has expanded to 26 billion euros. The bank also highlighted the risks currently facing the sector as it continues its rapid expansion.
