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No vintner ever funnelled old wine into new bottles with the zeal shown by financiers. Consider private credit. This is the hottest new thing in finance since the last one. The buzzy term describes corporate loans that do not trade publicly.

But private credit, more broadly defined, is exactly what countless business owners have depended on for centuries. The niche jargon actually describes lending that is not controlled by banks. Instead, investors are marshalled by alternative asset managers such as Apollo, Blackstone and Brookfield.

If you cannot beat them, join them. Last week, Société Générale launched a private credit fund with a target value of €10bn in partnership with Brookfield. Barclays is reportedly planning to establish a similar vehicle with AGL Credit Management.

This is confusing for anyone who would prefer shadow banks and well-lit lenders to stay in their patch of shade or sun. It also raises questions about who will have the balance of advantage in such arrangements.

Alternatives managers are on top in the wider struggle. Private credit is one means by which they are extending their territory beyond their old stronghold of private equity. Previously, they depended on banks to provide their buyouts with debt financing by syndicating publicly traded loans and bonds. By setting up private credit funds, alternatives managers have been able to bring some of that business in-house.

Big investors put money into the funds with the aim of making better returns than they would on syndicated loans or bonds. Mike Carruthers of Blackstone says: “Usually borrowers pay banks a couple of percentage points for a placing made at a discount to face value of one or two points. In a private credit deal, those fees would all go to the funds’ investors.”

The advantage for borrowers is a faster, simpler process that gives little information away to competitors. That contrasts with such rigmaroles of public debt as credit ratings, roadshows and quarterly public reporting. A lower cost of capital is meant to be the advantage of the latter approach.

Borrowers evidently do not believe that. You might quibble that a business in the process of becoming a portfolio company of a buyout group can hardly turn down the client money of the latter. However, Blackstone private credit funds put up hefty financing for two recent European buyouts led by rivals. The first was EQT’s £4.5bn purchase of Dechra, a UK-based veterinary pharmaceuticals group. The second was Permira’s takeover of clinical testing group Ergomed for £703mn.

The value of private credit has risen to some $1.5tn, according to data group Preqin, though that represents capital allocated rather than fully invested. JPMorgan Asset management estimates the total will exceed $2.5tn by the end of 2027.

Only a small proportion of commitments — some $220bn — is targeted at Europe. Here, the usual litany of financiers’ gripes applies: businesses are smaller, markets are fragmented and growth is anaemic. That could be one reason for Brookfield and perhaps AGL to team up with European banks. Harnessed to SocGen and Barclays, their funds should be able to originate loans that might otherwise only result from resource-intense European expansion.

Barclays and SocGen already have big European networks. Partnerships give them the chance to deploy their loan origination skills in a way that earns fees but does not require extra buffer capital.

We should not exaggerate the challenge private credit poses to banks in the core activity of commercial loans, worth some €20tn in the EU alone. Private credit remains linked to buyouts. Bank bosses should only feel worried when alternative asset managers are regularly lending billions for general corporate purposes.

EU regulators are, meanwhile, pondering whether displacement of a subset of corporate loans from public to relatively illiquid private markets increases systemic risks. Rules drafted this summer would cap the leverage of closed-end private credit funds at 300 per cent. The maximum for open-ended vehicles would be 175 per cent.

Commercial bankers can take some comfort from that. Private credit funds may not have their advantages competed away. But as they grow, they may suffer an equally galling fate: some of their unique selling points will be regulated away instead.

jonathan.guthrie@ft.com