US Insight: Large paydowns to direct lenders mean even more capital to put to work

large paydowns in direct lending

US Insight: Large paydowns to direct lenders mean even more capital to put to work

Andrew Hedlund - Managing Editor, LevFin Insights

26 June 2025

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Insights into how large borrower repayments are reshaping the direct lending landscape in 2025.

  • Capital Influx Dynamics: Learn how large paydowns from major borrowers are flooding direct lenders with fresh capital in 2025.
  • Deal Spotlight: Get details on headline transactions—including Brown & Brown’s acquisition, Trucordia’s refinancing, and Beacon Mobility’s facility paydown—and their effects on private credit.
  • Portfolio Strategy Shifts: Explore how lenders are repositioning portfolios, managing surplus capital, and defending spreads in a low-M&A environment.
  • Competitive Tools & Portability: Understand why portability provisions are becoming a crucial competitive advantage for lenders seeking to retain and attract deals.
  • Market Trends & Outlook: Discover recent trends in deal migration to the syndicated loan market and what they signal for private credit activity in the coming quarters.

Bye, bye to large borrowers, hello to a pile of fresh cash.

That has been a conundrum facing direct lenders after some of the largest borrowers in private credit left the market in the first half of the year, resulting in big repayments. That adds to substantial amounts of uninvested capital in a tepid M&A environment, leaving lenders scrambling to put the money to work.

This month, IG insurance brokerage Brown & Brown made an approximately $10bn acquisition of Risk Strategies parent Accession Risk Management, which had $4.57bn of outstanding debt held privately.

In addition, Trucordia refinanced $3.12bn of direct loans into the broadly institutional market, while Beacon Mobility paid down a $1.45bn private credit facility in part via a $1.28bn institutional loan-and-bond issuance.

KnowBe4 is also anticipated to turn to the syndicated market to refinance its debt obligations, an initially $1bn recurring revenue facility. That deal financed KnowBe4’s acquisition by a Vista Equity Partners-led investor consortium. The proposed BSL deal would comprise a $1.2bn first-lien term loan and a $260mn second-lien term loan, led by JP Morgan and KKR, respectively, according to sources.

Lenders have said that these large pay downs are forcing them to think about how to best position their existing portfolios in the anticipation that the influx of capital will keep spreads lower. “Where the larger repayments impact us and probably the broader market is just thinking about defending the portfolio,” one large lender said. Relationships and proactiveness are important to retain issuers and can include proposing a repricing or offering portability, given the elongated hold times, they said.

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