Private credit is no longer something that sits on the margins of a transaction. In most active markets, it is now part of the core financing conversation. In Egypt and the wider region, it is arriving more quietly, but it is arriving nonetheless, typically through cross-border transactions, sponsor led deals, and situations where timing or complexity does not lend itself to a conventional bank process.
Before going further, it is worth pausing briefly on what is meant by “private credit”, as the term is often used without explanation.
In simple terms, private credit refers to debt financing provided by non-bank lenders, typically investment funds, credit platforms, or institutional investors. Unlike banks, these lenders are not primarily deposit taking institutions and are therefore not constrained in the same way by regulatory capital requirements. As a result, they tend to have greater flexibility in how they structure lending.
Private credit can take several forms. It may be a direct loan to a borrower, often negotiated on a bilateral basis. It may sit as mezzanine or subordinated debt, ranking behind senior bank facilities. It may also be used as a bridge facility, providing short to medium term funding with the expectation that it will later be refinanced, often by bank debt once the business has stabilized.
From a market perspective, this is no longer a niche segment. Internationally, large private credit platforms such as Blackstone Credit, Apollo Global Management, Ares Management, and KKR Credit have deployed significant capital into direct lending and structured credit opportunities.
Closer to the region, institutions such as Gulf Capital, Shuaa Capital, Waha Capital, and credit arms of regional investment groups have increasingly participated in private credit style transactions, particularly in sponsor led and cross-border deals.
While Egypt does not yet have a fully developed standalone private credit market, these providers are already active in transactions involving Egyptian assets, typically through offshore structures or regional platforms. As a result, private credit is becoming a practical reality for borrowers and investors operating in Egypt, even if it is not always labelled as such.
What is still missing locally is not access to capital, but a clear way of thinking about when to use which type of financing, and how to structure them together.
Too many transactions still approach financing as a sequencing exercise. Speak to the banks first. If that becomes difficult, look at alternatives. In practice, that is no longer how the market is operating at the more sophisticated end.
Financing has become part of the deal design itself. Get it right early, and the transaction tends to move. Get it wrong, and the friction shows up later, usually at a point where options are limited.
Table of contents
- What the Decision Really Comes Down To
- Where Banks Continue to Deliver
- Where Private Credit Starts to Make Sense
- The Egyptian Layer: Where Structure Matters
- The Shift That Is Actually Taking Place
- What Tends to Work in Practice
What the Decision Really Comes Down To
The question is often framed as a choice between cost and flexibility. That is only part of the picture. The real question is how the financing structure supports the transaction you are trying to execute. That usually comes down to a handful of points that are easy to state but not always easy to reconcile in practice.
How quickly does the deal need to close. How predictable is the target’s performance. Is the business already operating on a steady footing or is it in transition. How much flexibility will be needed once the deal is done. And how do you expect to exit.
For investors deploying capital into Egypt, this tends to be even more pronounced. Transactions are often cross-border, sometimes time sensitive, and not always aligned with a standard local lending template. For local banks, particularly those active in structured and acquisition financing, the question is how far they can stretch within their credit framework without losing discipline.
That is where the real tension tends to emerge.
Where Banks Continue to Deliver
Banks remain the backbone of the financing market, and for good reason. They bring cost efficiency, local execution capability, and a framework that is clear and well understood under the supervision of the Central Bank of Egypt. In transactions where the business is stable, cash flows are predictable, and the structure is relatively straightforward, bank financing is often the right answer.
Predictable cash flow here simply means that revenues and operating performance behave in a way that can be forecast with confidence. That is what bank credit processes are built around.
Where banks are sometimes challenged is not on substance, but on timing and shape. Credit approvals take time, internal thresholds need to be respected, and syndication requires alignment. All of that works well when the transaction fits the model. It becomes more difficult when the transaction does not.
Where Private Credit Starts to Make Sense
Private credit tends to appear at precisely that point, when the transaction is moving faster than a bank process can accommodate, or when the risk profile does not sit comfortably within standard parameters.
Take what is often described as non-linear cash flows. In practical terms, this refers to situations where income is uneven. A business might generate strong revenues in certain periods and weaker revenues in others. This could be due to seasonality, project-based income, or a business that is still stabilizing. Banks generally prefer a smoother profile. Private credit is more willing to engage with variability, provided it is understood and priced.
Similarly, underwriting transitional risk usually means lending into a business that is not yet in its final form. A carve out from a larger group is a typical example. Systems may still be separating. Costs may not yet reflect the standalone position. The business is viable but not yet settled. Private credit is often prepared to step into that gap.
You also see private credit used as a bridge. In simple terms, it allows a deal to close now, with a view to refinancing later, often into bank debt once the business has reached a more stable position.
In cross-border acquisitions involving investors acquiring carve out businesses in Egypt, it is increasingly common to see situations where bank financing is available in principle but requires a longer diligence and approval cycle. In a number of such transactions, international private credit providers have stepped in to fund the initial acquisition on an accelerated timeline, with facilities structured to allow refinancing within 12 to 18 months once the business has been stabilized and integrated. In practice, transactions of this nature would often struggle to close within the required timeframe under a bank only structure.
Similarly, in mid-market transactions involving industrial and operational businesses with uneven revenue cycles, one increasingly sees structures combining bank debt with a subordinated private credit tranche, often provided by regional credit platforms. In these cases, the bank finances the more predictable portion of the business, while the private credit piece is structured to absorb variability in performance. The result is a financing solution that neither lender would typically be willing to provide on a standalone basis, but which becomes workable when the risk is allocated more precisely between them.
This is where private credit earns its place. It solves for speed, addresses complexity, and reduces execution risk.
It also comes with a price. Not just in terms of margin, but in terms of control. Lenders will want tighter protection, stronger security, and closer visibility on performance. That is the trade off, and it needs to be understood upfront rather than discovered in the documentation.
The Egyptian Layer: Where Structure Matters
Applying these structures in Egypt requires a degree of care that is sometimes underestimated. Bank financing benefits from a system that is well established and consistently applied. Private credit, particularly when it comes through offshore lenders, requires more deliberate structuring. Security needs to be properly created and enforceable locally. Foreign law governed documents need to be workable in practice, not just in theory. The regulatory position of non-bank lenders needs to be clear. These are not technicalities. They are the points on which structures either hold or fail when tested.
The same applies, perhaps even more so, in hybrid structures. Combining bank debt with private credit can be highly effective. It can also create misalignment if the intercreditor position is not properly thought through. Priority of payments, enforcement rights, and standstill arrangements all need to be agreed with a degree of precision that reflects how the structure would operate in a downside scenario, not just at closing.
The Shift That Is Actually Taking Place
What is changing in the market is not that private credit is replacing banks. It is that financing is becoming more layered and adaptable.
You are no longer choosing one source of capital. You are structuring a solution that draws on different sources at different points in the lifecycle of the transaction.
Private credit may be used to get the deal done. Bank financing may come in to optimize the capital structure once the business is stable. In some cases, both sit alongside each other from day one.
For investors, this allows capital to be deployed with greater certainty, particularly in competitive processes. For banks, it presents an opportunity to remain central to the transaction by participating in structures that may not have been accessible in a purely traditional format.
The common thread is that financing is being shaped around the transaction, not the other way around.
What Tends to Work in Practice
Across transactions, a few patterns are becoming clear. When financing is considered early, alongside the acquisition or investment structure, execution tends to be smoother. Late-stage adjustments are where most friction arises.
Private credit works best when it is used with intent. Where it is solving for speed, complexity, or a temporary dislocation in the business, it is highly effective. Where it is used without a clear purpose, it tends to become an expensive substitute for bank debt.
Hybrid structures require discipline. It is not enough to combine lenders. The interaction between them needs to be thought through in a way that reflects real world scenarios, particularly enforcement.
And in Egypt, perhaps more than elsewhere, the legal and regulatory framework rewards a practical approach. Structures that are technically sound but not adapted to local realities tend to create avoidable complications later.
A Final Observation
The conversation is often framed as private credit versus banks. That framing is increasingly less useful in the context of how transactions are actually being executed. The more relevant question is how to use both, deliberately and at the right time, to support the transaction you are trying to execute.
Those who approach financing in that way tend to move faster, negotiate from a position of strength, and retain more control over the outcome.
In the current market, that is not a marginal advantage. It is often the difference between getting the deal done and not.
About the Author
Hatem Badr is a Partner at Ibrachy & Dermarkar, where he leads the Banking, Finance and M&A practice. He advises banks, financial institutions, sponsors, and corporates on complex financing and transactional matters in Egypt and across cross-border contexts.
Hatem brings extensive in-house experience from senior legal roles at leading international and regional banking institutions and private equity firms, where he advised on structured finance, cross-border transactions, and regulatory matters across multiple jurisdictions.
His practice focuses on combining legal structuring with commercial execution, with a particular emphasis on transactions where financing, regulation, and deal design intersect.
