$4.3 trillion giant makes a move! JPMorgan plans to raise billions of dollars to re-enter the private credit market.

As the private credit market comes under pressure, JPMorgan Chase, the Wall Street giant, has chosen to buck the trend.

According to Bloomberg, JPMorgan’s asset management division, which oversees $4.3 trillion in assets, has officially launched an expansion plan in private credit. It aims to raise billions through institutional financing and inject loan resources from its commercial banking business into this new strategy, targeting to disburse tens of billions into the market.

According to department executives George Gatch and Bob Michele, negotiations with institutional investors are underway, and some commitments have already been secured.

This move comes at a time when the private credit market is facing its toughest test in years—several high-profile credit accidents have triggered a wave of investor redemptions, coupled with growing concerns about the impact of AI on the software industry.

Building, Not Acquiring, to Make Up for Lost Ground

JPMorgan Chase’s return to private credit comes from the lesson of missing out in the past.

In 2016, the bank spun off an internal business unit, which later became the private credit giant HPS Investment Partners. Management deeply regretted the decision. Earlier in 2024, JPMorgan engaged with Monroe Capital to discuss a possible acquisition, but no agreement was reached.

Afterwards, JPMorgan turned to organic expansion. "We’ve considered many approaches over the years, and ultimately decided organic expansion is the way to go," Gatch said.

About a year ago, Gatch and Michele brought Jeff Bracchitta, who previously served as co-head of direct lending at JPMorgan's commercial and investment banking division, to lead this new strategy.

Bracchitta has now recruited around a dozen professionals from peer institutions and other sources, forming a dedicated team.

Notably, the team is set up under the asset management division’s fixed income business line, not alternative investments. This structure reflects JPMorgan’s core belief: public market and private credit will eventually merge.

Internal Collaboration, Commercial Bank Provides Loan Sources

Unlike peers who opt for external cooperation, JPMorgan is deploying an "internal collaboration" model—its commercial banking business sources and initiates loans, while the asset management division evaluates and selectively takes over them.

Bob Michele, CIO and Global Head of Fixed Income at JPMorgan Asset Management, said, "The commercial bank sources and issues loans; asset management chooses which to participate in." He emphasized that this setup is "really not about the credit cycle," meaning it doesn’t depend on specific macroeconomic phases.

In contrast, other major banks have chosen to cooperate with external managers:

In 2024, Citigroup reached an agreement with Apollo Global Management to jointly pursue $25 billion in deals over five years; in 2023, Wells Fargo partnered with Centerbridge Partners to set up a $5 billion direct lending fund.

Allocating $50 Billion for Direct Lending Business

This round of fundraising by the asset management division is only one aspect of JPMorgan’s private credit layout.

JPMorgan has already earmarked more than $50 billion from its $4.9 trillion balance sheet specifically for direct lending through its commercial and investment banking arms, and has formed a group of joint lenders to provide additional funding support.

In addition, JPMorgan holds a private credit fund loan portfolio of about $50 billion.

As this product essentially layers debt upon debt, it is highly sensitive to market volatility. Earlier this year, JPMorgan exercised rights to mark down underlying collateral, which heightened market concerns about sector risks. However, Dimon said last week that he is not "particularly worried" about this business.

Last month, JPMorgan Asset Management also filed a prospectus for a planned interval fund, opening a channel for the future inclusion of wealthy clients in private credit strategies—even though Gatch and Michele said this is not part of the current plan.

Executive Gatch says there are huge opportunities ahead in private credit

JPMorgan’s countertrend move itself sends a strong signal.

Dimon’s recent remarks have been nuanced: on one hand, he has repeatedly warned of risks such as a lack of transparency and declining credit standards in private credit; on the other, earlier this month he stated that private credit "may not constitute systemic risk."

Against this backdrop, JPMorgan’s entry is seen in the market as a confidence statement in its own competitiveness, and by some competitors as a provocation—after all, the posture of "talking down while going long" has clearly sparked dissatisfaction among peers.

"Given the growth of the private credit business and some current market dislocations, it’s an interesting time," Gatch said. "We believe there are huge opportunities ahead."

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