Private credit is growing in New Zealand for sound reasons. Banks are tight-fisted with mid-market and growth businesses, and investors want yield. But a big share of the recent surge didn’t come from organic demand. It came from a visa programme, and the regulators are now trying to measure a market that has already arrived.
The offshore warning is loud. Sydney developer Bathla collapsed owing about A$3 billion ($3.72b) to private credit lenders, and the Reserve Bank of Australia has flagged ASIC’s concerns about the sector, while judging the problems unlikely to spread into the wider banking system.
The visa did the heavy lifting
Under the Active Investor Plus visa, private credit attracted $842 million, about 70% of growth-category managed fund investment. That is not what the scheme was built for. Its purpose was to push foreign capital into productive business growth, not into yield-seeking fund products.
Immigration New Zealand’s latest quarterly report shows the scale. Since the reworked settings went live in April 2025, $2.12 billion has been invested, with another $2.36 billion in the pipeline. Managed funds took 56% of committed capital, and private credit took 70.1% of that. Applications are accelerating, up 39% quarter on quarter to 171, with May 2026 an all-time monthly high.
The more interesting number is the gap between promise and deployment. Invest NZ’s recertification check found $1.89 billion committed to managed funds but only $623.4 million, or 34%, actually deployed. It reported no material compliance concerns, but described deployment as uneven across a small number of funds.
On 28 September the Government responded with tougher growth investment tests and gave Invest NZ powers to suspend or revoke investments that fail programme requirements. Private credit funds already on the approved list now face removal. That is a sensible correction, and an admission the original settings let capital flow somewhere ministers didn’t intend.
A small market growing in the dark
By offshore standards, New Zealand’s market is tiny. Australia’s sits at A$200-250 billion, and one of the largest local players, Paul Carman’s Private Capital Group, manages about $750 million. Non-bank lending institutions, a broader category than private credit, supplied just $9.7 billion of $142.6 billion in business lending as of April.
The problem is visibility. The RBNZ told the Herald it engages with private credit firms through its liaison programme but concedes there is “limited data available” on the scale of activity here. That has barely moved since 2024, when the Reserve Bank said it would monitor the sector’s linkages with the financial system, and the IMF warned that fast growth in an opaque ecosystem “could become a systemic risk”. By early 2025, NBR reported that the IMF expected the global market to reach US$3.5 trillion by 2028.
The opacity is structural. Most private credit is offered to wholesale investors, which keeps it outside the heavier retail disclosure regime under the Financial Markets Conduct Act. That lighter touch is part of the appeal. It is also why nobody can say with confidence how big the local book is or how it is performing.
The case for more of it, done properly
None of this makes private credit a villain. In June the Herald’s capital markets report described the sector as having matured into an institutionally credible asset class, driven by tighter bank settings, higher capital requirements and borrower demand for products banks won’t offer.
Harbour Asset’s TJ Singh argued in July that private credit complements rather than replaces banks, and that businesses benefit from multiple capital sources. He noted participation widening to family offices, iwi entities and KiwiSaver providers. For a country whose bank-dominated system routinely starves the mid-market, that diversity is a genuine positive.
Massey University’s Dr Claire Matthews, dean of accountancy and finance, put the trade-off plainly to the Herald: “There is a place for these entities, but it really comes down to making sure that they are getting appropriate security to cover the lending that they’re doing, and assessing those loans well.”
What borrowers and investors should do now
For business owners, private credit may be the fastest, most flexible growth capital on offer. But the AIP changes could slow the inflow to some funds, so borrowers relying on one lender for refinancing should line up alternatives. Investors should ask hard questions about security, concentration and how quickly the manager can actually deploy, or return, their money.
The answer is not a heavy new rulebook. It is better data, so the Reserve Bank can measure what it currently can only liaise about. Bathla shows what happens when lending outpaces scrutiny. New Zealand has the advantage of seeing that warning while its market is still small enough to get right.
Sources
- NZ Herald: Private credit gains ground in New Zealand as regulators watch offshore risks (2026-10-09)
- BusinessDesk: Private credit funds face removal risk under golden visa overhaul (2026-10-06)
- Immigration New Zealand: Quarterly report on the Active Investor Plus Visa Q4 FY25/26 (2026-09-18)
- interest.co.nz: RBNZ to ‘monitor developments’ in the private credit sector (2024-07-08)
- Investment Opportunities: Private Credit NZ, a 2026 guide for wholesale investors (2026)
- NZ Herald: Private credit matures as institutional investors back New Zealand lenders (2026-06-10)
- Harbour Asset Management: Harbour Navigator, a case for private credit for NZ businesses (2026-07-14)
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